Director Of Finance Issue 25

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ISSUE 25

BREXIT SHOCKWAVES What the referendum fallout means for pensions, talent and trade

Future-proofing the profession EXCLUSIVE INTERVIEW James Davenport, group FD of Innocent Drinks

FUTURE FINANCE How your annual reports can inspire key stakeholders

FINTECH SPECIAL The innovations shaping dynamic organisations

PENSIONS SCANDAL Lessons learned from the BHS debacle

The road to success Why sustainable fleets mean sustainable business OFC_DoF_With Spine.indd 1

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Managing editor

Marketing executive

Louise Naughton

Grant Ellis

Email: louise.naughton@zincmedia.com

grant.ellis@zincmedia.com

Contacts

Contacts | Intro

Tel: 0207 878 2403 Head of sales Editor

Daniel Tena-Mullor

Katy Ward Email: katy.ward@zincmedia.com

Advertising manager

Tel: 0207 878 2416

Joe Mills Email: joe.mills@zincmedia.com

Head of production

Tel: 0207 878 2340

Mark Armitage Email: mark.armitage@zincmedia.com

Sales executive Tommy King

Head of design

Email: tommy.king@zincmedia.com

Sarah Reis

Tel: 0207 074 7703

Art editor

Managing director

Diana Lawrence

Stuart Hall

Illustration by James Fryer – www.jamesfryer.co.uk

Published by

13th Floor | Portland House Bressenden Place | London | SW1E 5BH Tel: 020 7878 2300 Fax: 020 7379 7155 web: www.zincmedia.com

ŠZinc Media, July 2016. All rights reserved. No part of this publication may be used, reproduced, stored in an information retrieval system or transmitted in any manner whatsoever without the express written permission of Zinc Media. All of the articles in this publication have been supplied by contributors, and the publisher cannot give any warranty, express or implied, as to the accuracy of the articles, or for any errors, omissions or mis-statements, negligent or otherwise, relating thereto. Accordingly, the publishers shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or omission from these articles. Opinions expressed in articles are not necessarily the opinions of the publisher.

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Foreword

Intro | Foreword

A whole new world Welcome to the July/August edition of Director of Finance, which explores the reality of a post-Brexit world and dives into the BHS pensions scandal

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irst, an introduction. My name is Katy Ward and I am the new editor of Director of Finance magazine. There couldn’t have been a more eventful time to take over, with the news of Brexit and all the implications for FDs, the businesses they help lead and the wider economy. Turn to page 12 for the first in our series of special articles on the fallout from the referendum result. This magazine is also special because it coincides with our second annual award ceremony – the DOFscars. Taking place on 14 July in London, the awards celebrate the achievements of the finance community across various sectors and industries, both as individuals and teams. Keep your eyes on our website as the ceremony unfolds for updates on the winners and to find out if your favourites have taken home the trophy. And don’t forget to follow us on Twitter (@dofonlineUK) using the hashtag #DOFscars. As part of our awards coverage, I spoke to group FD of smoothie giant Innocent Drinks, James Davenport who will be one of our judges. We know our readers are ethically, Turn to page 28 to read his views on what makes socially and environmentally an excellent FD and the leadership skills that minded. Which is why we’ve have propelled him to the top. devoted our cover feature to Of course, this issue is about more than awards and we know our readers are ethically, green fleet management – diving socially and environmentally minded. Which is into the business and the moral why we’ve devoted our cover feature to green case for low-emission vehicles fleet management – diving into the business and the moral case for low-emission vehicles. Good luck to all our DOFscars nominees and thank you to our judges, sponsors and readers who nominated their favourite financial stars. We look forward to seeing you at the awards ceremony. But, if you can’t make it, there are plenty of other events coming up on the Director of Finance calendar – our fleet management roundtable is on 20 July and our defined benefit pensions roundtable is on 27 September, while we have a Director of Finance conference in November. Hope to meet you at an event soon. If you have any comments on the magazine (good or bad), I would love to hear from you so please get in touch: katy.ward@zincmedia.com Happy reading

Katy Ward Editor

LOOK

OUT 4

for our SPECIAL STAMPS this issue, which indicate the hot topics affecting FDs

THE

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pension DEBATE

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12 06 The top ten The key stories affecting finance directors and finance teams

22 The road ahead Why green fleet management makes environmental and business sense

12 Special report: Brexit fallout What the decision to leave the EU will mean for pensions, fintech, the skills gap and trade

28 Exclusive interview: James Davenport of Innocent Drinks The group FD of healthy drinks giant Innocent and judge in the Director of Finance awards on his own route to success and the qualities that make a great FD

14 Special report: BHS pensions An in-depth analysis of the decline of the former highstreet giant – how and why it happened

Contents

Contents | Intro

30 The transformative power of tech Discover the five pieces of fintech that are revolutionitising UK businesses – and what this means for FDs 36 All well and good How healthy staff can equal a healthy bottom line 45 The future of reporting Neil Stevenson, global MD of the International Integrated Reporting Council, on producing engaging financial data

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News

News | Top ten

Tensions over Brexit trade talks

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he UK may not be able to commence fresh trade negotiations until it has officially left the EU, officials have warned. When pressed on the question, the EU trade commissioner, Cecilia Malmstrom said: “There are actually two negotiations. First you exit, and then you negotiate the new relationship, whatever that is.” Her statement suggests the EU will not consider a trade deal until the UK triggers Article 50 of

the Lisbon Treaty, which includes a two-year waiting clause, Between Brexit and the signing of any new trade deal, business between the UK and EU would be conducted under World Trade Organisation rules, Malmstrom said. David Cameron has repeatedly claimed that the process of invoking Article 50 will be left to his successor, who is set to be in place by 9 September. For more on the trade implications of Brexit, see page 12.

Blockchain spending to hit £1bn

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inancial services firms and technology providers worldwide will spend more than £1 billion in 2016 as part of their efforts to bring blockchain to the capital markets, new research has revealed. According to the research from Greenwich Associates, the revolutionary potential of blockchain lies in its potential to securely transfer a digital asset from one party to another. The research also found that banks, brokers,

exchanges and central counterparties are at the forefront of this spending, with asset managers tending to adopt a more cautious approach. Of the firms surveyed that already have blockchain initiatives underway, 32 per cent have an annual budget in excess of $5 billion. “Blockchain has significant potential to reduce operational costs and shorten settlement times,” the research found. To learn more, read our feature on page 30.

Average income surpasses 2009 peak

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verage UK incomes for 2014-2016 exceeded their 2009-2010 heights, according to the latest figures from the Department for Work and Pensions (DWP). The data puts average earnings at £473 per week, which equates to approximately £24,600 per year.

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Under these figures, the mid-point net income of all households was up 3 per cent after inflation. The DWP attributes this increase to a surge in the number of people in work – a figure that plummeted during the financial crisis. Despite this increase, the gap between the rich and poor remained

largely unchanged, with little improvement in child poverty figures. Chief executive of the Child Poverty Action Group, Alison Garnham, said: “Child poverty isn’t inevitable – the government needs to invest in our children so we can all share the rewards of a stronger economy and a fairer society.”

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Fresh concerns over Tata deal

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he future of Tata Steel’s UK assets is once more in doubt, including its Port Talbot works, the BBC reports. The plant’s overseas owners have allegedly expressed concern that the current political uncertainty in the UK could hamper the proposed sale. A source close to Tata Steel has told the BBC: “It’s clearly an incredibly busy time in UK politics. “Nevertheless, the company still hopes that the hundreds of thousands of people in Britain who are dependent on a steel pension will not be left worse off by the current political leadership uncertainties.” Tata announced in March that it would sell the UK arm, which put more than 11,000 jobs in danger.

Nicholas Jackson / Shutterstock.com

News

News | Top ten

Negotiations to purchase the engineering giant have so far been hampered as acquirers are unwilling to take on the steelwork’s pension scheme, which

includes some 130,000 members and has a deficit of approximately £700 million. The consultation on the pension scheme has now

closed, with a government response due in July. For more news on the pensions environment, read our special report in this issue on page 14.

Data needs to drive decisionmaking, urges PwC

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usinesses in the UK need to make better use of data when contemplating key decisions, new research from PwC has found. Under a third of UK respondents in The 2016 Big Decisions survey claimed to possess a highly data-driven culture, compared with 45 per cent in the US and 53 per cent in China. Consulting data analytics partner at PwC Yann Bonduelle, said: “Data continues to be an underutilised tool in the decision-making process in the UK, despite the pace of technological change over the past two years. It’s clear

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that organisations know data is important, but are not yet properly leveraging it to supplement human judgement.” More than half of the UK participants responded that analytics is often a diagnostic tool, with only a quarter using analytics to predict future events. Bonduelle said: “The great majority of organisations are using data to look backwards and are missing out on the great advantages that tools such as predictive analytics can bring to a company’s success.” For more information on big data, turn to our article on page 30.

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Top ten | News

News

The best Big Four employers revealed Bruno Mameli / Shutterstock.com

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ig Four accountancy firms KPMG, Deloitte and PwC are among the most attractive places to work in the UK, new research from LinkedIn has revealed. According to the rankings, KPMG is the most desirable professional services firm on the list. It rated in seventh place, compared with PwC, which bagged the eleventh spot and Deloitte, which came in at number 21. Outside of professional services, the technology space ranked highly in terms of desirability. Apple was the most attractive employer, with Facebook, Google and Amazon also making an appearance in the top five.

