CFO Magazine South Africa 2015 KPMG Christmas Special

MAG AZINE FOR FINANCE PROFESSIONALS IN SOUTH AFRICA KPMG CHRISTMAS SPECIAL 2015 • CFO.CO.ZA

ALL THE KPMG EVENTS, GUEST ARTICLES & INTERVIEWS

Christmas special

KPMG CEO Trevor Hoole presents Deon Viljoen with CFO of the Year award Edson Magondo “You have to be a little frightened of your job to keep yourself true.”

Frank Rizzo 6 technology trends CFOs can’tafford to ignore

FROM THE FOUNDERS

Letter from CFO South Africa Dear KPMG, Through this special CFO Magazine we would like to express our gratitude for the partnership we established in November 2014. Thanks to the commitment and involvement of KPMG, we have been able to take CFO South Africa to the next level, with better content and hospitality and more CFOs attending our events.

In close cooperation with KPMG, we continue to build a growing network of experienced finance professionals eager to share their experiences. This community understands the value of peer to peer learning. From its midst, experts and thought leaders from KPMG are taking the stage to share knowledge and participate in many thought provoking discussions. Â We believe this delivers a true win-win-win situation. As our partner, you enable us to invest in the development of distinctive, high quality programs and meetings that create real value and insight for CFOs. The open discussions and networking opportunities enable KPMG to develop new friendships, receive first hand feedback and learn more about the challenges that CFOs face.

In 2016 we will intensify our working relationship. We are eagerly anticipating the third edition of the CFO Awards on 12 May 2016 and the inaugural Finance Indaba Africa on 13 and 14 October. We are looking forward to helping organise the KPMG alumni event and maximising the involvement of your industry leaders and partners.

We are excited about the foundation of our Public Sector CFO Chapter which will open new opportunities to help the professional development of finance leaders in the public sector.

The response to our first round table discussions has been very positive and by bringing together ambitious professionals and recognising the many challenges they face, we believe we are addressing a very real need.

Together we plan to publish four more CFO Magazines in 2016, giving KPMG an excellent opportunity to tell the stories that matter to a prestigious and niche audience of finance leaders. Our fast-growing online platform is also becoming increasingly significant and has the potential to become the leading voice of the finance industry.

We are ending 2015 with the feeling that we have only just begun. The events that we will organise in 2016 will offer more relevant, in-depth content and new ways to interact and share. We will give more attention - and editorial resources - to capturing and publishing the learnings from each event to extract maximum value. We will also continue to work hard to reach more CFOs and grow our membership base.

Since 2011, CFO South Africa has been connecting finance professionals online and off in order to share knowledge, exchange interests and open up business opportunities. By building the community, CFO South Africa is very proud to contribute to the growth of the country. We hope that our partnership with KPMG will be a long and fruitful one. We believe the best is yet to come.

Melle Eijckelhoff and Alex van Groningen 2

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FROM THE FOUNDERS

One year CFO South Africa & KPMG 13 November 2014 17 February 2015 19 February 2015 19 March 2015 14 May 2015 25 June 2015 30 July 2015 17 September 2015 22 October 2015 19 November 2015

Risk Compliance & Control Get Smart in 2015 Get Smart in 2015 Moving into Africa CFO Awards 2015 The CFO as Business Partner Effective growth strategy Digital Transformation Finance Transformation House of the future

Cape Town Club JSE Limited, Sandton Cape Town Club Michelangelo Hotel, Sandton Summer Place, Hyde Park KPMG Wanooka Place, Johannesburg Nedbank Head Office, Sandton 54 on Bath Boutique Hotel, Rosebank The Forum | The Campus, Bryanston Turbine Hall, Johannesburg

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FROM THE EDITOR

Sharing expertise and experience “CFOs are our biggest supporters and customers, so I want to be part of their community.”

Without resorting to love-at-first-sight analogies, the words of former KPMG Southern Africa CEO Moses Kgosana speak volumes. Especially because they were uttered to CFO South Africa founder Alex van Groningen during their warm introductory meeting on 10 April 2014 at Wanooka House, the anchor for KPMG’s African operations.

This special KPMG Christmas 2015 edition of CFO Magazine celebrates the insight KPMG’s specialists have since then provided to South Africa’s finance leaders, helping them build a better and more prosperous South Africa. With KPMG’s new CEO Trevor Hoole handing out the CFO of the Year award to Deon Viljoen of Alexander Forbes being an obvious highlight.

As chief editor of CFO Magazine, one of my favourite interviews was Edson Magondo (page 15), sector head for government, infrastructure and the public sector. Together with Moses and two others he founded the country’s biggest black audit firm KMMT and since the merger with KPMG in 2002 he has been one of the stalwarts at the services firm, first in Pretoria and now in Johannesburg. The interview with internal audit lead Granville Smith (page 33) focusing on turning risk into opportunities, a priority for most high level CFOs, is another riveting read.

We have gotten off to a great start with our two 2015 issues – and all KPMG’s guest articles we have published so far are included in this Christmas special. They include insights in technology trends by Frank Rizzo (page 19), the lowdown on the Tripartite Free Trade Area (TFTA) by Venter Labuschagne (page 22), a case for measuring your Social Return on Investment by Neil Morris, Yoliswa Msweli and Sarah Ball (page 25) and a master class on planning, budgeting and forecasting by Charl du Toit (page 28).

The cornerstone of the partnership between KPMG and CFO South Africa is the value of our CFO events, all offering something different to the attending finance leaders. Look out for reports throughout this Christmas special. On page 2 CFO South Africa’s founders Melle Eijckelhoff and Alex van Groningen reflect on the partnership between KPMG and CFO South Africa to date and on page 14 our managing director Graham Fehrsen looks forward to further fruitful collaboration in 2016.

Personally, I have great expectations of 2016 – with the third CFO Awards and the first ever Finance Indaba Africa as obvious landmark events. I am looking forward to sharing more expertise, experience and accumulated wisdom online and in print in the year to come.

Have a wonderful festive season and see you in 2016!

Joël Roerig joel@cfo.co.za +27 (0)76 3712856

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TABLE OF CONTENTS Letter from CFO South Africa

Events

“Through this special CFO magazine we would like to express our gratitude for the partnership we established with KPMG in November 2014,” write Melle Eijckelhoff and Alex van Groningen, founding partners of CFO South Africa. “Thanks to the commitment and involvement of KPMG, we have been able to take CFO South Africa to the next level, with better content and hospitality and more CFOs attending our events.”

18 20 27 32

Get Smart event February 2015 Moving into Africa event March 2015 CFO events June, July & September 2015 Finance Transformation event October 2015

KPMG guest articles 22 Tax in Africa, by Venter Labuschagne 25 Social Return on Investment, by Neil Morris, Yoliswa Msweli and Sarah Ball 28 Planning, Budgeting & Forecasting, by Charl du Toit

And further 4 8

02 CFO Awards 2015

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Deon Viljoen, chief financial officer at South Africa’s largest retirement fund administrator Alexander Forbes, was named South Africa’s CFO of the Year 2015. The award was presented on Thursday 14 May 2015 to round off an inspirational conference and gala event at Summer Place in Hyde Park, Johannesburg. KPMG was this year’s principal sponsor, with CEO Trevor Hoole presenting the highly anticipated award to Viljoen.

Edson Magondo Once the smallest boy in a Venda village, Edson Magondo’s can-do attitude saw him rise to prominence as co-founder of the country’s biggest black audit firm KMMT. After its merger with KPMG the self-professed ‘delivery guy’ headed-up the Pretoria office, the audit practice and – since 31 August – KPMG’s public sector offering. We spoke to Magondo about transformation, sustainable client relations and professional fear. “You have to be a little frightened of your job to keep yourself true.”

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14 19 33 35

From the editor Overview of participants at KPMG-sponsored CFO events From the MD 6 technology trends CFOs can’t afford to ignore Interview with Granville Smith Calendar CFO events 2016

CONTACT Graham Fehrsen Managing Director CFO South Africa +27 (0)79 898 0227 graham@cfo.co.za cfo.co.za

© 2015 CFO Enterprises PTY ltd, All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law.

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CFO AWARDS 2015

Finance leaders celebrated at CFO Awards 2015 The CFO Awards were a massive success again this year, with a host of fascinating master classes, a delicious dinner and eight deserving award winners.

Deon Viljoen, chief financial officer at South Africa’s largest retirement fund administrator, Alexander Forbes, was named South Africa’s CFO of the Year 2015. The award was presented on Thursday 14 May 2015 at the end of an inspirational conference and gala event at Summer Place in Hyde Park, Johannesburg.

The event was capably chaired by dynamic speaker and investor Vusi Thembekwayo and was attended by 300 CFOs and prominent business leaders. In six master classes that took place prior to the award ceremony, attendees discussed topics including strategy execution, leadership, business opportunities in Africa and ways of coping with and benefitting from the fast pace of technological development in the world.

During the gala dinner, South Africa’s doyen of corporate governance, Prof Mervyn King, held a keynote speech, and last year’s CFO of the Year Simon Ridley (Group FD Standard Bank) shared his thoughts on finance leadership.

Services firm KPMG was this year’s principal sponsor, with CEO Trevor Hoole presenting the night’s major award to Viljoen (see page 12).

He described the Alexander Forbes executive with a Jiddisch word. “A mensch is a person of integrity, a person of honour, someone to admire and emulate, someone of

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noble character and someone who has a sense of what is right.” Viljoen said the award was unexpected and thanked his wife and children. “I feel very honoured, very humbled.”

CFOs Brett Tromp (Discovery Health) and Anoj Singh (Transnet, now Eskom – see page 10) were the other big winners during the night, each accepting two awards. Besides receiving the Public CFO of the Year Awards, which he also won last year, Singh was honoured with the much coveted Strategy Execution Award for his role at the successful parastatal and his ambitious, counter-cyclical capital build programme.

The inspirational Brett Tromp is currently trying to convince government that companies should report on what he calls the ‘fourth bottom line’, a mix of measurable health metrics. Tromp, a regular guest at CFO South Africa events, walked away with the Young CFO of the Year Award and the High Performance Team Award.

Sasol’s new CFO Bongani Nqwababa received the Finance Transformation Award for his steadfast reign during difficult times at his previous employer, Anglo American Platinum. Last year’s double award winner Colin Brown (Super Group) was also among the award winners this year, securing the Finance & Technology Award.

Alexander Forbes CEO Edward Kieswetter with his CFO Deon Viljoen

Imraan Soomra, CFO at Africa’s largest fishing company Oceana, won the Transformation & Empowerment Award. The Moving into Africa Award was won by the ambitious Greg Davis (Standard Bank Africa), while Mervyn King handed the Compliance & Governance Award to Cobus Grove, the 33-year-old IFRS specialist and CFO who turned the struggling vehicle tracking company Digicore around, starting by restating 14 years of accounts and culminating in the recent sale to the Nasdaq-listed firm Novatel Wireless. l

“A mensch is a person of integrity, a person of honour, someone to admire and emulate, someone of noble character.” – Trevor Hoole, CEO of KPMG about Deon Viljoen

CFO AWARDS 2015

“The CFO has a dynamic role.

He or she has got to balance the books while being strategic to meet goals, and both mentor and transform the finance team.” - Prof Ben Marx “What is common to all the nominees is the ability to urge caution on a slippery slope, so we don’t all end up screaming ‘Fire!’ in a burning theatre.” - Thembekile Kimi Makwetu, Auditor-General “Let me be philosophical for a moment. This country is great, but a lot of work needs to be done so that this room [of CFOs] is more representative of the demographics of this country.” - Imraan Soomra, CFO at Oceana:

Who will win at the CFO Awards 2016? Send your nominations to shay@cfo.co.za CFO MAGAZINE • CFO.CO.ZA

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OVERVIEW OF PARTICIPANTS AT KPMG-SPONSORED CFO EVENTS

KPMG meets finance leaders Since the partnership between CFO South Africa and KPMG commenced in November 2014, our joint events have been attended by 14 KPMG leaders, who have had the opportunity to meet 470 CFOs, finance experts and other (South) African business people.

Here’s the complete consolidated list of attendees from those 10 events.

4most Systems Geoff Goddard, Business Development Consultant Eugene Olivier, Director abe Construction Chemicals Philip Nottingham, CFO Acacia Mining Jaco Maritz, Vice President Finance Accentuate Chris Povall, CFO ActiveOps Derek Brown, CEO Africa Paula Brown, CC ACWA Power Pooven Naidoo, Head of IT Infrastructure and Ops Africa Adams & Adams Darren Olivier, Partner Nic Rosslee, Trade Marks Adlevocapital.com Greg Voigt, Advisor AdviceWorx Seipati Ntsimane, CFO

AfriCatalysts Dumi Jere, CEO

AMEC Eric Bauser, CFO

Afrihost Clinton Lodge, CFO

Arca Jhb Natrishka Naidoo, Financial Director

Afrimat Hendrik Verreynne, CFO

Ascendis Health Pieter van Niekerk, Group Deputy CFO

AfriMobile Lebogang Mokgabudi, Consultant

Ashburton Investments Paramesan Mathen, Portfolio Manager

Agribusiness Development Agency Thandeka Memela, CFO Noluthando Mkhathini, Financial Manager AIESCE University of Cape Town Shampie Doko, Vice President: Finance and Legal Al Jazeera Media Network Nida Monga, Head of Finance and Administration Alaris Holdings Gisela Heyman, Group CFO Alcinda Ferreira Property Investments Frank Ferreira, CFO

AECI Mark Kathan, CFO

Alexander Forbes Edward Kieswetter, Group CEO Deon Viljoen, Group CFO

AfrAsia Marisa Meyer, Director

Allianz Global & Corporate Speciality SA Delphine Maïdou, CEO

Afric Oil Mangadi Dikotla, Finance Director

AlphaWealth Christopher Ball, Investment Analyst

Africa International Mining & Logistics David Ziman, Financial Manager

ALS Chemex SA Ranga Mabwe, CFO

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Atlas Mara Gerhard Labuschagne, Group Financial Controller ATM Solutions Wayne Abramson, CEO Auditor-General of South Africa Thembekile Makwetu, Auditor General Nkosinathi Chamane, Audit Manager Jennifer Njelesani, Senior Manager Finance Aveng Ethel Nyagani, Financial Executive Duraset Thobeka Ntshiza, Financial Executive Infraset Craig Barrett, Financial Director Manufacturing Dean Subramanian, CFO: Aveng Steel BAE Systems Land Systems South Africa Odwa Mhlwana, Director Finance Barclays Africa David Hodnett, Deputy CEO & Finance Executive Dominique Erlank, CFO Retail Markets Avashnee Ramdial, CFO Wealth and Investment Management Noorul-Ain Khan, CFO WIMI Corporate Clarina Du Preez, Customer Value Proposition Design

Henry Botha, Head of Business Development Karien Jones, Regional Head Risk Finance Sameer Khan, Vice President Patrick Kibunja, Corporate Banking Margaux Kluk, Strategy Consultant Kuda Makoni, Programme Manager Strategic Execution Shiran Moodley, Digital Banking Hamilton Ndlovu, Relationship Executive Hazel Nyewula, Head of Financial Control Enterprise Functions Heather Osborne, Head of Investment Governance and Strategy Integration Hannes Pienaar, Innovation Francois Rossouw, Finance Chris Skellern, Finance Business Partner - IT Farhana Fredericks, Head of Delivery and Innovation Barloworld Equipment Rajiv Maharaj, CFO Africa BDO South Africa Ferdie Schneider, National Head of Tax Gladys Sebatha, Partner Risk Management Bidvest Managed Solutions Loveness Khunou, Divisional Executive Finance Blouberg Local Muncipality Conny Raganya, CFO Blue Green Consulting Lerato Aphane, Director Blue Recruiting Graeme Marais, Managing Director Bowman Gilfillan Nathan Bailey, Group Financial Manager Alan Keep, Managing Partner

OVERVIEW OF PARTICIPANTS AT KPMG-SPONSORED CFO EVENTS

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OVERVIEW OF PARTICIPANTS AT KPMG-SPONSORED CFO EVENTS British High Commission Etienne Pretorius, Africa Head of Finance Louise Van Der Walt, Regional Finance Manager Southern Africa BSG Jurie Schoeman, Client Engagement and Strategy Executive Business Connexion Lawrence Weitzman, Group CFO Jan Van Den Handelm Group Finance Manager: International Capitec Bank Andre Pierre Du Plessis, CFO Car Hire Brokers Danie Ferreira, CFO Ceva Animal Health Carel Gangel, Financial Director CISCO Denishree Naidoo, Customer Success Manager City of Johannesburg Thabea Modise, Assistant Director: Finance Reetsang Pule, Deputy Director Finance City of Matlosana Masego Kwenamore, Deputy Director Finance Clarkhouse Human Capital Roy Clark, Director Deborah Booth, Director Clicks Michael Fleming, CFO Clinix Feng-Ju (Ray) Shih, CFO Clorox Africa Portia Sibiya, Assistant Accountant CN Outsourced Finance Chwayita Deliwe, Director Compass Group Southern Africa Dean Sackett, Group CFO Vajra Singh, CFO Insurance Continental Coal Rachel Hebron, CFO COSATU Talelani Enos Ramaru, National Head Of Finance CR2 Javier Hermida, Business Development Manager Dannhauser Municipality Danisile Mohapi, CFO Datatec Simon Morris, Group Corporate Director Dawn Solutions & Logistics Francisco Ferreira, CFO

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Deloitte Yaseen Ahmed, Analyst Graeme Berry, Director Roy Campbell, Director Nazeer Essop, Director Tatenda Gatawa, Senior Manager Andrew Mackie, Director Delise Muller, Marketing Leader

Eaton Towers Maud Mmachacha, Business Development

FROS Capital Francis Osuyah, CEO

Edcon Minnesh Rajcoomar, Group Finance Executive

FTC Africa Michael Roberts, CEO

Engenderhealth SA Joyce Chinembiri, Senior Finance Officer

Futuresense Nicole Astfalck, Finance Director

Deltamune Nishina Dayaram, CFO

Entelect Mark Beets, General Manager Ryan Naude, Manager: Data Solutions

Gauteng Human Settlements Magness Vanqa, Management Accountant

Denel Fikile Mhlontlo, Group CFO Honey Shangase, CFO Aerostructures Modise Innocent Khoza, CFO Land Systems Marius Potgieter, Group Treasurer

EOH Asher Bohbot, Group CEO John King, Group Financial Director Mandy Leonard, Finance Director

Department of Economic Development Semphete Mildred Oosterwyk, CFO

ERPM Insights Peter Chisambara, Finance

Department of Energy Yvonne Chetty, CFO

Eskom Pension and Provident Fund Nopasika Lila, CFO

Department of Home Affairs Pumeza Ntshiba, Director: Finance and Support

ETDPSETA Dennis Tembo, Senior Financial Accountant

Department of International Relations & Cooperation Caiphus Ramashau, CFO

Ethos Craig Dreyer, CFO

Department of Mineral Resources Rofhiwa Irene Singo, CFO Department of Public Service & Administration Masilo Makhura, CFO

EY Rahul Agrawal, Associate Director Manti Grobler, Advisor Ajith Haripaul, CFO Kabo Nkoana, Manager M&A Lead Advisory Jet O’Brien, Corporate Finance

GladAfrica Holdings Mpho Mashile, Group CFO Gold One International Katlego Tlale, Group Financial Reporting Manager Gordon Institute of Business Science Matthew Birtch, Lecturer : Strategic Management Nishen Munnisunker, Director - Executive Education Open Programmes Gowin Investments James Slabbert, CEO Groupe Seb South Africa Matone Ditlhake, CFO GT247.com Bradley Leather, Executive Director Gulf Strategies JP Fouche, CEO

FCB South Africa Makarand Phadke, Group Financial Controller

Hans Merensky Holdings Rian Du Toit, CFO Hello Group Ahmed Cassim, Chief Commercial Officer

Deutsche Bank AG Riaan Visser, CFO South Africa

FD Centre Yolande Jansen, Principal Mike Sacher, Regional director Pretoria Hylton Surat, Regional Director Gauteng Russel Swarts, Interim FD and Business Partner Tjaart Van Stryp, Financial consultant

DigiCore Cobus Grove, CFO

Financial and Fiscal Commission Mavuso Vokwana, CFO

Discovery Health Brett Tromp, CFO Pumla Molope, Financial Manager Marius Moller, Finance Head - New Buisiness

Finbond Group Gary Sayers, CFO Finesse Group Malose Leolo, CFO

Hollard Insurance Brooks Mparutsa, Group CFO Lwando Sangcozi, Finance Business Partner

Drake and Scull, A Division of Tsebo Outsourcing Group Barry Doran, CFO Andre Van Staden, Senior Commercial Manager

Fintech Lourandi Kriel, Head of Finance

Home Fabrics Nomali Vilani, Finance Director

Flowify IT Jehslo Mabinda, CEO

Howden Kevin Johnson, CFO

DSV AIR & Sea Mpho Paie, Africa Regional Controller

FNB Stefan Brandt, Business Analyst Siboniso Edison Mdluli, CFO Swaziland

HPCA Callen Hodgskiss, CFO

Department of Social Development Clifford Appel, CFO Department of Trade and Industry Shabeer Khan, CFO

DUO Marketing + Communications Ronell Swartbooi, B2B Tech PR Account manager Eagle Business Development Gert Barnard, Director

Hepstar Financial Services Brett Dyason, CFO Hitachi Data Systems Juan Mostert, CFO Sub-Saharan Africa Holbourne Advisory Eric Van Gils, Partner