From a purely UK perspective, John Lewis, Virgin Media, Harrods and Google were all rated among the most sought-after workplaces for staff. Executive editor of LinkedIn Daniel Roth said:

“Companies around the globe are forced to keep pace with an accelerating rate of technological and economic change. Having and keeping the right people is what is going to separate the winners

and losers. And the better these top companies get at attracting, the harder it is for competitors to catch up. We dug into the data to find out who those stars were.” For more on employee engagement, see page 36.

UK-bound M&A deals plummet by 42 per cent

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ergers and acquisitions into the UK fell by 42 per cent during the first quarter of 2016, while activity in Europe increased by 107 per cent, research from Deloitte has found. The most significant drop in M&A investment was in the UK’s manufacturing sector, which dropped by 93 per cent. Head of global M&A at Deloitte, Iain Macmillan, said: “The UK was the strongest performer last year and received £245 billion worth of M&A investment, the highest for any country in Europe.

However, the global economic slowdown, compounded by uncertainties created by the EU referendum vote, has had a massive impact on deal flows into UK, with investment dropping to £23 billion ($30 billion) in the first quarter of this year.” In terms of deal volumes, the number of UK-targeted deals fell 10 per cent to 222 in the first quarter, while inbound deal volumes increased by 4 per cent to 384 deals for Europe. Macmillan said: “Market uncertainties have a significant bearing on corporate confidence and the deal flow. Currently,

companies are content to wait and will revaluate their plans following the outcome of the referendum vote. The credit conditions are still favourable and the

UK market has always been one of the most active in Europe, so we expect deal flow to eventually pick up.” For more information on Brexit, see page 12.

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Vodafone could exit the UK

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odafone is among the latest set of companies to announce plans to relocate from London in the wake of Brexit. According to an email statement, the telecoms giant is keen to maintain the “free movement of people, capital and goods”. The company claimed that free movement of people and EU membership

had helped to spur growth, the BBC reports. Asked whether the company would remain headquartered in the UK without access to the single market, a spokesperson said: “It remains unclear at this point how many of those positive attributes will remain in place once the process of the UK’s exit from the European Union has been completed.

Michaelpuche / Shutterstock.com

News

News | Top ten

“A visible commitment to openness must be at the heart of our new relationship

with the EU. This means tariff (and barrier) free access to the single market.”

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hree adverts published by budget chain Aldi have been branded as “misleading” by the Advertising Standards Authority (ASA). The adverts claimed a £70 shop in Aldi would cost £98 in the ‘big four’ mainstream supermarkets. Rival chain Morrisons and two members of the public complained the adverts failed to make clear which products were being compared in the figures. A spokesperson for Aldi said: “The use of

comparative advertising is a well-established principle and is firmly in the interests of consumers and encourages competition between retailers.” The ruling applied to two TV and one press advert. The ASA said: “We acknowledged that Aldi stated they had not intended the comparisons to represent a ‘typical’ weekly shop, but to be a comparison between the pictured products only. “Nonetheless, we considered that was how consumers would interpret

Chris Warham / Shutterstock.com

Aldi hit by advertising reprimand

the adverts rather than as a representation of the savings which could be made by switching from

a largely branded shop to shopping in Aldi, and therefore assessed them on that basis.”

Bank shares plummet in Brexit wake

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he UK government has been hit by paper losses nearing £8 billion on its stakes in Royal Bank of Scotland and Lloyds Banking Group following the EU referendum, which represents approximately £275 for each person who voted. Since the annonucement of the result, the two banks have a lost a combined £24 billion in

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market capitalisation. RBS shares dropped to 152p, which represents its lowest level since the beginning of 2009. Shares in Barclays fell 17 per cent, while Lloyds , which is 9 per cent owned by the government, dropped by approximately 10 per cent. Last year, George Osborne annonuced plans for a £2 billion sale of the retail arm of Lloyds. The news followed the

announcement that leading agencies had downgraded the UK’s credit rating. Following the result, the UK lost its top AAA credit

rating from agency S&P. Rival agency Fitch lowered its rating from AA+ to AA, while Moody’s cut the credit outloook to negative.

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Special report

Special report | Brexit

Brexit:

Where do we go from here?

Keep an eye out for more Brexit coverage in future issues

Whichever way you voted and whatever the pollsters predicted, the UK’s FDs now need to navigate the reality of a post-Brexit world. Katy Ward explores the issues

T

he profound implications of the vote Leave victory are not yet known and may not become evident until years after the UK formally invokes the Article 50 clause of the Lisbon treaty. But there are issues that will no doubt revolutionise the landscape in which FDs operate. The trade-off How will the UK trade around the world in a post-Brexit environment bereft of access to the single market? There is, for example, nothing to prevent Brussels from imposing penalising tariffs on UK deals. If the UK is to retain its preferential trade status, it would need to renegotiate deals with the 52 countries currently covered by EU trade deals. The UK could potentially follow a similar model to Norway – although not a member of the EU, it is a member of the European Economic Area with full access to the single market. In exchange for this privilege, it is obliged to make a financial contribution and accept many EU laws and free movement. The pensions conundrum It didn’t take long for the news of Brexit to send shockwaves through the pensions professions. Just days after the vote, the UK’s funding hole for pensions hit a record £900 billion, according to consultancy, Hymans Robertson.

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“We are entering a period of great uncertainty in which we will witness short-term market turmoil both in the UK and beyond,” said former pensions minister and director of policy at Royal London, Steve Webb. “There will be much public debate about how this will impact the pensioners of today and tomorrow. More immediately for today’s pensioners, there may be concerns about threats to the ‘triple lock’ on the state pension, but it would be odd for a government to prioritise a cut that would affect the most powerful voting bloc in the country. “Pensions are a long-term project and their future depends on a healthy and growing economy. This, rather than the immediate future, will be the key test that will determine the quality of life in retirement of millions of UK citizens.” The brain drain A quarter of companies look set to impose a recruitment freeze in the wake of Brexit, research from the Institute of Directors (IOD) has found. The data is based on a survey of 1,000 IOD members, with two in three believing that the UK’s decision to extricate itself from the EU will have a negative effect on their business. Of those surveyed, 25 per cent plan to freeze recruitment, a third

will continue hiring at the same pace and some 5 per cent are planning redundancies. HSBC has already revealed plans to move up to 1,000 staff from London to Paris if the UK leaves the single market. Tech: From boom to bust According to government statistics, the financial technology industry generated £6.6 billion in revenue during 2015 – a large part of this was certainly due to friendly regulation with the EU and close relationships with investment banks that chose to make their home in the capital. But there have been warnings that the UK could lose its position as a pioneer in the fintech space following the referendum result. The departure from the EU will, for example, bring additional complexities in data protection and regulation. More red tape will inevitably provide a roadblock to innovation. As a result of Brexit, it may also be more difficult for fintech pioneers and start-ups to navigate legislation and ensure they abide with the varying rules in different countries. As a member of the EU, the UK is currently able to benefit from the ‘passport’ rule, which allows financial firms regulated in one EU country to operate in every other EU country For more information on the fintech shaping your business, see our feature on page 30. DoF

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Special report

Special report | Pensions

What are you looking at? Pensions under the microscope With the debate on the BHS pension blackhole and retirement savings becoming ensconced in the consciousness of the public and FDs, Director of Finance takes a deeper dive

Featureflash Photo Agency / Shutterstock.com

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ot for the first time in recent months, the issue of pensions has hit the headlines and become a topic of concern for all areas of the business and not just the finance function. When former retail stalwart BHS went into administration in April this year, it left a pension deficit of ÂŁ571 million for more than 20,000 members,

which has caused outcry from members of the public and the finance community keen to understand how this failure could occur on such a scale. One of the most fractious incidents in the scandal has undoubtedly been the interrogation of former owner and Arcadia boss Sir Philip Green who appeared before MPs at a joint hearing on 15 June.

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Pensions | Special report

THE

DOF

pension DEBATE

During the fiery session, which took a decidedly personal turn as Sir Phillip sparked controversy by barking at Conservative MP for Bedford and Kempston, Richard Fuller: “Do you mind not looking at me like that? It’s really disturbing.” And Green also admitted, “I can answer virtually no questions on the pension”, but that “someone had quite

clearly fallen asleep at the wheel”. The pension scheme, ominously named Project Thor, now looks set to be absorbed by Pensions Funds at a cost of £275 million. Getting personal In another particularly fractious moment of the scandal, the beleaguered Sir Philip demanded an

apology for what he deemed “an outrageous outburst” from MP, Frank Field. When Field alleged the scandal had given the impression that business was about “nicking money off other people”, Sir Philip furiously replied “accusing me and my family of theft is totally false and unacceptable on any basis.”

>>

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Special report

Special report | Pensions

pxl.store / Shutterstock.com

We are still a long way from the end of the BHS story

Field said: “What’s required is a very large cheque from the Green family who have done so well out of the whole of this. “The image you put over is that everybody in business is not about creating jobs, about spreading wealth but nicking money off other people.” Green responded: “Mr Field’s outrageous outburst today demonstrated yet again his clear prejudice against myself, my wife and my executives, who turned up for a second time.”