Free State Development Corporation Shepherd Moyo, CFO

HSRC Andrew Ndlovu, Head: Projects Finance Office and Treasury

Freedom Property Fund Franky Pretorius, CFO Dominique Nel, Financial Manager

Hymax SA Claude Pedro, Business Development Philip Wessels, Executive

OVERVIEW OF PARTICIPANTS AT KPMG-SPONSORED CFO EVENTS IDC Lazaros Karapanagiotidis, Senior Consultant Nomfundo Mzobe, LED Manager IG South Africa Kevin Algeo, Managing Director Ignitor Justin Coetsee, COO IIA SA Claudelle Von Eck, CEO Ince Alban Atkinson, Managing Director Incubeta Holdings Sean Reuben, CFO Innovation Group Zeenat Loonat, Finance Executive International Corporate Training Roger Latchman, CFO Internet Solutions Nene Thidiela, Group Financial Manager Interwaste Andre Broodryk, CFO Ithemba Property Trust 3 Anita Fourie, Financial Controller J Walter Thompson Company South Africa Attish Harichunder, Finance Director J&J Group Yashodan Naidoo, Chief Project Manager Jasco Warren Prinsloo, CFO JPD Consulting James Donaldson, Owner JSE Limited Nicky Newton-King, CEO Aarti Takoordeen, CFO Kansai Plascon Tshepo Makete, Executive Finance: Africa Operations Shaaheen Shamsoodeen, Senior Manger Finance KDI Mining Solutions Lungile Tom, Director and Financial Executive Keeley Granite Andre Van Der Westhuizen, Financial Director KPMG Trevor Hoole, CEO John Saker, Partner Carel Smit, Partner Frank Rizzo, Partner Dean Wallace, Partner Arvind Hari, Partner Gerald Kasimu, Partner Makgotso Letsitsi, Partner Edson Magondo, Director

Ron Stuart, Director Joelene Pierce, Director Mohsin Begg, Manager Sajag Arora, Management Consulting - Strategy & Operations Nishith Saxena, Management Consulting Technology Enablement

Microsoft South Africa Paul Marten, CFO Sphiwe Blose, Finance Controller

Laureate Africa Operations Alvin Liew Voon Siong, Director FP&A

MMCP Nthabiseng Mokone, Principal

Banking Gordon Fordred, Structurer Ian Fuller, General Manager: Group Shared Services Centre Collette Hammann, Senior Project Manager: Strategic Initiatives Karel Janse van Rensburg, Head of Finance Raveen Maharaj, Finance Manager Priya Naidoo, Group Executive for Strategic Planning and Economics

Liberty Group Casper Troskie, Financial Director Philip Timberlake, Group Financial Manager Liberty Health Virlene Agulhas, Financial Adviser Liberty Life

MMI Group Dennis Langton, NBD Manager

NEPAD Business Foundation Monica Dowie, CFO

Moonwater Heleen Wright, Director

Netcare Natasha Wyatt, Regional Financial Manager

Liquid Thought Zulfiq Isaacs, CEO

Moretele Nancy Rampedi, CFO

Netsurit Logamal Ramiah, CFO Elizabeth Maduna, Financial Accountant

Litha Healthcare Group Sabelo Nongauza, Group Finance Manager

Morvest Business Suren Singh, Group CFO

Lloyd & Business Associates Lloyd Phiri, CEO

Mpact Brett Clark, CFO Tim Ross, Board Member

Lonkama sales and marketing Lindiwe Donna Motshaba, Director Lonmin Platinum Vongani Mashaba, Senior Manager: Finance

MiX Telematics Megan Pydigadu, CFO Sabelo Toyi, Group Financial Manager

Mr Price Mark Blair, CFO

Low Carb Adapt Nuno Muscolino, Head of Finance

MTN South Africa Sandile Ntsele, CFO Thembi Ndeya, Regional Sales Operations

Lunar Capital Sabir Munshi, Founder

Multindev Rudo Martin Founder, Software Developer

Lyoness Cash Back Programme Ettiene Stander, Head Of Finance

Multitrade Distributors Grant Hagedorn-Hansen, Financial Manager

Mafica Mlungisi Dlamini, Financial Director

Musangwe Strategy Group Ntombencane Mazibuko, Accountant

MAN Truck & Bus South Africa Arshad Hassim, Financial Director South Africa & Sub Equatorial Africa

Nalana Facility Management Stephen Mohapi, Managing Director Ntandoyenkosi Nyathi, COO

Matchi Catherine Miller, HOD Marketing

National Arts Council of South Africa Dumisani Dlamini, CFO Simon Dakalo Mandiwana, Finance Manager

MBKEV Consulting Services Morgan Mutale, Finance and Business Development Director McKinsey David Fine, Director Medu Capital Siyabonga Nhlumayo, Partner Medupi Energy Resources Sepheu Masemola, Director: Finance Merchantec Capital Hannes Smith, Group FM Metalsa Polinah Gatawa, CFO Metmar Sizwe Nkosi, CFO

National Heritage Council Mathabiso Chamane, Director Finance Manager National Treasury Republic of South Africa Dalu Majeke, CFO Siphiwe Ndlovu, Executive Manager OAG Business Strategy Yolisa Tyantsi, Communications Specialist Necsa Zakes Myeza, Group executive: Finance & business development Nedbank Raisibe Morathi, CFO Mfundo Nkuhlu, COO Steven Bird, Group Financial Controller Anbann Chetti, Head of finance Corporate

Network Recruitment / AdvTech Resourcing Ronny Van Der Sluys, CFO New Media Publishing Mark Oaten, CFO Ngubane & Co. Nompumelelo Ngwenya-Mokou, Director Nihilent Saurabh Bali, BDM Nissan South Africa Greg Field, Director: Corporate & Finance Norton Rose Fulbright South Africa Ted Baxter, CFO NUMSA Mark Kumwenda, Acting CFO Oakbay/Sahara Group/Jic Mining Services Vipul Desai, M&A & Business Development Oceana Group Imraan Soomra, Group Financial Director Odyssey Capital Graeme Franck, Finance Director / Portfolio Manager Ogilvy Megan Bernstein, Digital Strategist Olam International Bikash Prasad, Vice President, Regional CFO (S & E Africa) Old Mutual Marisa Viljoen, CFO Alternative Solutions Qinisekile Dhlamini, Senior Direct Sales Consultant Oltio Nnamdi Oranye, Head of Business Development Omnia Wayne Koonin, Group Financial Director

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OVERVIEW OF PARTICIPANTS AT KPMG-SPONSORED CFO EVENTS Optinum Matthew Harman, BDC

PwC Michael Parusel, Senior Manager Corporate Finance

Oracle South Africa Kholiwe Makhohliso, Country Manager Anees Mayet, Senior Finance Director Armin Moradi, Territory Manager Financials OUTsurance Jan Hofmeyr, CFO

Rand Merchant Bank Dominique Collett, Investment Executive Jacky Buys, Corporate Treasury Solutions, Global Markets Duncan Smith, Leveraged Finance Simon Woodward, Sector Director Mike Wright, Business Solutions

Pan Mixers South Africa Greg Goulding, CFO

Rapid Technologies Suza Adam, CFO

Pembani Group Aman Jeawon, CFO

Red Dot Marketing and Communication Abigail Brooks, CEO

Permanent Beta Kim Van Den Berg, Project Coordinator

Redefine Properties Marc Wainer, Executive Chairman Leon Kok, Financial Director

Pfizer Laboratories Mhanqwa Khumalo, Finance Director Philips Alexander Visser, CFO Philips Africa PlatCol Colin Vallis, Founder Power FM Thabiso Hermanus, Head of Finance Powertech Battery Group Dulani Du Pisanie, CFO PPM Attorneys Lucien Pierce, Partner Praekelt Foundation NPC Hanno van der Walt, CFO

Regent Insurance Este Digue, CVP & Segmentation Lerusha Naicker, MIS manager Denver Naidoo, General Manager - Business Analytics Marvellous Rukundu, Business enablement Reverside Software Solutions Tobie Winterbach, CFO Ricoh South Africa Megan Thomas, Financial Director Rifle-Shot Performance Holdings Guy Imbert, CFO and COO Rig 5 Petroleum Chris Green, CFO

David Maron, Specialist account executive Sandi Pietersen, Solution specialist - Financials Kelly Poole, Head of Commercial SAPO Nichola Dewar, CFO: Postbank SAS Institute Desan Naidoo, Managing Director

South African Business Schools Association Millard Arnold, Executive Director

Sasol Bongani Nqwababa, Group CFO

South African Heritage Resources Agency Catherine Motsisi, CFO

SASSA Mosodi Mosodi, Manager: Management Accounting

Spur Corporation Ronel Van Dijk, CFO

SC Johnson and Son Mikateko Tshetshe, Finance Director SDV South Africa Anne Coste, Financial Controller Search Partners International Stephen Dallamore, Managing Director Sebata Group Obi Gadzikwa, Interim CFO SekelaXabiso Bongi Nxumalo, Senior Manager Business Development Sentula Mining Johann Lemmer, Financial Director Sephaku Holdings Neil Crafford-Lazarus, Financial Director

Premier Lloyd Uta, Project Management Graduate

Rothschild Giles Douglas, Managing Director Michel Kopp, Analyst

SET Consulting Rick Smith, Legal Consultant SET Recruitment Carl Endenburg, Director

Price Forbes Warren Bolttler, CEO

Ruvido Perfect Mbitshana, CEO

SHIFT | Boardroom Sparring Partners Martijn Aslander, Co-founder

Proconics Lundi Mdingi, CFO

Ryden International Property Consultants Molly Gallant, CFO

Sivart Wealth Solutions Joshua Marran, Financial and Investment Planner

Promasidor Austin Mcdonald, Group Finance Director

Safika Business Solutions & Services Rashida Albertus, CFO

Provantage Media Group Johan Scholtz, Financial Director

SAICA Noncedo Mungwane, Support CFO

Public Protector South Africa Kennedy Kaposa, CFO

Saide Rajeshree Subramoney, Senior Financial Manager

Puma Energy Amandla Mjolo, Finance Controller

SAMSA Tudor Hungwe, CFO

Purple Group Charles Savage, CEO Gary Van Dyk, CFO Patrick Daoust, Head of Finance Carlos Fernandes, IT Manager Tristan Finnemore, Head of Sales Paul Jansen Van Vuuren, CTO Craig Margolius, Head of Operations Almero Oosthuizen, Head of Marketing Justin Pearse, Head of Client Engagement

Sanlam Wesley Govender, Business Development David Mapharisa, Business Development Business Solutions

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South African Airways Technical Michael Mpanza, Head of Department: Finance Pat Padayachee, Senior Manager Finance/ CFO Acting

SizweNtsalubaGobodo Victor Sekese, Chief Executive Rakesh Bhika, Director Vonani Chauke Dean Davey, Director Peter Goss, Director Theo Josias, Director Fana Manana, Director Vusmuzi Masilela, Director Kemp Munnik, Director Phumeza Nhantsi, Director Alex Philippou, Director

SSAB South Africa Mduduzeli Moyo, Finance Director Stafix Heidi Williamson, CFO Standard Bank Simon Peter Ridley, Group Financial Director Greg Davis, CFO Africa Sean Doherty, CFO Investment Banking Ian Bower, Head: Digital, Wealth and Investment Arno Daehnke, Head Treasury and Capital Management Richard De Roos, Head of FX Gavin Heron, Principal Structured Finance Standard Bank Ahmed Karodia, Group Finance Consultant Princess Kubheka, Group Finance Internal Reporting Manager Rene Lutchman, Commercial Financial Manager Kuvani Naidoo, TCM Pricing Analyst Ruschka Raidoo, Head: PMO Paul Steenkamp, Head: Innovation Capability Linda Swart, Incubator Manager Standard Chartered Bank Joel Ncube, Regional Finance Manager Zukiswa Phillips, Business Planning Manager Startup Nations South Africa Mmbodi Rambau-Nesengani, Programme Manager Step Advisory Cheryl Howell, Senior Manager StratCorp Limited Henk Engelbrecht, Group Financial Director Strato IT Group Mervyn Coopen, CFO Sundarar Investment Holdings/ TATA JHB Deheshan Naidoo, Financial Director Super Group Colin Brown, CFO

SMEC South Africa Farid Vania, Group Finance Manager

SuperSport International Lwazi Tutani, Finance Manager

Santova David Edley, Group Financial Director

SolarReserve Karl Van Eck, Regional Controller - EMEA

T-Systems South Africa Aneshree Naidoo, Vice-President: Finance and Controlling

SAP Garth Beavon, Director Solution Support Africa

Solid Hope Telecoms Charles Maake, Director

Takeover Regulation Panel

OVERVIEW OF PARTICIPANTS AT KPMG-SPONSORED CFO EVENTS

Maragaret Motsoahae, CFO Taxi Club Holdings Alec Mthembu, Director Taxichoice Themba Mazibuko, Financial Director Telesure Jo-Ann Pohl, CFO

Sunil Ramkillawan, Financial Director Oil & Gas and Mining Resources

United National Breweries Ramesh Katte, CFO

WeThinkCode Arlene Mulder, Executive Director

Tower Bridge Projects Geoffrey Ossip, Financial Manager

University of Johannesburg Ben Marx, Vice-Chairperson; Department of Accountancy

Winhold Grant Scrutton, Financial Director

Trade Routes Travel Dumisani Moyo, Financial Director TransAfrica Media Graeme East, Financial Director

University of South Africa Vuyokazi Memani-Sedile, Acting Vice Principal : Finance

Wipro Technologies Kiran Muralidhar, Finance Controller - Africa WIZZIT International Brian Richardson, CEO

Transcend Capital Anton Baumann, Director

University of the Witwatersrand Linda Jarvis, CFO Igor Rodionov, Lecturer

Woolworths Reeza Isaacs, Group Financial Director

Transnet Freight Rail Nomfuyo Galeni, CFO

Valsir Uneeq Antonio Agostinelli, CEO/Financial Director

Worley Parsons South Africa Margaret Amofa, CFO

TransUnion Chad Reimers, Strategy and Planning

Vickers & Peters Financial Planning Chris Ellis, Benefit Consultant

Yellowwoods Mike Swilling, Analyst

Travelex Africa Foreign Exchange Naniwe Dhlamini, Finance Manager

Vodacom Dineo Molefe, Managing Executive : Finance

Zoona Keith Davies, CFO

The Foschini Group Shané Viljoen, Senior Manager: Finance (Financial Services)

Tyme Capital Bongani Maponya, Financial Manager

Volvo Group Khaya Gcobo, Financial Manager

ZuruFaya Mwelisi Mkwananzi, Managing Director

The Mvula Trust Richard Somanje, CFO

Ukhwakhile Thabo Motinyane, Director

Vuwa Investments Martin Buchalter, CFO

Zydus Healthcare SA Sandeep Gadhia, Finance Controller & Supply Chain Head

The SPAR Group Mark Godfrey, CFO

Unemployment Insurance Fund Vuyo Mafata, CFO

Wayne Becker Consulting Wayne Becker, Sales and Marketing

Thebe Refiloe Nkadimeng, Group Financial Director

Union Tiles Nico Smit, CFO

Webber Wentzel Christo Els, Senior Partner

Telkom Deon Fredericks, CFO Thatohatsi facility management Ntandoyenkosi Nyathi, Building Refurbishments The Competition Commission Thomas Kgokolo, CFO The Digital Academy Gary Bannatyne, Managing Director

CFO MAGAZINE • CFO.CO.ZA

13

FROM THE MD

Sharing knowledge and networks in 2016

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’d like to personally thank each member of the KPMG team for their support. Whether it has been Edson Magondo sharing his accumulated wisdom with us, CEO Trevor Hoole presenting the CFO of the year AWARD or Alida Taylor talking about big data, KPMG’s participation has added value every step of the way. Who can forget Victor Onyenkpa’s excellent advice on the tax climate in Nigeria, the tantalising insights into a brave new world by technology lead Frank Rizzo or Charl du Toit’s master class on planning, budgeting and forecasting?

What these engagements show is that KPMG understands how important it is to collectively build intellectual capital in South Africa’s finance sphere. And this is exactly what CFO South Africa’s master classes, round tables and CFO dinners do. Together we are delivering real, detailed, practical value to finance professionals in South Africa and on the continent.

KPMG’s deep, continent-wide industry insight makes it an ideal partner for CFO South Africa as our footprint expands. Together we can tackle talent management, finance transformation and many other important issues facing African finance professionals.

We have an exciting line-up planned for 2016. The year will be noteworthy for the development of our public sector CFO chapter and Finance Indaba Africa on 13th & 14th October.

This event is our response to the growing demand from finance professionals below the CFO and FD level for access to learning platforms, where the newest technologies, ideas, insights and business trends are shared. We have had a fantastic response to this initiative and are very pleased to be hosting the KPMG Alumni function at Finance Indaba Africa on the evening of the 13th October.

Each of the new developments represents a significant growth marker for us and, more importantly, further opportunities for KPMG professionals to develop their networks, share experience and showcase expertise. CFO South Africa is all about creating opportunities for Chief Financial Officers and Finance Directors to share knowledge, network, learn and inspire each other. We continue to believe that partnering with KPMG gives us even greater opportunities to contribute to a better South Africa and better finance practice on the continent as a whole.

Below are my contact details if you want to get in touch! I look forward to working with you all in 2016 and wish you a safe and relaxing festive season.

Graham Fehrsen graham@cfo.co.za +27 (0)79 8980227

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PUBLIC SECTOR Proteas grow in tough terrain and a lot of patience is required before seeds can be harvested and sown again. There are surprising parallels with the growth of black accountants in South Africa – and with Edson Magondo’s own rise to prominence, as we discover during an exclusive interview with the man who heads the KPMG service offering for government, infrastructure and healthcare.

Growth in difficult terrain Once the smallest boy in a Venda village, Edson’s can-do attitude saw him rise to prominence as co-founder of the country’s biggest black audit firm, KMMT. After its merger with KPMG the self-professed ‘delivery guy’ headed-up the Pretoria office, the audit practice and – since 31 August – KPMG’s public sector offering. We spoke to Edson about transformation, sustainable client relations and professional fear. “You have to be a little frightened of your job to keep yourself true.”

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dson Magondo plans to cultivate king proteas on a piece of land he owns in the mountains of Venda, in the far north of South Africa. “My neighbour is already growing them, so he is giving me lessons,” he says. Eventually he wants to make money off the sale of the flowers, but for now he needs to be patient. “I need to wait for the flowers to dry on the plant, so I can harvest the seeds and sow them.” His interest in growing South Africa’s national flower is telling; proteas – like Magondo – prosper in difficult terrain.

Venda is where it all began for Edson. He reluctantly admits that he “always had firsts for everything” in his village. “For some reason I was tinier than most people in my class at Thengwe High School,” he recalls, but this didn’t hamper his performance. He went to Khwevha High School for grades 11 and 12.

He continued to excel and fondly remembers Mrs Ludolf, “a missionary-type educator” and her

accounting lessons. Her lessons and motivational talks set him firmly on the route to become a chartered accountant, he says.

Edson studied at the University of the North, now the University of Limpopo. When he was a student, it was the university reserved by the apartheid regime for Sotho, Venda and Tsonga people, and was also known as “Sovenga”. Student leaders like Tito Mboweni, later Reserve Bank governor, and many others led anti-apartheid protests, but Edson laid low. “The campus was a nucleus of everybody from everywhere,” he explains. “Besides,” he chuckles , “the guys from Soweto and other urban areas were more connected and streetwise so I just stayed in the background.”

“The few graduates that I knew went to do articles at Deloitte Haskins & Sells (now Deloitte) at the time (which is testament to how long ago they saw transformation as a business imperative), so I wanted to

go to a different firm,” he says. After half a year of trying with no success, Edson gave up, applied to Deloitte, was interviewed by Dr Hennie Van Greuning, and articled with them, subsequently working for Eskom and South African Breweries. “Then 1994 happened. We were already thinking about starting our own practice. Our first attempt in 1990 failed but in 1995 we didn’t falter. We got bank loans and got going.”

With partners Moses Kgosana, Tshidi Mokgabudi, Themba Tshikovhi and, of course, himself, KMMT instantly became the biggest black audit firm by number of partners. Gill Marcus – who went on to become another Reserve Bank governor – spoke at the KMMT launch event. The courting by big firms started. “Our first job was with Nedbank Property Group. I still remember their largest project at the time, a multi-use complex next to Fourways in Johannesburg. We went in with all four partners to do the work. It was such good work.”

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“It is not only size that matters. It is about sustainable change, where enough black partners are standing in front of key clients.”

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PUBLIC SECTOR The Auditor-General also provided the company with “wonderful opportunities” to do audits on their behalf and Edson’s long relationship with the public sector started. “I was the audit delivery guy and Moses was our front man. I am not very outspoken, but I build good relationships with clients and ended up doing audits like Denel Aviation and the City of Johannesburg.”

“My strength is working with people, listening to them and then trying my utmost to deliver. You need to be very transparent, because public sector auditing, with its expanded focus, is always a sensitive relationship and you need to diplomatically discuss inconvenient truths. It needs to be clear that my work is never personal or about what I think, it is about the information put in front of the audit team.”

Edson doesn’t consider the acquisition of KMMT by KPMG in 2002 as the end of an adventurous dream.

“We always wanted to make a difference. The number of black accountants in the country was low and is still low, so we wanted to play a part in increasing these numbers. We also wanted deep skills and could not scale-up quickly enough. We wanted transformation to be even more impactful – so we ended up joining KPMG. The merger added real impetus to transformation at KPMG and the appointment of Moses Kgosana as the first black African CEO of a big four firm was a highlight, which accelerated transformation in ways that we have not fully comprehended! Moses led from the front, identifying and promoting many black partners. In the last few years enormous transformation strides have been made across the accounting profession.”

Can we call KPMG the biggest black audit firm now, since it has more black partners and staff than SizweNtsalubaGobodo or SekelaXabiso? “It is not only size that matters. It is about sustainable change, where enough black partners are standing in front of key clients. In

that sense, even as one recognises the progress being made, the need for transformation in South Africa is far from over,” says Edson, who values the independence of ‘Sizwe’ and ‘Sekela’. “The emerging firms have been change leaders in transformation and are keeping the pressure on the profession by demonstrating their capability – and they are continuing the articulation of new ways to transform faster and sustainably.