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The role of the media For many observers, one of the most remarkable aspects of the debate has been to again underscore the disastrous PR potential of a mismanaged pension, which had been previously brought into focus by the Tata Steel scandal. As part of the Tata fallout, some 700 employees risk losing up to £20,000 a year if the fund is transferred to the Pensions Protection Fund. See our box on page 20 for a round-up of the most disastrous pensions stories in history.

“There are a number of things that have put pensions into people’s consciousness during the past five or 10 years and so much of it is positive,” says president of the Pensions Management Institute, Kevin LeGrand. “However, when a story like this breaks with a big household name, it does make people start to think about it and relate that to their own experience.” One thing is clear, the debate surrounding BHS will continue for months and potentially years. “We are still a long way from the end of the

>>

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14 Cornhill, London EC3V 3ND. Telephone: +44registration (0)20 7105 2000 Pension Pension Pension Insurance Insurance Insurance Corporation Corporation Corporation plc isplc registered plc is registered is registered in England in in England England underunder under registration registration number number number 05706720 05706720 05706720 with registered with with registered registered offices offices at offices 14at Cornhill, at 1414 Cornhill, Cornhill, London London London EC3VEC3V 3ND. EC3V 3ND. 3ND. Authorised Authorised by thebyPrudential by thethe Prudential Prudential Regulation Regulation Authority Authority and regulated and and regulated regulated by thebyFinancial by thethe Financial Financial Conduct Conduct Conduct Authority Authority Authority and Prudential and and Prudential Prudential Regulation Regulation Regulation Authority. Authority. FRN 454345. FRN FRN 454345. 454345. Pension Authorised Insurance Corporation plcRegulation is registered inAuthority England under registration number 05706720 with registered offices atAuthority. 14 Cornhill, London EC3V 3ND. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. FRN 454345.

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Special report | Pensions

BHS: The pensions

timebomb The start of the new Millennium heralds a new era for BHS. Retail magnet Sir Philip Green purchases the chain for £200 million. The business has a pension fund surplus of £5 million

2000

2004

Sir Philip is alleged to have told ministers there is no chance of the BHS scheme falling into the Pensions Protection Fund, a detail revealed in 2016 by former pensions minister Steve Webb Philip Green officially becomes Sir Philip

2006

Shareholders in BHS, including many of Green’s own family, have taken more than £420 million in dividends

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2009

2012

The BHS pensions deficit climbs to almost £140 million

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Pensions | Special report

APRIL The former high street giant officially lapses into administration and it becomes clear that the case will be passed to the Pensions Protection Fund

2015

2016

Sir Philip sells BHS to investment group Retail Acquisitions for £1. The new owner is led by previously bankrupt Dominic Chappell. By the end of the year, the deficit stands at £226 million

2016

MAY Sir Philip demands chair of the Work & Pensions Select Committee, Frank Field, resigns for suggesting that the Arcadia boss be stripped of his knighthood over the pensions question

2016

MAY The Pension Protection Fund, the largest unsecured creditor in BHS, estimates its liability at £275 million and urges administrators to line up liquidators

2016

JUNE Liquidators are called in, but funding gaps mean that a rescue deal does not materialise Later in the month, MPs grill Sir Philip and Dominic Chappell over the business’ demise

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Special report

Special report | Pensions

Did you know? The first ever pensions are thought to have existed in Roman times with centurions receiving an annual payment following their days of service

BHS story,” he says. “There is a valid concern, in the pensions industry that, although it’s useful to have an open public discussion about these issues, it needs to be a balanced discussion. “It is quite easy to focus on one particular case where something might appear to have gone wrong, in terms of the outcome not being as good as people had hoped. But in context, this is one scheme out of thousands that work perfectly well. It is human nature to concentrate on the bad news but lessons can be learned when things have gone wrong. .” Le Grand is one of the judges in our upcoming Director of Finance Awards (awards.dofonline.co.uk), which take place on 14 July. Remember to keep an eye out for future issues of the magazine and our website for more coverage of the awards, and updates on the BHS scandal as it unfolds. DoF

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Before BHS: Three pensions scandals from history Machinations from Maxwell One of the most notorious pensions scandals in history is undoubtedly that of Mirror Group owner Robert Maxwell, who it emerged after his death, had pilfered £440 million from his business’ pensions funds to shore up shares in his empire. While the vast majority of funds were repaid by the British government and investment funds, it remains a bone of contention that many of those involved in scrutinising the scheme were never fully reprimanded for their involvement. National Bus Company: a rocky road Following the privatisation of the National Bus Company in the late 1980s, the Treasury took £168 million out of the company’s pension scheme surplus. But the official Pensions Ombudsman investigated and concluded that the funds had to be repaid. The case eventually went to the High Court and was decided in favour of the pensioners. Inflated sense of worth? It was seemingly good news when the government announced in 2012 that it would link increases in state pension to inflation – but there was a sting in the tail. Rather than using the retail price index measure of inflation, the government proposed to use the typically lower consumer price index. Opponents reacted angrily to the proposal, which would knock off about £100 billion from private sector pensions.

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05/07/2016 16:28


Premier | Expert view

DEFINED BENEFIT MASTER TRUSTS: A GOOD OPTION FOR FINANCE DIRECTORS? Ian Gutteridge Sales and marketing director

O

ver the past two years, master trusts have grown in popularity. While most focus on defined contribution (DC) benefits, there is a small population designed to manage defined benefit (DB) arrangements. As with any new solution, the offering is subject to scrutiny and possible criticism (or reasons why not to use them) if the advisers undertaking the analysis do not actually offer their own form of master trust. WHEN TO USE A DB MASTER TRUST Ideally suited for schemes with less than £100 million of assets, where the cost of managing the scheme (actuarial, administration, audit, trusteeship etc) can be disproportionately high when paid for by fees. Instead, having the management costs met by a slight increase in the funds under management charge can provide better value.

FREEING UP MANAGEMENT RESOURCE Most DB schemes are closed to future accrual. For many, their DB plan is a legacy scheme, catering mainly for ex-employees. As a result, the costs of management become less acceptable. Tying up key people in trustee meetings and paying high actuarial and investment fees is increasingly difficult to justify. Master trusts offer savings in staff time and in fees by providing governance and other services, including actuarial, administration, secretarial services and trusteeship. REMOVING OPERATIONAL RISK Running a DB pension scheme is difficult. With constant regulatory change, keeping up with the requirements is time consuming. With a more intrusive regulator, there is significant financial and business risk. A master trust will help to ensure that this responsibility is largely shifted to the new arrangement. While you will still need to meet funding requirements, you can focus largely on your business, rather than getting sidetracked by pension issues. THE IMPORTANCE OF BEING FULLY SECTIONALISED In the past, if a participating employer went out of business, its DB liabilities were shared among other participating employers.

Premier’s master trust is fully sectionalised. Every participating employer has its own section within the trust. They are not shared out amongst other participating employers. TRANSPARENCY OF COSTS The costs of running a traditional DB trust are significant and often difficult to assess. Master trust fees are fixed or charged as a percentage of the assets under management, making them transparent and controlled. ACCESS TO HIGH QUALITY ADVICE Master trusts are generally managed by professional trustees with a knowledge of the legislation, best practice and the governance needs of a pension arrangement. A master trust allows access to all of this expertise without the high costs that are normally incurred GETTING TO THE “END GAME” Most employers with legacy DB arrangements would love to be able to buy-out benefits. With improved cash flow (remember, the cost of managing the scheme is via a small funds under management charge, rather than the payment of fees), a budget is created which enables the liabilities to be addressed. A successful de-risking strategy improves the financial standing of the employer. By reducing costs, improving cash flow and giving access to more effective and efficient actuarial and investment solutions a DB master trust can get you to your desired outcome quicker and with less cost. Once the assets are sufficient you can complete the process, securing benefits with an insurance company. Ultimately, DB master trusts need to be considered as another option available to manage a DB scheme. For the right type of scheme and based on the concerns and aspirations of the employer, they may be an appropriate route to remove operational risk, reduce cost, protect the employer and reduce liabilities.

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FML16_FPAD(DirectorOfFinance).qxp_BF 20/06/2016 13:02 Page 1

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Sustainability

Feature | Fleet

Green GIANTS The environment is no longer just about the sustainability of the planet, but the sustainability of the economy – and your business. We talk to the Andrew Benfield of the Energy Saving Trust on the business (and ethical) case for greener fleet management

In numbers: the cost of pollution

“I

f something doesn’t stack up financially, you can’t expect organisations to run with it.” This is not a statement you’d necessarily expect from the director of transport at the Energy Saving Trust, but Andrew Benfield takes a pragmatic approach to green fleet management. “We’ve always had one eye on the FD,” he says. “You can have the best environmental argument in the world, but for businesses, fleet management has to be a rational decision.”

Is it easy being green? Ethical issues aside, why should FDs be passionate about the environmental impact of their fleets? “One of the things I want to echo,” says Benfield, “is that this can be a win/win scenario. Organisations can have everything now. They can

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Indoor and outdoor air pollution costs European economies as much as £1.05 trillion each year. Some 9,046 new ultra-low emission vehicles were registered in the UK in the first quarter of 2015. The UK suffers

£54 billion

in economic costs associated with air pollution, which accounts for 3.7 per cent of GDP.

In total, 8,561 cars and 247 vans were eligible for grants, which allowed discounts of up to £5,000 for cars and £8,000 for vans.

The government is investing £500 million over the next five years in making low-emission vehicles more accessible to families and businesses across the country.

>>

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Sustainability

Feature | Fleet

have a fleet that is desirable to the driver, but also good for the environment and ultimately, there is a financial case for that.” To learn more about the financial case for greener fleets, see our box on page 22. How can green be cheaper? At first glance, the initial purchase of an electronic vehicle may appear more expensive. But there is a ‘whole of life’ cost analysis that FDs need to factor in. “One of the biggest issues we come across is the lack of visibility of costs and data surrounding green fleet and its management.” True, the initial cost of rental and purchases may be higher for a greener vehicle, but there are other cost benefits, which can boost the bottom line, including: • reduced fuel costs • reduced class 1A National Insurance contributions • reduced vehicle excise duty • reduced corporation tax • employee benefit through reduced benefit-in-kind tax “There are lots of other cost factors that are beneficial to ultra-low emissions, which finance needs to take into account when looking at the future cost of running a fleet,” says Benfield. The hidden costs lurking in your fleet Another factor to consider is the use of grey fleet – the employees across the UK who routinely drive their own vehicles for business purposes. “Nobody knows the total scale of grey fleet,” says Benfield. “The rule of thumb is that billions of miles are being driven every year in grey fleet and it just doesn’t stack up from a financial perspective “When you times billions of miles by fuel reimbursement of 40, 50, 60 pence per mile, there is a huge cost to the economy and to business.” With grey fleet, for example, more efficient fleet management could cut costs by as much as 10 per cent. And the financial risks of grey fleet don’t end there. Because these vehicles tend to be older, they also bring unknown financial risk – both in terms of safety and increased CO2 emissions. If your organisation does rely on grey fleet, it can be tempting to adopt a laissez-faire attitude, but Benfield identifies this as a major cause of financial loss. When grey

How efficient is your fuel consumption? To calculate if you are overspending on fuel, the AA recommends taking the following steps: • Fill the tank and record the mileage. • Keep a record of any subsequent fuel purchases (you don’t have to completely fill the tank again until you’re ready to work out your mpg). • Ideally go back to the same pump at the same garage you first filled the car and fill the tank again to the same level. • Divide the total mileage since the first fill by the total number of litres used and then multiply by 4.546 to get miles per gallon (for example if you’ve covered 1000 miles and used 101 litres of fuel, your average mpg = (1000/101) x4.546 = 45mpg).

The role of tech in greener fleets and safer driving “The accuracy of data intelligence gathered from telematics today is phenomenal. Whether it’s vehicle and fuel efficiency information, early fault diagnostics, service and repair reminders or driver behaviour, the value of information is limitless. For example, driving style data helps businesses reduce the risk of driver accidents and vehicle repair costs, as well as enhancing duty of care by encouraging safer driving. “Crash detection technology helps fleet managers save time and insurance costs with instant accident notification. The technology’s intelligence can distinguish between bumps and kerbs and actual impacts, with reports provided on impacts via email and screen alerts. These alerts enable fleet managers to quickly ascertain the safety of the driver and condition of the vehicle. “The beauty of this evolving technology is that its implementation doesn’t have to be a full systems or platform investment. The key to a fleet manager getting the most out of telematics, however, is understanding from the outset, exactly what information is needed and why.” Chief operating officer for TRACKER (part of the Tantalum Corporation), David Wilson

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Advertorial

Are you experiencing increased fleet costs?

Managing director of Total Motion, Simon Hill, on how managed funding can deliver the lowest cost funding on every vehicle

W

ith the change in trading conditions and financial markets since 2006, most fleets are experiencing reduced visibility around leasing rates and increasing costs. It is now widely accepted that this is the shape of the market for the foreseeable future, so fleets need to take steps to deal with this inevitable change and impact. We have seen the end of businesses being able to use one, two or three lease suppliers as a way of managing costs. Managing director of Total Motion, Simon Hill, has gone to great lengths to tackle this problem head on. Its solution managed funding, is designed to reduce leasing costs and manage your overall leasing process efficiently and effectively. Hill is confident that managed funding can help you reduce leasing costs, but also improve flexibility and control, enhance management performance, reduce service, maintenance, repair spend and related costs, as well as reducing resource and lower downtime.

How does it work? “Managed funding will deliver the lowest cost funding on every single vehicle both now and in the future and removes the need to fix rates.” Hill believes their method is the market leader and guarantees finding the right deal. “Rather than using one provider/leasing company, we work with a panel of up to 60 finance suppliers to deliver the most competitive funding arrangements for our clients.” Backed up by hard facts and evidence, extensive research conducted by independent auditors shows that using managed funding will reduce your leasing costs by at least £30,000 per annum, per 100 vehicles on the fleets. “These figures are substantial for a company of any size. We see variances of as much as £161 per month on cars under £40,000 and £458 on cars up to £70,000.” Hill elaborates on the process used where managed funding is concerned. “Total Motion choose from potentially 60 suppliers to find out which is the most competitive on each vehicle. To facilitate this, we have established great supply relationships with each and every one of the UK’s finance and leasing suppliers. Once a funding product has been selected, we work to a set process, normally using either a hybrid finance lease or contract hire without maintenance.” A great selling point for Total Motion, is that it always liaises directly with the suppliers. “We deal with managing and administering all new and existing contracts, along with authorising and verifying all supplier invoices. This reduces unnecessary

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hassle for companies when trying to address any matters relating to their vehicles.” Hill is adamant that managed funding can enhance the way your business operates when dealing with leasing vehicles for your company. “Managed funding will ultimately allow a business to reduce costs while having greater control. Driver choice will be improved, and you are able to set up personalised management and support processes. We have developed managed funding to support the drivers’ needs more effectively and we aim to create a positive and proactive atmosphere for the fleet.”

So what products are available? “Our team at Total Motion can offer contract hire, finance lease, hire purchase, hybrid finance lease, and hybrid hire purchase.” With the benefits of using a single or small number of finance/contract hire providers almost completely eroded, managed funding delivers the solution.

Find out more Call 0116 251 1122, email info@totalmotion.co.uk or visit www.totalmotion.co.uk

06/07/2016 12:56


Sustainability

Feature | Fleet

fleet is commonplace, companies may not be carrying out basic (yet essential) security checks such as ensuring drivers have the requisite business insurance. “One of the misconceptions is that the administrative burdens [of grey fleet] are much lighter than running a company car scheme,” says Benfield. “In reality, duty of care requirements for businesses suggest that, if you are running a grey fleet, there is actually a very long list of things to check.” From a legal perspective, shifting to grey fleet does not absolve a company of its duty of care and you will still need to carry out checks on driver licensing and car maintenance. Getting drivers engaged Whatever your company-wide strategy, and despite the best efforts to embed it across the organisation, it will inevitability fail without the co-operation of the drivers behind the wheel every day. “It’s one of the hardest things to do because it’s about culture and people’s behaviour,” says Benfield. “Eco-driving and fuel-efficient driving is also safer driving. Primarily, it’s all about anticipation, reading the road well and using the gears in a very fuel-efficient way.” [For more information on fuel-efficient driving, see the box on page 27].

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Attitude is also key, he argues. “With the right type of training and motivation, you can drive savings across the route.” For many fleet managers, maintaining an element of fun can boost engagement from staff on the road. “It’s really important to keep things positive for drivers, rather than telling them you are going to monitor their every move.” In practical terms, this can mean offering incentives to those who perform well according to metrics such as miles per gallon. “There is a cost involved in that, but it’s nothing in comparison with the savings,” says Benfield. “It can also create a sense of competitiveness among drivers to see who is the safest. If the savings are being made, then obviously, it’s better for the organisation.” How Red Bull is going green In the UK, energy drinks provider Red Bull is attempting to transform its fleet management strategy by reducing both costs and emissions (which have already fallen by approximately 10 per cent since 2012). One of the major initiatives has been to reduce its petrol-driven fleet with low-carbon alternatives. Under its previous strategy, Red Bull had employed a fleet of 38 converted minis, refitted to resemble its drinks can. To

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Fleet | Feature

Eco-efficient driving

You can have the best environmental argument in the world, but for businesses, fleet management has to be a rational decision

Below is a selection of eco-efficient driving tips from the AA for companies that want to cut fuel costs and boost safety: Servicing: get the car serviced regularly to maintain engine efficiency. Engine oil: make sure you use the right specification of engine oil. Tyres: check tyre pressures regularly and before long journeys; under-inflated tyres create more rolling resistance and so use more fuel. Lose weight: extra weight means extra fuel so if there’s anything in the boot you don’t need on the journey take it out. Leave promptly: don’t start the engine until you’re ready to go as idling wastes fuel and the engine warms up more quickly when you’re moving. Don’t get lost: plan unfamiliar journeys to reduce the risk of getting lost and check the traffic news before you leave.