Collaborating through the Association for the Advancement of Black Accountants of Southern Africa (ABASA) and other forums have put the accounting profession ahead on many levels.”

After the merger Edson went to Pretoria, where he ended up heading the KPMG practice with considerable success. “We pitched, we won and we delivered,” he recalls. He was then asked to head up KPMG’s audit practice. “I was scared,” he admits, adding that fear is a good thing. “If I am not scared, I am not able to deliver optimally. You have to be frightened of your job a little to keep yourself true. Once you think you can do it with your eyes closed, you are in trouble.”

While long-time pal Moses Kgosana stepped down as KPMG’s CEO earlier in 2015, Edson has stepped up – from 31 August – into the “toughest job” around, heading up the KPMG service offering for government, infrastructure and healthcare. “My approach is firstly about the quality of work, including the time and cost an audit or project involves,” Edson says. “Secondly, we need to link our work to the top outcomes of the client, because then we add real value.

What do the clients worry about? If it is youth unemployment, what can we do beyond our annual intake of trainees?”

The third thing KPMG will focus on in its public sector work is sustainability, Edson says. “As a consultant, I get worried when I see a consultant working on the same problem at the same client for very long periods – years and years. That gives consul-

tants a bad name. If a project starts at day one and the end date is day 365, you try to finalise by day 340 or so. Every project should have a finite date and needs to create a positive story. KPMG is known for good audits, financial services, clean audit projects, internal audits and forensic investigations. Our public sector advisory work in a more sustainable way to ensure that each project we undertake adds credibility and social acceptance for our clients.”

Breaking the consultant curse will be music to the ears of public sector CFOs, who are struggling to do a lot with little. Edson says he’ll go out of his way to get to know CFOs, DGs and the supply chain professionals.

“When we have a meeting with a CFO, I need to know what is bugging him or her. My team needs to know ‘it is this time of year, the public sector CFO is busy with this aspect of his work’. When I meet a municipal CFO I need to know – confidently – what things should be going on in his or her working life at that point in time.”

“There is a lot of giving back to do, when I retire.”

Although Magondo is now a big man instead of a tiny boy, he hasn’t become a massive celebrity in Venda, “although people know about me,” he admits. The chance that he’ll ever retire to his nascent protea plot or his ancestral village on the other side of Thohoyandou is slim though. “I can’t be that far out in the beautiful woods, because when I leave KPMG I want to get back into the public sector on the other side and sit on audit committees (having previously chaired the audit committee of the department of Correctional Services when Mr Linda Mti was DG). There is a lot of giving back to do, when I retire.” l

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FINANCE TRANSFORMATION

BY EBRAHIM MOOLLA

Weapons of mass disruption After dazzling CFOs and other top Finance professionals with a barrage of inspiring technological innovations, visionary speaker and entrepreneur Martijn Aslander sounded the clarion call for a people-centred digital revolution. “In the next 10 years, the world will have changed more than it has in the last century.”

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uring CFO South Africa’s Get Smart in 2015 events in Johannesburg and Cape Town, Aslander warned that the future belongs to a new breed of entrepreneur - those who are prepared to unleash “weapons of mass disruption”, taking aim at the (business) world as we know it. “These are dangerous people. They are not in it for the money and don’t even have a business model – all they want is to improve the lot of humankind. The only competitive advantage a company really has is the ability to learn.”

The Dutch livewire spoke about digitisation and crowd sourcing and condemned the ruthless profiteering of hyper-capitalism. “In the future, it is no longer about what you own or what you do, but about your attitude and ability to adapt,” he said during the event on 17 February 2015 in the

building of the JSE Limited in Sandton, which was followed by a similarly well-received presentation at the Cape Town Club two days later.

In a simple but profound example of the dearth of digital skills in many large companies, he pointed to the legions of employees who attain a basic proficiency in Microsoft Outlook and other email clients without ever trying to advance their skillset to enhance productivity. “I go through 400 emails and monitor 900 websites every day, even though I spend most of my day attending meetings and am at my computer for an hour at most. The secret is in how you filter all this information,” he said, before demonstrating how he uses voice commands to respond to emails. This is the essence of his ‘lifehacking’ philosophy: “Accomplishing more in less time, with less stress, at lower cost with the use of simple digital tools.”

Brett Tromp (Discovery), Greg Davis (Standard Bank), Deon Fredericks (Telkom), Frank Rizzo (KPMG) and Martijn Aslander discussing the digital revolution.

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In his introduction, Aslander, a renowned motivational speaker, author and explorer, told the CFOs that the world was experiencing a new Renaissance, a golden age fuelled by

“Accomplish more in less time, with less stress, at lower cost with the use of simple digital tools.” the cumulative power of networking.

Unencumbered by financial jargon, he spoke of revolutionary personal healthcare gadgets like the SCIO handheld molecular scanner and the Scanadu Scout, a tiny device that is able to measure your heart rate, breathing and temperature with minimum fuss.

Aslander also mentioned the incredible IBM Watson, a supercomputer with the power to decipher the cryptic clues needed to succeed on the American game show Jeopardy and to devise a recipe for the world’s best chilli sauce in a matter of milliseconds.

He highlighted the achievements of electric car manufacturer Tesla Motors and space travel pioneer SpaceX, along with those of founder Elon Musk, who has released his patents into the public domain as a catalyst for development. He encouraged the audience to visit the “most disruptive website on the planet”, Instructables, which allows its users to painlessly share and access information on all manner of complex subjects. l

FINANCE TRANSFORMATION

BY JOËL ROERIG

6 technology trends CFOs can’t afford to ignore KPMG Technology Sector Leader for Africa Frank Rizzo delivered a Master Class on trends in data analytics, business intelligence and technology at our Get Smart events in Johannesburg and Cape Town.

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n his introduction, he outlined six key tech trends that are shaping the business landscape:

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Cloud computing – Internet-based access and exchange to resources coupled with web-based access to low-cost computing and applications is proving to be a disruptive force on the African continent.

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Cyber-security – Rizzo identified this as a leading trend in 2015 as cybercrime escalates and governments intensify their efforts to secure state assets. As an example, he mentioned the unprecedented $1 billion bank cyber-robbery by a multinational gang of hackers.

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Gamification – “Making a game of how we interact with our customers as businesses and our workforces is changing the nature of corporate communication,” said Rizzo, citing Discovery’s innovative points-based car insurance scheme as an example.

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Mobile Communication – “Across the continent, mobile is exploding, offering opportunities to access business services and content,” he said.

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Social Media – Linked to the rise of mobile, Rizzo said the uptake of social media in Africa was “encouraging” and was creating a revolution in customer relations.

Frank Rizzo (KPMG)

Rizzo quelled Fredericks’ fears that technological advances would have a negative impact on South Africa’s already woeful unemployment rate.

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Data and Analytics – The influx of various data and matching internal data with externally sourced information will open up a range of opportunities.

Rizzo was later joined by CFOs Brett Tromp (Discovery Health), Greg Davis (Standard Bank Africa) and Deon Fredericks (Telkom), as well as ‘lifehacker’ Martijn Aslander, for a lively discussion and to field questions from the assembled captains of industry.

In response to a query from Tromp about how much resources should be allocated to cyber-security, Rizzo said it was dependent on the value of the data that need protection.

“How much value do you need to protect? Remember that it is a question of when, rather than if, when it comes to cyber-security breaches.

The best way to go about it is to find the core data that needs protection and leave the rest to the public domain,” he said.

“Technology will create jobs we cannot even dream of right now.”

“Technology will create jobs we cannot even dream of right now.

The power of machines and the ingenuity of human beings can be formidable,” said Rizzo. He agreed with Fredericks that formal education for accountants and other finance professionals needed to be revamped to allow them to cope with the fast pace of change and develop a more creative outlook on business. l

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MOVING INTO AFRICA

BY JOËL ROERIG

Tackling tax in Africa Never speak to the tax authority in an African country without an advisor present, make better use of tax incentives and familiarise yourself with the local tax law and the people who enforce it. Those were some of the lessons learnt during KPMG’s Moving into Africa Master Class on 19 March 2015.

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uring the CFO South Africa event in the Michelangelo Hotel in Sandton, CFOs received a comprehensive overview of African tax affairs from some of the brightest tax minds on the continent.

It was Devon Duffield, Chairman: Tax & Legal at KPMG, who kicked off proceedings by emphasising that three completely different tax bases are used in Africa: Napoleonic law in the West, English Common law in the East and Roman-Dutch law in the South. He noted that more and more businesses and CFOs are looking at expanding into Africa, but that many are still nervous about the investment climate.

Lack of familiarity with the tax landscape in African countries can strike fear into Excos, with the most often cited tax worries being withholding taxes and Base Erosion and Profit Shifting (BEPS), commonly known as transfer pricing. According to the Africa Tax Administration Forum (ATAF) between $500 billion and $800 billion leave the continent irregularly each year. In most countries that number is higher than the aid they receive.

More and more countries are creating or im-

While tax systems in African countries, especially in West and Central Africa, are not very sophisticated, that is changing now 20

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proving legislation to encourage and enforce tax being paid in the correct country, something that will be relevant for pretty much every single investor in Africa.

While tax systems in African countries, especially in West and Central Africa, are not very sophisticated, that is changing now, Duffield explained. Increasing tax revenue is often seen as one of the best ways for Third World countries to make a leap forward.

“These days the majority of western aid is going to projects to help countries to set up systems,” Duffield said. While he encourages good relationships with tax authorities, he insists local tax consultants should always be present: “At KPMG we don’t allow a conversation between a client and a tax authority unless a senior tax partner is present.”

“At KPMG we don’t allow a conversation between a client and a tax authority unless a senior tax partner is present.”

According to Duffield’s KPMG colleague Venter Labuschagne, Head: Trade & Customs, many CFOs underestimate the importance of managing customs duties, while often being preoccupied with seemingly ‘bigger’ issues. “Africa has the highest rates of customs duties. They are easy to collect, so that is what authorities focus on. It is not

Louison Kiyombo

MOVING INTO AFRICA

Victor Onyenkpa (KPMG)

on the radar of the CFO, though. It is often left to the department that handles logistics. Most businesses leave customs to their freight forwarders or couriers, but they have no interest in lower rates,” said Labuschagne, calling on CFOs to get actively involved in managing customs duties.

Labuschagne also signalled a trend of fewer tax exemptions, for example for the extractive industry. Trade regions such as the Southern African Development Community (SADC), Economic Community Of West African States (ECOWAS), East African Community (EAC) and the the Common Market for Eastern and Southern Africa (COMESA) are also growing in importance. “They are getting more tight-knit,” Labuschagne said. “A very exciting development is the Tripartite Free Trade Area. SADC, EAC and COMESA are in a very advanced stage of negotiations for a free trade area encompassing 26 countries.” In the next article in this CFO Magazine, Labuschagne outlines the opportunities and challenges the creation of this Tripartite Free Trade Area (TFTA) provides.

Africa experts Bikash Prasad (CFO Olam International), Greg Davis (CFO Africa Standard Bank) and Sean Bennett (Head of UBS South Africa and Sub-Saharan Africa) also contributed their insights to the Master Class. Prasad has had a hand in $1 billion of Olam’s investments in the continent so far, and successfully turned around disappointing business performance in South and East Africa, by closing 11 businesses, reducing overheads and reducing risk exposure to cotton. He also modernised IT and localised the finance teams in African countries. “We are often at an disadvantage, because we compete with informal trade and underdeclaration by competitors,” Prasad said.

Davis is a regular contributor to the CFO South Africa website, CFO.co.za. His Expert Insight contributions focus on four business principles for doing business in Africa: being in control, interacting, influencing, and getting the most out of infrastructure.

“Doing business in Africa is not for the faint-hearted, but I see incredible talent in Africa,” Davis said during the Master Class.

He added that Standard Bank is trying to play a role in helping tax authorities in African countries align their practices.

The real detailed, practical value of the Master Class came from the last three KPMG presenters, Victor Onyenkpa (Partner Nige-

ria), Richard Ndung’u (Partner and Head of Tax Kenya) and Louison Kiyombo (Head of Tax and Legal DRC). They spoke about the challenges, pitfalls and opportunities in West, East and Central Africa and replied to a question by UBS’s Sean Bennett about the possibility to get a pre-ruling on tax matters.

In East Africa and Ghana this seems to be working quite well, while tax authorities in Nigeria and the Democratic Republic of Congo might give an ‘opinion’ on a tax matter, but no binding point of view.

Victor Onyenkpa further explained that in West Africa 100 percent foreign ownership of companies is usually not a problem, unless you are in the oil or mining industry.

Corporate tax rates hover around 30 percent and there are a number of sectors – like low cost housing in Ghana and tourism in Sierra Leone – in which investors can enjoy ‘tax holidays’. Restriction of profit repatriation is almost non-existent in West Africa and tax authorities are getting more approachable by the day.

The Kenyan Revenue Authority can issue advance tax rulings on contentious issues, while tax authorities in Nigeria might give an ‘opinion’ on a tax matter, but no binding point of view.

In East Africa, the Kenyan Revenue Authority (KRA) is the most aggressive and influential and agencies in other countries often look up to it as “big brother”, Richard Ndung’u said.

Kenya is in a process of implementing e-filing, e-payments and e-registration platforms and can issue advance tax rulings on contentious issues. Tax Revenue Appeals Tribunals have been established for the resolution of tax-related issues. Rwanda has built investment centres that function as one-stop shops for businesses, while other East African countries have similar initiatives. l

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MOVING INTO AFRICA

BY VENTER LABUSCHAGNE, HEAD: TRADE & CUSTOMS AT KPMG AFRICA

26 African countries launch initiative to scrap duty and quotas.

Free trade revolution The establishment of a free trade area in 26 African countries is going to be a revolutionary development for the continent. In this article, Venter Labuschagne, Head: Trade & Customs at KPMG, outlines the opportunities and challenges the creation of the Tripartite Free Trade Area (TFTA) provide.

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usinesses engaged in intra-African trade, and those with aspirations to grow their businesses into new markets on the continent, are holding their breath for a big announcement on the establishment of a major free trade area, spanning the entire length of the continent.

“Businesses are considering the opportunities offered by the TFTA as being paramount in planning their African expansion strategies.”

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The big announcement, expected as soon as May 2015, will officially launch the Tripartite Free Trade Area, commonly referred to as the TFTA, covering almost half the continent’s countries, with a combined population of some 625 million people, and a GDP of almost US$1 trillion. The announcement on the launch of the TFTA is the culmination of 10 years of negotiations between member states of 3 regional economic communities, being the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), and the Southern African Development Community (SADC).

The member states of the TFTA are Angola, Botswana, Burundi, Comoros, Djibouti, DRC, Republic of Congo, Egypt, Eritrea, Ethiopia, Kenya, Lesotho, Libya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Rwanda, Seychelles, Swaziland, South Africa, Sudan, Tanzania, Uganda, Zambia and Zimbabwe.

Venter Labuschagne

MOVING INTO AFRICA improvement of operational efficiencies of border crossings and seaports are important factors in speeding up economic development and facilitation and expansion of inter-regional trade, as well as trade with the rest of the world; and • free movement of business persons within the Tripartite region to facilitate the conduct of business.

The ultimate objective of the TFTA is to establish duty and quota-free treatment of all products meeting the origin requirements of the TFTA agreement. The movement of such goods between member states will also be free of quantitative restrictions. Negotiations are ongoing on the rules that will determine if products have origin status, thus qualifying for free movement as envisaged, but timelines for implementation have not been finalised.

The TFTA is a major step towards the realisation of the African Economic Community.

The objectives of the TFTA rest on the following pillars: • harmonisation and improvement of functionality of regional trading arrangements and programmes, including establishing a Tripartite Free Trade Area encompassing its 26 member countries, which is a major step towards the realisation of the African Economic Community; • enhancement of trade facilitation to improve the flow of goods along transport corridors by lowering transit times and the cost of trading. Significant progress is already being achieved on the North South Corridor, which has been implemented as a pilot since 2007; • joint planning and implementation of infrastructure programmes which include surface (road, rail, border posts, seaports) and air transport, ICT and energy. The enhancements of physical interconnectivity through infrastructure development and

Discussions around the principle of “variable geometry”, allowing countries to progress to full integration along different timelines, are also proving to be problematic. It is foreseen that full implementation of the TFTA agreement can take up to 8 years.

Despite these factors, businesses are considering the opportunities offered by the TFTA as being paramount in planning their African expansion strategies. From an investment perspective, African companies are now, second only to Western Europe, the biggest investor in Africa, accounting for 22 percent of Greenfield investment on the continent. Measured in deal volume, African Mergers and Acquisitions account for the biggest number of deals, and 21 percent of South African foreign direct investment is going into Africa.

The area covered by the TFTA: Intra-African trade does, however, face a number of challenges, not least of which is the lack of trade finance when it comes to transactions being concluded, or having the potential of being concluded, on the African continent. This is featuring prominently on the agenda of the World Trade Organisation, with Director-General Roberto Azevêdo, in opening the seminar on “Trade Finance in Developing Countries” at the WTO on 26 March 2015, pointing to a recent WTO Secretariat paper indicating that trade financing gaps are “the highest

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MOVING INTO AFRICA

The WTO estimates that the value of unmet demand for trade finance in Africa is between $110 and $120 billion. in the poorest countries, notably in Africa and Asia”. He said that “lack of development in the financial sector can be a significant barrier to trade”, and told participants “let’s redouble efforts to work together and resolve this problem”.

Azevêdo noted that trade finance availability had largely returned to normal in major economies after the global financial crisis, but that smaller companies, in less developed countries are finding it more difficult than ever to access such finances.

On the issue of such financing gaps, Azevêdo said: “I was particularly struck by the fact that the financing gaps are the highest in the poorest countries, notably in Africa and Asia. And I was struck by the size of those gaps.

A survey by the African Development Bank of 300 banks operating in 45 African countries found that the market for trade finance was somewhere between $330 and $350 billion.

It also found that this could be markedly higher if a significant share of the financing requested by traders had not been rejected.

Based on such rejections, the estimate for the value of unmet demand for trade finance in Africa is between $110 and $120 billion.

This gap represents one-third of the existing market.

The main reasons for the rejection of requests for financing were: • the lack of credit worthiness or poor credit history, • the insufficient limits granted by endorsing banks to local African issuing banks, • the small size of the balance sheets of African banks, and • insufficient US dollar liquidity.

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Some of these constraints are structural, and can only be addressed in the medium to long term. The retreat of global banks from Africa, and from other poor countries, is one such issue.”

From a tax perspective, the landscape facing companies operating on the continent is also constantly changing. The debate around Base Erosion and Profit Shifting (BEOS) is gaining momentum, and a large number of countries have, in the last 3 years, introduced stringent anti-avoidance and anti-tax haven rules. The last 5 years have shown a reduction in corporate income tax rates from 30.6 percent in 2009, to 28,6 percent in 2014.The UN has however set a target for African countries to achieve tax collections of at least 20 percent of GDP. Not surprisingly, Zimbabwe currently tops the list of tax collections as a percentage of GDP, at 49 percent. South Africa has achieved 27 percent, while Kenya is at 18 percent, and Nigeria and Angola are lagging at only 6 percent. With the fall in oil revenues, however, tax revenue collection has received considerably more government attention in these countries.

Notably, as tax systems are becoming more sophisticated, revenue authorities are becoming more aggressive. The Africa Tax Administration Forum (ATAF) is now 38 countries strong, and mechanisms have been put in place to promote mutual cooperation between countries, and improve efficiencies in tax collection. The Forum also allows member countries to freely exchange tax payer information, improving enforcement of tax laws across the continent. International organisations such as the World Bank, IMF and UK DFID are providing funding to revenue authorities to improve collection capacity, and broaden the tax base. In a survey recently conducted by KPMG within the CFO community, respondents have listed the capacity, capability and accessibility of the revenue authorities on the continent as being the biggest challenge when doing business in Africa.

All things considered, these are indeed interesting and exciting times to be doing business on our continent! l

EXPERT INSIGHT

BY NEIL MORRIS, YOLISWA MSWELI AND SARAH BALL, KPMG SOUTH AFRICA

What is your Social Return on Investment?

How does measuring your Social Return on Investment add value to businesses?

Neil Morris (Director, Financial Risk Management) and his KPMG South Africa colleagues, Yoliswa Msweli and Sarah Ball, list 5 examples.

W

hether social investment is central to your business or not, it is undeniable that all companies have social touchpoints, which mean that companies influence, and are influenced by, the societies in which they operate.

Reasons for focusing on social development differ from organisation to organisation. For some, social investment and stakeholder engagement is centred around maintaining a social licence to operate and reduce stakeholder risks, while for others it may be more relevant in terms of galvanizing employee morale and engaging staff, or showing visible commitment to national imperatives such as the National Development Plan. Many companies carry out social investment activities to strengthen their pipeline, both of material supplies and skilled employees.

Regardless of the motives, these are all strategic imperatives for your company and should be taken no less seriously than other decisions made at a strategic level. Social

Return on Investment (SROI), which quantifies the impact of your social investments and determines the socio-economic returns it creates, is one way of elevating conversations about social investment appropriately.

It allows the formation of a ratio between the investment made and the return achieved, as well as being able to identify to which stakeholder this value has accrued.

Our experience working with social investors, and more specifically, working with SROI, has revealed a number of ways in which these types of analyses are able to add value to businesses directly: 1. It feeds directly into your business strategy: Knowing which initiatives achieve the most impact and have the greatest positive effect on the intended stakeholders allows the decisions around social investment to be made from the same sound fact-base as other business decisions. This means that funds can be spent more effectively, achieving greater value for money, and essentially allowing a company to ‘do more with less’.

Many companies carry out social investment activities to strengthen their pipeline, both of material supplies and skilled employees.