date, nine have been replaced with diesel minis, which cut carbon emissions by more than 40 per cent. In terms of the bottom line, this improved miles-per-gallon performance is saving the business around £6,000 a year. The UK campaign has been so successful that it is being rolled out across the company globally. “The journey towards minimum emissions never ends,” says procurement manager of Red Bull, David Oliver. “We’ve reorganised routes, provided driving training for our people, and introduced a reward scheme to recognise safe and efficient drivers.” The triple win But what does this mean for companies looking to add a sprig of green to their fleets? For the first stage, companies can examine the journeys they undertake to see if these trips are all strictly necessary: in many cases, there could be an eco-friendlier option such as video conferencing. So what is the bottom line? How can organisations ensure green fleet stacks up for FDs? For Benfield, the answer is clear. “It’s a triple win,” he says. “Green fleet is cheaper, but also cleaner and safer.” DoF

Combine short trips: cold starts use more fuel so it pays to combine errands such as buying the paper, dropping off the recycling, or collecting the kids. Decelerate smoothly: when you have to slow down or to stop, decelerate smoothly by releasing the accelerator in time, leaving the car in gear. Cut down on the air-con: air-conditioning increases fuel consumption at low speeds, but at higher speeds the effects are less noticeable. So if it’s a hot day, open the windows around town and save the air conditioning for high speed driving. Turn it off: electrical loads increase fuel consumption, so turn off your heated rear windscreen, demister blowers and headlights, when you don’t need them. Stick to speed limits: the faster you go, the greater the fuel consumption and pollution. Driving at 70mph uses up to 9 per cent more fuel than at 60mph and up to 15 per cent more than at 50mph. Cruising at 80mph can use up to 25 per cent more fuel than at 70mph.

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Interview

Interview | James Davenport

From innocence

to experience James Davenport, group finance director of Innocent Drinks and judge in the upcoming Director of Finance awards, talks exclusively to Katy Ward about the qualities that make a great FD, why he has stayed with the company for 13 years, his decision to become a judge and the relationship between the FD and the board Can you tell us a little about your role? I’m the group FD in charge of finance, operations, planning and risk at Innocent, which makes soft drinks and smoothies. We have been in operation for about 17 years and I’ve been here for 13 years. Being part of a business that is growing pretty rapidly is something I am very excited about. What characteristics make a great FD? There are certain traits an FD must have such as integrity, truthfulness and a willingness to tell the story as it is. But the thing that probably excites me the most is a curiosity about the business they are operating and the opportunities it presents. These individuals want to investigate how they can make their businesses better.

Things don’t stay static and, if they do, it’s likely the business is going to die

What is it about the Innocent brand that has inspired you to stay with the company for 13 years? There are three reasons. I’m really proud of the drinks we produce – if you drink one, you’ll be a little healthier and much of our fruit comes from third-world countries, which means farmers will also be better off, which is a pretty cool place to be. I love it when I go to the supermarket and see our products for sale on the shelves and it’s even better when someone actively chooses one of our drinks. They have to work extremely hard to earn their salary and to make a choice to spend some of that money on one of our products is really rewarding. We’ve also got a really good team – the average age is about 29 or 30. There’s lots of creativity and being part of that is fantastic. What made you decide to become a judge in the awards? We’ve been involved in numerous award ceremonies ourselves, which have been fantastic for the team and having the opportunity to do something similar in return is important. It’s great when someone who is working incredibly hard in their business is told: ‘I think you’re doing a really great job’. It gives them a lot of confidence to continue doing what they’re doing.

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James Davenport | Interview

There’s a great deal of discussion on the changing role of FDs among the business community. Do you have an opinion on this? A large part of this shift reflects the needs of the business, rather than the evolving role of FDs. When I started at Innocent, we were very much about getting into the guts of the business and working with spreadsheets. But, as the business has grown, it has altered the demands on the FD and this trend is likely to continue. Things don’t stay static and, if they do, it’s likely the business is going to die. You have to progress and change the way you work. What’s your view on corporate reporting? How can FDs make the rest of the business pay attention to financial data? I look at some company reports and they are very obtuse and don’t tell you anything about the business. We have a simple saying here: if you can’t describe your strategy to your grandma in 30 seconds, it’s probably not a wellwritten strategy. For more on the changing face of annual reporting, read our interview with Neil Stevenson of the International Integrated Reporting Council on page 45. What advice do you have for finance professionals at the start of their careers? You have got to have a very strong relationship with your fellow board members: whether the CEO, the commercial director or the marketing director so you can have conversations without fear. You’ve also got to bring energy and enthusiasm to the role and a key part of that is leading your team in a manner they find engaging. Finally, you need to find a product or business that works and a model to make it profitable and scalable over time. For us, innovation has been core to the business and we have to responded to consumer needs, which are changing rapidly. DoF

CV Finance director Innocent Drinks June 2003 – present Auditor BDO January 2000 – March 2003 Auditor BDO Stoy Hayward 2000 – 2002

There are certain traits an FD must have such as integrity, truthfulness and a willingness to tell the story as it is

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Fintech special

Feature | Software

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Five revolutionary

fintech solutions Fintech is a hot topic worldwide and being discussed by the likes of Donald Trump and IBM. But why are these innovations now moving from IT desks to boardrooms? We reveal the pieces of technology revolutionising the way you do business, whatever the size and shape of your organisation

A

s a seasoned finance professional, you’re probably familiar with having your eyes down on a spreadsheet. If you started your career decades ago, you may have assumed this is how your role would play out until retirement. But finance professionals can no longer afford to think like that. If you manage a fleet, for example, the dynamics of your drivers’ behaviour are perhaps being measured by telematics technology and little black boxes. And wearable tech is often a tool to boost engagement through smart watches, mobile apps and pedometers. Are your employees taking enough steps to maintain healthy activity levels? Do they have healthy biometric readings? And you couldn’t miss how tech-savvy those just beginning their careers are in terms of social media – aggressively marketing themselves and their personal brand on Twitter and LinkedIn. Like it or not, fintech is here to stay, which means the role of the FD may never be the same again. With this in mind, we’ve rounded up five of the top technologies creeping onto boardroom agendas worldwide.

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Feature | Software

Blockchain: the next generation of digital currency The term “bitcoin” is probably nothing new to you and this technology has hit the headlines more than once in recent years. But the world of digital currency is rapidly moving on. “Bitcoin” is out as a buzzword du jour and “blockchain” is in. Blockchain is a public ledger of all bitcoin transactions ever conducted. And it is constantly growing – whenever a new transaction is completed, it is added to the set of blockchain transactions. The process is often described as the “transfer of trust on a trustless world”. Why should FDs care? Blockchain is one of the main drivers of change that has come out of fintech from the perspective of cryptocurrencies. Many within the industry predict blockchain could, in fact, revolutionise finance. Blockchain stores information on a global network that cannot be tampered with. It’s this technology that banks feel has the potential to act as a gamechanger in areas such as remittances and securities exchanges. “Bitcoin was a significant breakthrough – but it’s not the whole story,” says blockchain and distributed ledger subject matter expert at Barclays, Simon Taylor, in the report Blockhain: understanding the potential. “The technologies around bitcoin have the potential to transform many different processes and companies should be discussing these developments at the board level and asking how this technology could help them and whether they should be investing in it,” he argues.

The IOT crowd The Internet of Things (IOT) is another buzzword in the fintech space. How does it work? The technology connects devices over the internet, allowing them to communicate with human beings and other devices. The analogy that gains most attention is the smart fridge. When the IOT is in your home, your fridge will send a text alerting you the day your milk passes the best before date. Why should FDs care? According to the research from Mckinsey’s Global report, The Internet of Things: Mapping the value beyond the hype, the IOT could generate up to £8.36 trillion, which would be equivalent to approximately 11 per cent of the world economy. But there is a still a way to go before business are able to capture the full value of the IOT. McKinsey cites the example of an oil rig that has 30,000 sensors – in this scenario; typically just 1 per cent of the data from those sensors would be examined. When it comes to the IOT, experts seem to agree on one point: interoperability (which allows different technologies and software to exchange information and communicate) is the key. In a series of exclusive video interviews with Director of Finance, head of customer engagement at accounting and software company, BluQube, Nicky Wilkins says: “Assess the cost impact of a person keying in that information – assess the cost impact of that process being five or 10 days.”

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BE LAST IN TO WORK AND FIRST OUT AT THE END OF THE DAY As a financial leader, you’re facing more pressure than ever to meet rising expectations with diminishing returns. You’re expected to play a pivotal role in the better management of budgets and costs, security and strategic direction — all with flat budgets and no increases in headcount. By automating your processes with K2, you can improve control over operations and increase efficiency while eliminating the time-consuming, manual approvals and streams that keep you working long hours.

Learn more about the many financial solutions you can build with K2’s business process applications by downloading the whitepaper at: k2.com/firstout

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Every day, we create 2.5 quintillion bytes of data and 90 per cent of the data in the world today has been created in the past two years

Artificial intelligence

Big data: big deal?

Perhaps the ultimate proof of the fintech revolution and the blurring of lines between finance and science fiction lies in the evolution of the artificial intelligence (AI) phenomenon.

We all know the stats… every day, we create 2.5 quintillion bytes of data and 90 per cent of the data in the world today has been created in the past two years, cries IBM.