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EXPERT INSIGHT

1. SROI evaluations can also be carried out predictively, giving an indication of the likely benefit of an investment, and a clear understanding of which stakeholders are positioned to benefit most. This can save significant waste of social investment funds as the initiatives are far more likely to achieve the desired impact if they have been selected on the basis of their predicted ability to do so.

2. It is able to ascribe a financial value to social impact of development activities, which enhances the reporting capacity and degree of transparency in the integrated reporting process. Although most of the capitals lag far behind financial capital in terms of their ability to be objectively reported, understood and compared, the momentum being gained by tools such as SROI bodes well for a more holistic approach to understanding the value being created by business, increasing the value of the integrated report.

3. It helps to identify risks in your social investment processes and implementation plans. This is particularly relevant where separate legal vehicles such as Trusts, Funds and Foundations are used which, completely unlike any other business functions, are penalised for underspending. As a result, these vehicles often disburse money under pressure, which leads to it not being spent strategically, and without appropriate due diligence processes.

If the intended return is not being achieved, or if it is accruing to stakeholders other than those intended in the project design, a flag is raised as to possible irregularities which, if identified early, mitigate reputational and stakeholder risks.

Leading from this, it affords members of the Social and Ethics committees the tools to treat their fiduciary duties with regards to social investment with the same gravity and objectivity as other Board committees manage their respective portfolios.

4. It gives you a clear understanding of WHO is benefiting from your investments, and how much of this benefit is attributable to you: Is most of the value accruing to the company? To project beneficiaries? To government? Is this who you were hoping would benefit? Knowing this helps provide

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It gives you a clear understanding of WHO is benefiting from your investments a platform to create partnerships with the beneficiary stakeholders, or leverage the positive impact you are making on them to achieve greater value for your own business. It also gives you grounds to alter your investment if the desired beneficiaries are not being reached.

In order to work out what percentage of the impact achieved is attributable to you, the SROI methodology takes into account attribution and counterfactual information (information that tells you about the contribution of others, as well as what would have happened regardless of your intervention). This informs the degree to which you are responsible for any impact experienced. In this way, you are able to understand how much credit you are able to take for impacts created, as well as to know who is responsible for the remainder, once again forming a valuable basis for decision making and the creation of partnerships. If this information is taken into account predictively, it is able to enhance impact, decreasing any waste that would have taken as a result of duplication and laying the foundation for constructive partnerships before the project begins.

5. It provides a consistent measurement tool: Although the number of SROI assessments carried out to date is not large enough to have allowed for the development of robust benchmarks and points of comparison, the growing body of case studies is building a sound basis for shared learning and year-on-year comparison of the social investment portfolio of an individual company. Eventually, this will translate into a large enough pool of studies for companies to compare their projects with one another, strengthening the response of business to the country’s most pressing social issues and, in turn, creating a more stable society in which business is able to function more effectively, as well as continuing to drive improved value for money in the social investment arena. l

STRATEGY & GROWTH

Taking CFO events to the next level CFO South Africa’s events have really made a leap to the next level in 2015. Elsewhere in this magazine there are reports on the CFO Awards (p6) and our October event on digital transformation (p32). Here’s a summary of the CFO get-togethers in June, July and September.

Business partners Our 25 June event took us to KPMG’s Wanooka Place and provided “really stimulating and brilliant discussion”, as CFO of the Year Deon Viljoen (Alexander Forbes) called it in closing.

The afternoon saw a star-studded line up and provided a platform for deep and meaningful conversations about the way CFOs can influence and drive growth as business partners.

Keynote speaker was Sasol CFO Bongani Nqwababa, who spoke about the reorganisation he led at Anglo American Platinum (see interview p57). “Success is adding value to yourself,” Bongani said. “But significance is adding value to others.” The discussion was energetically moderated by whirlwind business speaker Vusi Thembekwayo, with valuable input by JSE Limited CEO Nicky Newton-King and property mogul Marc Wainer of Redefine Properties.

Effective growth Alexander Forbes CFO Deon Viljoen was back during our 30 July event at the Nedbank headquarters in Sandton to share how he dealt with the turbulent recent history at the country’s biggest pension funds administrator (see interview p12). The ensuing panel discussion, led by our own Graham Fehrsen, turned into a conversation about risk, with Anthonie de Beer, partner at Ethos Private Equity, emphasising the leadership role the CFO has to play as a “cornerstone of integ-

rity”. Karel Janse van Rensburg, executive head: finance and strategy at Nedbank’s Corporate Investment Banking advised to “always trust your gut. Don’t let it go, don’t let it grow but deal with it.” Natalie Kolbe, partner South Africa and West Africa at Actis, said that “you need an internal structure to deal with risk, but the real test is what you do about the external environment”.

Planning, budgeting, forecasting On 17 September at the 54 on Bath hotel in Rosebank, KPMG’s Charl du Toit opened with an insightful presentation about planning, budgeting and forecasting (see his guest article on p19). Individual presentations by Derik Rothman (Futuresense), Seldon Goodwin (Ethoss), Carl Janse van Rensburg (Intellient) and Zafar Mahomed (CFO of McDonald’s SA) each offered further insight into the topic.

Armin Moradi, territory manager financials for South Africa Oracle, led attendees through research he conducted into the status of PBF in South African companies, having interviewed some 100 organisations.

A select number of CFOs attended simultaneous roundtable sessions, discussing what their companies would look like if Steve Jobs was in charge. KPMG technology ace Frank Rizzo chaired one of those sessions, while the always impressive CEO Victor Sekese of SizweNtsalubaGobodo enthralled a group of public sector CFOs. l

Visit cfo.co.za become a member and join us at our events!

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STRATEGY & GROWTH

BY CHARL DU TOIT

Using integrated business planning as an approach to develop your organisation as a leading planning, budgeting and forecasting practice

Drive better business decisions In the majority of organisations, planning, budgeting and forecasting (PBF) processes are flawed.

KMPG’s Charl du Toit suggests that a fully integrated planning process is essential to deliver full benefit and value from the planning process – and help your organisation achieve its goals.

A

common theme at KPMG is seeing in its client base is that the planning function is placed under stress from a variety of sources. These include internal pressures, such as organisational complexity, skills shortages, disparate systems and governance issues, as well as external pressures, such as market forces and expectations, geographic requirements, and disruptive technologies.

In the face of these challenges, current PBF processes are characterised by a large investment in sub-optimal processes which do not meet the strategic or operational needs of the business. Instead, they should be investing in fully integrated planning processes, like Integrated Business Planning.

Some of the key challenges for organisations are: •

•

•

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Inconsistent planning processes – different approaches to planning across the organisation means different understandings of key measures, and inconsistent methods leading to disconnected plans.

Planning and forecast accuracy – the budgets and forecasts delivered were not particularly accurate, which causes concern both internally and externally.

Integration of actuals and plans – some organisations struggle to integrate the plans with the actual data, because they don’t have a single planning platform, and do have a number of disparate source systems. This makes it difficult to accurately report on performance against plan.

WHY SOUTH AFRICA LAGS BEHIND In South Africa, the PBF processes lag far behind other developed countries.

It takes South African companies eight to 12 weeks to complete a budgeting cycle. It takes European and North American countries companies an average of four weeks to do the same.

One of the reasons for this much longer budget cycle time is that South African companies underuse rolling forecasts. A survey by Oracle found that 84% of South African companies do not do any form of rolling forecasts and, even worse, 74% of South African companies do no forecasting at all. Effective forecasting means the forecast can inform the budget and lessen budget cycle time, and if done correctly a rolling forecast can supplant a budget completely, where a version of the forecast becomes the budget.

If this is used in conjunction with a standardised budgeting platform (61% of South African companies do their budgets on Excel), combined with a true integrated business planning approach to planning, South African companies have a huge opportunity to improve and gain true value from the planning process.

STRATEGY & GROWTH

plementing standard planning technology platforms, and moving away from Excel and siloed planning systems. This helps ensure consistency in approach, definitions, and the use of consistent planning methods.

Companies are starting to implement certain measures in the PBF processes in order to address these typical issues. Some of the key trends are: •

•

•

•

Process standardisation – companies are standardising their planning approach across the entire organisation to ensure consistency in method and interpretation of results, and to ensure all areas use the same definitions of key metrics.

Reduction of planning content – organisations are planning on less line items, focusing on the key items which have the most impact on results. This goes hand in hand with using value-based driver models, which lessens the amount of input required and calculates more detailed plans based on the well-defined drivers.

Less budget and more forecast – organisations are moving away from a once-a-year budget process and implementing monthly or quarterly rolling forecasts which are more dynamic and provide more timely feedback on performance.

Use of a standard technology platform – organisations are im-

KPMG has analysed some of the global organisations recognised as leaders when it comes to their PBF processes. Some of the behaviours which were common across these organisations include the following: •

•

•

Rolling forecasts – every single one of the leading practices made use of rolling forecasts, usually on a monthly basis. This means they have a completely up-todate view of how performance is tracking and are able to adjust targets and expectations more frequently in response to changing environments.

Value-driven budget models – the leading practices defined budget models based on the key measures which drive performance and the model calculates the more detailed items automatically.

Align budget to KPIs – planning is done on key indicators linked

•

•

•

•

to strategy, not purely on the financial account structure.

This ensures the plan can be used to measure achievement of strategy.

High level of accuracy vs good enough – the leading practices insist on having forecasts and budgets of a high level of accuracy and do not accept ‘good enough’ plans.

Variance analysis aligned with business imperatives – Variance analysis is not just an automatic actual vs plan report for every single line item, but rather focused on measuring the variance of key indicators, as dictated by the business imperatives relevant at that specific point in time.

Collaborative target setting – targets are set through a collaborative process which ensures there is buy-in and ownership of targets, and not something forced down from above.

Fully integrated ERP and EPM environments – there is full integration between the ERP and planning systems, making it possible to import actual data for proper analysis of performance, and to use this to adjust forecasts using the latest available data.

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STRATEGY & GROWTH can an integrated planning model be realised.

3. Improve business decisions – Due to the alignment of planning processes, having a common platform, understanding of measures and results, being able to know results sooner and being able to perform better analysis, implementing IBP correctly will drive better business decisions.

•

•

Fully trained, empowered employees – leading practices ensure the employees involved with the planning process are firstly fully trained to use the available technology and secondly, are empowered to take ownership of their plans.

Use enabling technologies – leading practices all make use of some kind of common, central planning platform, and not disparate, Excel-based processes. This drives consistency in approach and definition of measures and methods.

Integrated business planning In order to address these challenges in the PBF process, and to assist organisations to move towards becoming leading PBF practices, KPMG suggests that companies implement an integrated business planning (IBP) approach. IBP aligns strategic planning, financial planning, and other operational planning activities such as supply chain, sales, marketing and product development planning into a unified planning operating

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model in order to make proactive business trade-offs and improvement decisions.

IBP creates value by realising three specific objectives to support improved financial performance: 1. Integrate planning activities – IBP aims to integrate all the different levels of planning activities, i.e. strategy, finance, sales, product and operations planning, into a single model, to drive common approaches and make it easy to share data between different activities to ensure consistent results.

2. Understand key business drivers – For an integrated model to work across all levels, it is vital to have a shared understanding of key business drivers. It is a truism in the PBF field that the more important a measure is to the organisation, the more different definitions there are of what it actually means. Only through a common understanding of these key drivers

“IBP connects strategy with execution and intent with outcome and it makes it possible to accurately and quickly measure this.”

In short, IBP connects strategy with execution and intent with outcome, and makes it possible to accurately and quickly measure this. IBP harmonises financial and operational processes with customer demand, enables organisations to optimally collaborate and address cross-functional business decisions, and delivers alignment of planning and execution processes to improve predictability and financial perfor

STRATEGY & GROWTH mance. A key aspect of IBP is that it impacts all aspects of financial statements, and does not just provide a sales or expenses plan.

IBP leading capabilities In order to effectively implement IBP, the KPMG IBP operational model provides guidance to the leading capabilities required. These capabilities, if developed correctly, will help ensure your organisation can implement a proper IBP model, which covers all the required bases.

These capabilities are organised according to the key objectives for IBP as outlined above.l

“ 84% of South African companies do not do any form of rolling forecasts and, even worse, 74% of South African companies do no forecasting at all.�

How to approach implementing IBP at your organisation It might seem like a huge task to implement IBP at your organisation. Taking a sub-optimal planning process, which might suffer from most, if not all, of the issues discussed earlier, and changing that into an IBP model which delivers on the promised benefits might seem like too much to take on. However, at KPMG we can assist and we have an approach which has proven effective to do exactly this.

Like all large transformations, we do not suggest you do all at one, but rather take a step-by-step approach. Our suggested approach covers the following areas:

1. Develop your current PBF state hypotheses Analyse your current PBF processes and determine the current state. At KPMG we have industry benchmark databases which are used to benchmark your planning function against your peers, which helps identify problem areas.

2. Prioritise key IBP gaps and opportunities This is done by firstly doing a maturity assessment of your existing planning environment. This is done by plotting the planning maturity against 12 key dimensions which helps sketch a picture of how mature your processes are across various key elements. After this, key gaps are identified and prioritised based on the business impact and level of effort for each of these.

3. Develop a planning transformation roadmap The desired future state for planning is developed using the IBP framework, as well as guiding principles relevant to the organisation such required timing, accuracy targets, etc. A governance and role matrix is develop to align key stakeholders and ensure everyone required is involved.

Execute on key initiatives and embark on the transformation journey. Based on the roadmap, execute quick wins, measure the success of these, and maintain momentum by continually adding to and improving the IBP environment.

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TECHNOLOGY CFOs discuss big data at October event

Asking the right questions Working with big data can enable CFOs and their companies to innovate, interrogate and turn the finance department in a profit centre, rather than an expense. This only starts to yield results, though, when BI allows finance bosses to “answer sufficiently interesting questions”.

T

hat was one of the conclusions at the inspiring Master Class of CFO South Africa’s Finance Transformation event on 22 October 2015 at The Forum in Bryanston, Johannesburg.

In a parallel exclusive roundtable session Microsoft South Africa’s CFO Paul Marten discussed the practicalities of big data with a carefully selected group of his peers. Moderated by our own MD Graham Fehrsen, the discussion touched on Microsoft’s exciting data analysis at Spanish soccer club Real Madrid, the need to know how to make pizzas and the cold fact that finance transformation will stall if you don’t get buy in from your own people.

Great insights from Microsoft CFO Paul Marten and KPMG partner Alida Taylor

Meanwhile, the Master Class was kicked off with a very insightful presentation by Alida Taylor, a partner at CFO South Africa’s principal sponsor KPMG. She told CFOs to take

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charge of finance transformation, especially now big data is starting to play an increasingly big role. “If you don’t take the lead, the IT department will, but that is not right, because data and analytics should sit firmly within the business.”

CFO South Africa’s founding director Melle Eijckelhoff then called a diverse panel of experts on stage to share their insights. Servest CFO Peter Walsh frankly admitted his company could probably extract more value from big data, even though it’s a purely B2B business offering services like landscaping, security and water dispensers. “We don’t need to be at the bleeding edge of big data innovation, but if we don’t innovate, we get left behind. If data allows us to get single view of a customer – especially if we offer multiple services to that client – we could grow our business.”

Zetta Solutions EPM manager Anna Puzone said that the CFO plays a pivotal role in the data revolution.

“IT and the business often talk a different language. Even though it is getting smaller there is still a gap.”

Business Optics director James Saunders implored the audience to know what they want from big data and Berenice Francis, group commercial executive at Imperial, added that CFOs can only take advantage of big data “if you have a plan, the right

Alida Taylor

data and the right people”. The technicians need to report to the CFO, she said. “IT people can be like kids in a sweet shop. We need to harness their energy and relate it back to the business so it makes sense.”

The way people influence – and determine – the success of finance transformation was also a major theme during the round table discussion. Philips Southern Africa CFO Fabian Cazares admitted changing the way finance operates is still “a journey”, especially when working in different African countries that “lack integration of systems or have no systems at all”.

Zimkita Mabindla (Digby Wells), Edward Willcox (Simba) and Natasha Moodley (Yum Brands) all elaborated on their challenges to distil the right information from the available data. Moodley is involved in the rollout of Pizza Hut in South Africa and emphasised how important it is to know the business inside out.

“I know how to stretch, how to top and I can ring up an item,” she said, with other CFOs around the table agreeing that a deep understanding of the business is crucial for modern finance leaders. Irene Singo, CFO at the Department of Mineral Resources, candidly shared her challenge from a government perspective, where “pockets of data” are scattered throughout divisions. l

GOVERNANCE & COMPLIANCE

BY JOËL ROERIG

4 questions for Granville Smith, KPMG Partner in charge of the Internal Audit Business Division.

Turn risk into opportunity “Turn risk on its head and explore the opportunities offered by signals of change in the marketplace,” says Granville Smith, KPMG’s Internal Audit boss in South Africa, in an interview with CFO South Africa.

1

Which aspect of your work do you enjoy the most?

“I am fortunate that I have the opportunity to engage with different clients across various industries with different business models and different strategic thinking. The opportunity to provide advice on the organisation’s key risks and controls and more importantly having insightful debates on how they can improve their operations is the part of my work that I enjoy the most. I am also excited about the opportunity to oversee the development of individuals working for KPMG. It is a real thrill to see how individuals develop and how our guidance assists them in becoming trusted advisors to our clients.”

“A good internal auditor should not be afraid to enter the competitive fray of ideas.”

2

How can CFOs leverage the knowledge of internal auditors better?

“In my view a good internal auditor should not be afraid to enter the competitive fray of ideas. One of the early lessons that I have learnt in my career is that you must have a view and more importantly that you must not be afraid to share your views.

Our clients expect us to express our thoughts – you should not and must not play it safe, otherwise you will not create value. Like in any argument, the person looking from the outside in will always have a better feel or view of the problem and quite often can offer better advice than individuals involved in the argument.

I have however also learnt that you are only able to offer real insight if you make an effort to understand the environment and the issue. You cannot advise the client on a payroll issue if you do not understand the size of the payroll, legislative requirements, the client’s policies and procedures or strategic direction.”

“Good internal auditors have a unique insight into the client’s business and operations and often CFOs

“I think many businesses will be surprised by the wealth of knowledge and views that their team of internal auditors will bring to the table.”

could better leverage this knowledge.

Internal auditors might not always have the same level of management’s business acumen or the deep understanding of the strategy of the organisation, but they are better placed to understand how operations, rules and policies impact on each other. They also have the benefit that they see the organisation in its entirety and through a different and objective lens, therefore they possess an understanding of the

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GOVERNANCE & COMPLIANCE business that should be valuable for any CFO or business leader. In my view, if I was the CFO of the organisation, I would have weekly discussions with my internal audit team on how they view the business – I think many businesses will be surprised by the wealth of knowledge and views that their team of internal auditors will bring to the table.”

3

What are the biggest risk issues in 2015?

“CFOs recognise the direct link between being able to manage risk, business performance and creating value. In a global business environment, KPMG’s risk professionals are trained to challenge executive management in terms of understanding and unpacking key risks that face the organisation and ensuring their mitigation strategies and action plans will have a direct impact on bottom-line performance.”

“Every organisation’s circumstances are different, and therefore the key risks for one Board may not be the same as the key risks for another. But there are some risks that I believe most Boards and organisations need to address. In South Africa currently the electricity or power supply challenges are a risk that cannot be underestimated by any Board. A common issue faced by every Board and organisation is the impact of the slowdown in economic growth. This has an add-on risk on all industries from the public sector for tax revenue, to miners, retailers and manufacturers.”

“Are you taking enough risk to win?”

“Another issue faced by every Board and organisation is innovation and technology. Innovation is changing and disrupting business models in a dramatic way. This is something every Board needs to monitor very carefully. Management complacency

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is the biggest risk of all. Beware of the boiling frog syndrome. At KPMG we believe we need to get back to basics, i.e. make sure your risk management, internal controls and assurance plans are aligned and focussed on how to improve the bottom line – in the short-, medium- and long-term.”

“I also believe that one should not only focus on the negative side of risk – it is about moving risk to value. Turn risk on its head and explore the opportunities offered by signals of change in the marketplace, like digitisation, innovative business models and new technologies. I will encourage all CFOs to ask the question ‘Are we taking enough risk to win?’.”

4

What are typical mistakes CFOs make relating to corporate governance?

“Unfortunately there is no list of common mistakes that CFOs make when it comes to corporate governance, as industries, companies and executive teams are not the same.

Many business leaders including CFOs take a ‘tick box’ approach to corporate governance and fail to leverage the efficiencies of the convergence of strategy, risk, performance and governance. The economic and industry cycle are also factors. For instance, in recession or low-growth periods such as we are facing at the moment, CFOs are often challenged by shareholders and the Board to cut costs. It can be tempting to do this superficially or to cut too deeply.”

when CFOs are looking at reducing the internal audit budget, they do well to ask first whether they have optimised their combined assurance strategy (i.e. making sure that the right assurance providers are giving comfort and that there is no omission or duplication of effort) and are using data analytics to get the most optimal coverage and insights into risks.”

“When it comes to organisations’ out-sourcing internal audit functions, in order to reduce costs and headcount, we have found that our experience counts. KPMG has taken over Internal Audit departments in terms of Section 197 of the Labour Relations Act, and have yielded good results for the organisation, as well as improved outcomes for the employees. And at the end of the day, good governance is about achieving results in an ethical and sustainable manner. Therefore it is not about doing less or more, but more importantly doing the right thing, religiously, if not fanatically.” l

“CFOs have to give careful consideration to rationalising parts of the business or trimming expenses. We see the consequences of cutting costs in the medium term with the impact it can have on control frameworks e.g. reducing headcount can result in poor segregation of duties, over-burdened staff and key-man reliance, to name but a few consequences. This increases the risk of fraud or results in poor application of controls leading to losses.”

“Awareness of fraud risk becomes even more relevant during difficult times. Likewise, in our profession

Granville Smith (KPMG)

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