Why should FDs care? In one of the most published examples of robotics in fintech, Enfield council has employed a robotic employee to deal with front-line customer service enquiries. Following budget cuts and job losses, the council has announced that the AI device will address queries “as a human would” and also has the capacity to monitor thousands of employees simultaneously. The robotic device, known as Amelia, has been previously used the public sector, with one survey suggesting this approach is 60 per cent cheaper than a human employee. In another famous case, wealth management firm Charles Schwab introduced a service in which clients’ money would be managed by an algorithm. Rather than a person, investment decisions would be driven by lines of code typed into a computer.

Why should FDs (still) care? Whatever your views on its efficacy, big data is clearly still relevant as evidenced when it became a point of debate in the US presidential election. When quizzed on the use of analytics and big data metrics, Donald Trump said: “I’ve always felt it was overrated. Obama got the votes much more so than his data-processing machine and I think the same is true with me.” Political posturing aside: the analysis of big data has the potential to identify trends within customer behaviour, with the possibility of increasing segmenting and tracking consumer engagement. Whether your business has a straightforward website or just a social media presence, you’ll receive information that will allow you to monitor your customers’ behaviour and gain insights in what drives their purchasing decisions.

Fintech special

Software | Feature

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Feature | Software

Fintech special

We’ll be drilling down into these topics in more detail in coming issues of the magazine and in our online version.

Ahead in the cloud Cloud computing is nothing new. But one of the most interesting aspects of the debate is the implications for FDs and the role of the finance function. If accountants no longer rely on spreadsheets to get their job done, they can use their energies to partner with other functions of the business and become more involved in strategic direction. Is it safe? Head of product marketing for accounting in the UK and Ireland at Sage, Michael Office, says: “There is a fear of high-profile data loss, which is not necessarily related to the cloud. One of the biggest issues was when child benefit files went missing from HMRC. But this was probably in the infancy of cloud data.” Many within the industry argue there has been a disproportionate focus on cloud security breaches. According to data from Sage, just 16 per cent of data attacks originate from external threats, while 47 per cent are caused by staff incidents. We’ll feature more insights from Office in a future issue of Director of Finance in which we probe the issues of cybersecurity and the future of cloud computing. Another pertinent question in the debate is the emergence of the ethical hacker – a computer and networking expert who systematically attempts to penetrate a computer system or network on behalf of its owners to identify security vulnerabilities that a malicious hacker could potentially exploit. Keep your eyes open for future issues of the magazine for an in-depth interview with an ethical hacker.

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Expert view | K2

WHY YOU NEED TO DIGITISE YOUR PROCESSES Advances in computing power over the past decade have dramatically changed how people think about technology – and what they expect from it

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marter, faster and connected, today’s tech has led to a revolution in how almost everyone on the planet works, lives, plays and, most importantly, accesses information. Because of these tectonic shifts, it should come as no surprise that the business processes your organisation depends on to interact with the new world of the anytime/ anywhere/always-on customer are also being re-imagined. In the past, business process optimisation and automation was all about digitising existing paper-based systems so they would be more efficient. That was it. There was no fundamental rethink about what a process was, just a series of steps to get from one interaction to another in order to achieve a task. Cashing orders, paying procurements and onboarding employees went digital basically unchanged. Fast-forward to today and you can see the limits of this approach. Today’s customers expect to interact with your business. Digitising a process that responds to local business hours and shuts down afterwards does not meet the demands of the customer. Business process optimisation today takes an agile approach to incorporating new information and technologies. As organisations gain access to more content and context, we’ve created a need for greater analysis of that data. Rather than manually correcting our paths, machine learning will enable processes to write themselves and adjust in real-time to changes in the environment. Future processes will meet customer demands, maximise efficiencies, create business opportunities and meet compliance. Many of the things we think about manually automating today will be done automatically. This is not to say more traditional process will not be gone completely, rather the way we write those steps will be better informed. This next generation of self-writing process will be determined by the following factors.

AN EXPLOSION OF DATA First and foremost, this automation will depend on the proliferation of data coming from a host of new sources (people, devices and sensors). As businesses navigate privacy and regulation, they’ll be able to responsibly receive data to improve process and decision-making. Once this data is in the hands of an organisation, users will need access to smart technology, such as machine learning and predictive analytics. Data is only valuable if it can be analysed and made sense of, so tying machine learning capabilities to predictive analytics will be key. We’re already on our way – machine learning is becoming capable of ‘filling in’ for people or systems. MAKING MEANING The final step in making self-writing processes a reality is the ability to take the outputs of those efforts and turn them into actionable outcomes. Very soon, these tools will be capturing data and managing processes seamlessly, and in a way that justifies an initial outlay. What we traditionally saw as a structured process in the past – based on people making decisions – will become more flexible. Process design has graduated from mere efficiency. The prime directive of any process in the future will be convenient, simple and engaging customer experiences. After all, today’s consumer has moved beyond rote transactions too – they care less about the thing or service they’re buying and more about the value it can provide. K2 transforms paper-based processes into business process applications that can accelerate revenue growth opportunities and transform productivity. Learn more by downloading the Business Process Applications for Finance and Purchasing for Dummies e-guide at http://transform. k2.com/finance/finance-process-for-finance-dummies.html

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Managing absence

Feature | Employee wellbeing

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Healthy profits

With employees being one of a company’s most valuable assets, how can FDs help contribute to a strategy that manages their health and wellbeing? Katy Ward gets firsthand insights from industry experts

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ook at the colleague beavering away opposite. Are they a little green around the gills or perhaps they’ve been sniffling all day despite getting in for a 7:30 conference call? Hardly an unusual scenario as more than 90 per cent of workers routinely come into the office when they’re not feeling up to a day’s work…. hindering productivity and inflicting germs on their (previously) fit colleagues. Or perhaps that person isn’t even in the

office, having called in sick for the second week in a row. Again, this wouldn’t be anything out of ordinary for the UK workforce. According to data from the Health and Safety Executive, the cost of illness to the economy is approximately £9.4 billion and the bill for employers is £8 billion. On an individual level, the median cost of accidents is £554, according to the Chartered Institute of Personnel and Development (CIPD).

Burning questions “If you treat people like machinery, you are going to burn them out, and in a knowledge-based economy driven by people’s innovative thoughts and experiences, you have to create the right environment so people feel willing to share their experiences,” insists research adviser in human capital and metrics at the CIPD Edward Houghton.

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Employee wellbeing | Feature

If you treat people like machinery, you are going to burn them out, and in a knowledge-based economy driven by people’s innovative thoughts and experiences, you have to create the right environment so people feel willing to share their experiences

When people are at a premium, it’s surprising that many companies (both across the UK and globally) struggle to establish strategies to adequately cater for the health and wellbeing of their employees. Although 93 per cent of workers routinely come into the office when too unwell, the average length of an absence is rising. The CIPD’s Absence Management 2015 report puts the typical absence duration at 6.9 days,

compared with 6.6 in the previous year. On a sector-by-sector level, manual workers have 1.5 more days’ absence per year than non-manual workers, while absence levels are 50 per cent higher in the public than the private. Isn’t absence management a soft skill best left in the domains of HR? The latest financial thinking couldn’t disagree more. “Within the environment organisations are now operating, it is really important that they understand,

and take into account, the health and well-being of their workforce if they are to drive competitive advantage and recruit the best employees,” says Houghton. “They have to create the right environments for individuals to want to come and work in.” But what’s the angle for FDs? From the perspective of financial reporting, employees fall into the category of ‘human capital’ – one the intangible assets that don’t necessarily appear on its balance sheet, but make a huge contribution to a company’s profits. “The main value of an organisation is tied up in these intangible resources, but we have many difficulties in accessing it,” says Houghton. For more information on the value of people to a business’ bottom line, turn to page 45. The stress test Stress and mental health are perennial questions for professionals invested in employee wellbeing. Despite more than half of people having had a recurring mental health issue in the past 12 months, “we’re not so good at managing people’s mental health,” says marketing director of Canada Life, Paul Avis. “There is a spectrum of causes that could be work-related or non-workrelated, but we’re not very good at dealing with these when they arise.” So, prevention versus a cure? “When people talk about health and safety, they immediately think of stopping staff falling off ladders or slipping on banana skins,” says Avis. “The changing demographic of UK PLC means we’re not in that world anymore and many people have sedentary white-collar jobs with tight deadlines.” Houghton agrees. “Mental health is more likely to become long term and younger workers are more likely to recognise mental health issues in themselves, which is something to bear in mind when we are thinking about developing talent for the future. We have to adapt the way we create our organisations so younger workers feel able to work in a healthier way.” So what should a company do if it wants to retain top talent and avoid being hit by the costs of staff absence? Begin by consulting the workforce, says Houghton. But, this process needs to go beyond the annual survey that ends up

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Money can’t replace employees. But it can keep your business going. If employees are unable to work as a result of illness or injury, it can be a difficult time for them and for you. Our Group Income Protection policies provide both important financial and practical assistance with a guaranteed regular income and rehabilitation specialists to help support a return to work. Crucial protection and a powerful employee benefit are more affordable than you think – call 0345 223 8000 or visit canadalife.co.uk/group

Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

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An X-ray of your business Are you convinced you know the major players and key influencers in your organisation? Well, there is a significant chance you could be mistaken, according to the organisational networking analysis (ONA) model. To deduce the social interaction between members of staff, ONA questions employees on the individuals they rely on and interact with in various workplace scenarios. The results are then represented graphically to reveal the relationships that exist within the organisation. Analysts can then use this information to chart relationships between colleagues. ONA exposes the social currents underpinning a business on a day-to-day business, revealing the employees who are well liked and trusted in professional networks. For many companies, the results may not be as expected, often revealing that apparently lower level employers hold the most potent networking relationships. Rather than identifying the most senior figures within an organisation, the ONS model typically reveals the most adept communicators and is often described as an X-ray into the inner workings of a business.

sitting in a database. It should involve activities such as ‘lunch and learns’ in which experts visit the office to share their views. If you are planning to overhaul your absence management strategy, it also makes sense to take a forensic look at data surrounding staff sickness – not just the level of illness, but also the type. “Your workforce is entirely unique to your organisation and you need to understand the needs of that workforce before putting together any strategies.” Avis agrees and has similar experiences to back this up. “A multinational auditor was on call 24/7 when at work and, alongside the strains of almost permanent hotel living, was taking phone calls at any time of the day or night,” he says. “Exhausted, the employee went off sick.” The company used a rehabilitation consultant to help the auditor in his return to work. “As an employee with valuable skills, he is now UK-based, undertaking another role.” To prevent a similar situation in the future, the company has also rewritten the job description – making it clear late-night calls and hotel stays are a fact of the job. Diverse set of challenges Diversity and inclusivity is another topic high on the agenda in boardrooms across the UK – particularly in light of the aging workforce and shifting pensions regulations requiring staff to work until much later in life than previous generations. For more on the pensions debate, see our feature on page 14. This is the subject of PwC’s Golden Age Index, which measures companies’ success in harnessing the potential of older workers. Among its main conclusions, it found the UK could boost annual GDP by approximately £100 billion (5.4%) if it matched employment rates for 55-69 year olds to those of Sweden – the best performing EU country in its treatment of older workers. “Businesses could gain from job redesign and role shifts to enable longer careers and manage the health issues of older workers,” the report states. “Training and development should not stop at 50. Family crisis leave, career breaks and alumni programmes could all help to utilise

Managing absence

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Feature | Employee wellbeing

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Within the environment organisations are now operating, it is really important that they understand, and take into account, the health and wellbeing of their workforce if they are to drive competitive advantage and recruit the best employees

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Employee wellbeing | Feature

the skills of older workers at a time when customer bases are also aging. Age should be included in diversity audits for companies.” When employees do call in sick The relationship between the line manager and the employee is at the centre of this process, but its success relies on equipping managers with the skills they need. To ensure managers understand the correct protocol for dealing with absence, a transparent absence procedure is essential. Many companies now enforce a telephone

questionnaire on the first day the member of staff calls in sick. The next step is to request a sick note on the seventh day of absence and a face-toface visit on the 14th. “We often take technical managers and promote them to people managers without equipping them with the skills they need, which, in itself, causes people to go off with stress,” says Avis. For line managers and FDs struggling to cope with longterm absence, the difficulties are understandable. But the health of employees will have a very real impact on the health of the bottom line. DoF

Reinventing the office space With everything from baby pictures to aquariums and gingerbread meeting rooms, quirky or unusual office spaces are becoming increasingly popular for staff recruitment and retention. “These innovations such as flexible working arrangements are radically changing the nature of our workplaces and that is a really positive thing,” says research adviser in human capital and metrics at the Chartered Institute of Personnel and Development, Edward Houghton. “We are clearly in an age in which technology is allowing us to approach work in a very different way.” With this in mind, we’ve rounded up some of the most colourful examples worldwide. A sweet spot Nestled in north London’s Kensal Rise, the healthy drink chain’s headquarters has earned itself the title of ‘Fruit Towers’. Sitting on synthetic grass or at one of the building’s park benches, staff can enjoy unlimited free smoothies or a free breakfast. To add to that, all new employees also submit a baby picture to be displayed in the canteen wall. For a sneak peek into the Innocent offices, read our exclusive interview with group FD James Davenport on page 28. As one of the judges in the upcoming Director of Finance Awards, he discusses his own route to success and the qualities he is looking for in our nominees. Google’s Zurich headquarters While the search engine’s headquarters are often shrouded in mystery, it is alleged that the Switzerland branch boosts a massage room, aquarium and slide into the canteen. In the UK, London employees can host meetings in a replica of a London bus or a recreation of a country park – complete with rowing boat. Treehouses in Hoxton Last year, a pop-up tree house known as TREExOffice opened in Hoxton Square in the east end of London. As a tech hub for freelancers, the structure contained power plugs to allow time-pressed freelancers to connect their devices to the wi-fi. And this isn’t the only office space in tune with the great outdoors. Mind Candy, which was behind the Moshi Monsters game phenomenon that swept the children’s entertainment world several years ago, boasts wooden treehouses and gingerbread houses as meeting rooms in its Old Street offices in London. Blazing inferno According to reports, this media agency based near Covent Garden offers a glass elevator, taking guests to a bar and pool table in the reception area.

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In association with

Employee wellbeing | Infographic

PUTTING WELLBEING AT THE HEART OF YOUR BUSINESS

Advances in technology have changed how and where we work. The modern workforce is more diverse than ever, with more female workers and employees working beyond the traditional retirement age. Finding the right work/life balance is becoming more important, particularly to those just entering the workforce.

PERFORMANCE

RESPONSIBILITY

62%

93%

86%

believe the whole management team is responsible for workplace wellbeing

consider the management of wellbeing to be part of their role

of employers across Europe, the Middle East and Africa believe there is a correlation between health and employee performance

ENGAGEMENT

COSTS

30% of employees would consider leaving their job due to poor workplace wellbeing...

21%

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of employees would be less motivated to work

The average cost of replacing an employee

across five key sectors earning

26%

of employees would be less likely to stay with an employer long term Sources: Management Today survey, commissioned by Unum, 2015, Finance Director survey, commissioned by Unum, 2014, The Aon Health Survey 2016 , ICM Survey, commissioned by Unum, 2014, Cost of Brain Drain report by Oxford Economics, commissioned by Unum, 2014

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Unum Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

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Unum | Expert view

LESS SICKNESS, FEWER COSTS Communication and giving staff a voice are the secrets of managing employee wellbeing, argues Steve Harry, CFO of employee benefits provider, Unum

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f you have an engaged, motivated and healthy employee, he or she is more likely to be successful in their career and take less time off due to sickness. This scenario has to benefit any company in terms of increased productivity, higher retention rates and reduced sickness costs. From a financial perspective, wellbeing has a role to play in influencing costs and there is a business case for recognising the hard and soft aspects of a healthy workforce. Not everything on a wellbeing agenda is directly measurable, but FDs should look at the programme holistically and the contribution to the overall organisations’ culture and values. There is also a retention factor at play, which is particularly important in an environment in which businesses are concerned about the skills shortage and are seeking to retain their best talent. About a third of employees would consider leaving their job due to poor workplace wellbeing, according to the ICM survey commissioned by Unum. Furthermore, 21 per cent would feel less motivated and 26 per cent would be less likely to stay with their employer in the long term. [See infographic opposite for facts and stats on employee wellbeing]. If you are planning to overhaul your staff wellbeing strategy, the first step is getting to know your workforce. Every company is different in terms of the demographics of their workforce. And, to add to that, workplaces are changing dramatically: with more female, older and transient workers. Different benefits will be attractive to different sections of your workforce. For example, life insurance is likely to appeal more to those with families, rather than those who are single. Matching your package to the needs of your staff is vital Communication is another cornerstone of employee engagement. If your workforce isn’t aware of your benefits and support mechanisms, you may as well not have them. Failing to tell staff about their employee benefits is costing UK companies £2.7 billion each year, through increased staff turnover and sickness absence1. Listening to your staff and introducing benefits they request can have a really positive effect on engagement. 1 2

Communicating your employee benefits effectively is vital. Opinions about who is responsible for managing talent are shifting; some 62 per cent of respondents in a recent Management Today survey believe wellness is now the responsibility of the whole management team, not just HR2 . The right wellbeing strategy is something that the whole board should be engaged with along with the employee benefits package that supports it. A THREE-TIERED APPROACH When it comes to managing health and wellbeing, there are three key stages any wellbeing strategy needs to consider: • Prevention: putting support in place to help keep staff fit and healthy. • Early intervention: stepping in at the beginning of an employee’s sickness absence and, if possible, mitigating absences before they become too severe. • Protection: if an employee has to take long-term sickness absence, having support place, such as income protection, to help provide financial protection. GETTING THE METRICS RIGHT To be successful, you have to measure the effectiveness of your approach – whether through absence statistics or retention data. Employee engagement statistics can be a powerful indicator of whether your measures are getting the right message across in terms of how you lead and develop the business. You can achieve this by rolling relevant questions into your engagement and satisfaction surveys so employees feel they have a voice. FIVE STEPS TO ESTABLISHING A WELLBEING CULTURE • Look at talent as a valuable asset and nurture your workforce. • Invest in your working environment and technology. • Tell your staff about your wellbeing strategy, if they don’t know about it they can’t appreciate it. • Regularly update staff on your wellbeing strategy. • Lead by example, show your employees you believe in your strategy and are committed to it.

Management Today survey, commissioned by Unum, 2015 Money Talks: Communicating Employee Benefits, a report by Cass Business School, commissioned by Unum, 2013

Unum Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

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Neil Stevenson | Interview

Reporting

from the front Neil Stevenson, managing director of global implementation at the International Integrated Reporting Council, explains how businesses can get stakeholders to take notice of their financial data – and why this matters. Katy Ward reports

We need more consistent measurement of reporting around human and intellectual capital and, at the moment, that probably doesn’t exist

Why does reporting matter? We all argue for greater transparency and better business. Reporting is one of the great tools that can help achieve that. It instills discipline in an organisation, helps it be more transparent about what it does in a positive way and tell its story, which leads to better engagement with stakeholders. But it’s only going to be relevant if we think about how we’re creating value and how we measure it. It is not going to come through more compliance. It is going to come through a coherent story that informs people and that really is worth fighting for.

My own belief, which is shared by many, is that finance directors and people in accountancy more broadly can, and should, see that as a worthy aim. Integrated reporting is the topic of the moment for finance functions worldwide. Why is it suddenly gaining so much attention? There’s a happy convergence of a number of strands – the emergence of new business models that are much more reliant on human capital and technology. There is a

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Interview | Neil Stevenson

CV Managing director, realisation that today’s corporate reporting model is, at best, fragmented and possibly broken, and needs to evolve to be relevant. We often talk about reporting on the value of the whole business and not just the finances. Sustainable development is of increasing importance to a much wider group of stakeholders and there is the obvious and growing interest from investors in these kinds of decisions. If the finance function doesn’t move into a bigger understanding of the way in which the organisation is creating value, it is not understanding the whole business.

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global implementation International Integrated Reporting Council June 2014 – present

Executive director, brand ACCA 2001 – 2014

Senior marketing manager PricewaterhouseCoopers 1995 – October 2001

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Why Ebit Business Solutions? Our Solutions: Detailed benchmark and review of current contracts Analysis of both historical and current spend In-depth analysis of current supplier base Detailed review of specifications, future business and supply base requirements Management of tender process including supplier negotiations Recommendation of best value supplier solutions Implementation and delivery of supplier and contract solutions Extensive market knowledge and benchmark database across multiple spend categories

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Interview

Interview | Neil Stevenson

Today’s corporate reporting model is, at best, fragmented and possibly broken, and needs to evolve to be relevant. Investors want certainty and confidence in the information that they have and they get that from financial reporting

It risks losing relevance and missing whole swathes of value being created. FDs are ideally placed to take a leading role in driving new report models. What do you see as their key role? Finance directors are important leaders within their organisations so they can make a difference in using tools such as integrated reporting. FDs own the whole reporting cycle and mechanisms around reporting: they want to innovate the channel and make it work harder. More importantly, investors want certainty and confidence in the information that they have and they get that from financial reporting. FDs can use all those skills across the organisation in creating robust datasets. How would you summarise the key business benefits of integrated reporting? Through IR, businesses can demonstrate the material resources and relationships they use to create value – what they rely on now and in the future. These are key business questions organisations need to measure.

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It’s important we don’t ask organisations to do things unless we can demonstrate the benefits and the biggest benefit of IR is understanding value in a modern organisation. This model of joined-up reporting is driving more relationships across the organisation, in terms of linking performance to strategy, producing more certain data to engage the board, which fuels better business decisions. Institutional investors want a clearer view of the organisation and to understand how you’re creating value in the future. Integrating reporting can add much more confidence to those conversations. What advice do you have for companies looking to embark on their first integrated report? Start by getting clarity on how the company creates value. What are the critical resources and relationships? How might these change or be affected in the future? Thinking about where you’ll be in the future is a critical aspect of integrated reporting. I would then ask organisations to put in place more rigour and clarity against the information they work on. Consider what measures matter to the board and try to get a stronger

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Neil Stevenson | Interview

What is integrated reporting? Through integrated reporting, companies can demonstrate how they create value to their stakeholders. Rather than simply relying on financial data, integrated reporting provides information on factors that don’t traditionally appear on the balance sheet. A key characteristic of integrated reporting is to include non-financial data into reports to illustrate an organisation’s current performance and future potential. It does this by looking at six capitals across an organisation: • Financial: economic resources that can be measured in terms of cash. • Manufactured: EY defines this as: “Physical objects that are available to an organisation for use in the production of goods or the provision of services.”

It’s important we don’t ask organisations to do things unless we can demonstrate the benefits and the biggest benefit of IR is understanding value in a modern organisation

• Intellectual: the value of intangible assets such as patent trademarks and copyrights. • Human: the skills, experience held by the employees within an organisation (for more on the value of human capital to an organisation, turn to our feature on page 36). • Social and relationship: the value derived from an organisation’s reputation and goodwill. • Natural: according to the Natural Capital Coalition, these are the natural resources (plants, animals, air, water, soils, minerals) that combine to create value for people and businesses.

link between internal and external reporting. Investors want to see the mind of the board. What has the board been thinking about in its innovations and decisions? What information was it relying on to make those decisions? Then ask, how can we be certain we’re on track? What performance benefits are right for us and how can we track these? The simple things don’t require huge amounts of resources – they do require a bit of dedication from the top. What about SMEs? Do you have any advice for these businesses on compiling their first integrated reports? I would say to a smaller company: “don’t try to overcomplicate it”. I urge any small enterprise to look at the value-creation model in our framework, which talks about models and inputs and outputs, what will impact on value in the future. It’s always a work in progress and we shouldn’t think that large organisations always have the resources they need either. Their reporting requirements can often be a lot larger over various subsidiaries and divisions. A powerful driver for any company thinking is: “we are living in an age of transparency and really need to show that

we do engage in that way”. There is an overpowering case for doing it over time. What about business partnering? How can integrated reporting help the finance function build better relationships with other areas of the organisation? When drawing up your integrated report, think about the structure and working relationships within your organisation and how you can create those touchpoints with all those involved in reporting. Seek greater collaboration and alignment of reporting silos to get those links with risk management. We strongly encourage organisations to think about breaking down reporting silos. When businesses start doing that, they achieve insight that they hadn’t expected. Don’t question: “how much more effort can we put into the reporting process?” But “how much effort can we put into understanding and measuring the value of this organisation and making better decisions?”

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Interview

Interview | Neil Stevenson

Learn more The International Integrated Reporting Council http://integratedreporting.org/ The Natural Capital Coalition http://www.naturalcapitalcoalition.org/ Brand Finance http://brandfinance.com/ Chartered Institute of Management Accountants http://www.cimaglobal.com/Thoughtleadership/Integrated-reporting/

We all know that a huge amount of a company’s assets don’t necessarily appear on the balance sheet. What is your view on the relationship between intangible assets and integrated reporting? We need more consistent measurement of reporting around human and intellectual capital and, at the moment, that probably doesn’t exist. Many businesses worldwide seem to be moving to a less frequent reporting model. Do you have any thoughts on this? A shift to a longer-term planning horizon is appropriate in today’s business environment… thinking about the need for more long-term sustainability. We don’t believe quarterly reporting is essential in that context. For pension funds or funds with a longer-term nature, we would hope to see reporting that aligns to the investment horizon. Our framework talks quite deliberately about short- to medium- and long-term horizons. We summarise that as creating value over time. What are your predictions for reporting models in the coming years? The next two to three years will be around building linkages with institutions and encouraging companies to adopt integrated reporting. Going forward, we need two things – a more emphatic sense of how it all fits together and to speak to each other much clearly.

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We are starting to see some really good innovations in how can we use online and other tools. The future has to innovate the way in which technology is consumed and the integrated report is put together. Getting easier and more consistent access to information will help. In the future, we will see innovation, which will be positive and welcome. Investor interest in using broader information to drive their investment decisions will also become more important. Even now I am seeing a much broader interest in the impact of client change. What will future reporting look like? We will see some exciting innovations around the means of delivery. But the important point is that the integrated reporting framework is very high level and I would expect it to be relevant, even if the way reporting is done changes. I would expect a focus on a broader context of value and relevant performance metrics – those sorts of things will remain constant. What motivated you to become personally involved in integrated reporting? In my personal observation, there were lots of initiatives around reporting and parallel agendas that were not coming together. Reporting really does speak more than ever to today’s business agenda around transparency, driving change and being innovative. There is a fantastic opportunity to make reporting more relevant. DoF

DIRECTOR OF FINANCE

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06/07/2016 13:22


How the future of finance is shaped by tech We all know that those who embrace change early usually advance and succeed. This is certainly the case when it comes to new opportunities in finance technology. Looking back, the colour television, the personal computer and the internet have changed our lives forever. So, what’s next? Quite simply, the next things to change finance aren’t a million miles off what’s in our personal technology use. They include mobile devices, user-intuitive software design, system integration and cloud computing.

How user experience will change your processes Software in our personal lives has been designed with enjoyment and simplicity of use in mind; just think how easy it is to retrieve and share information on your phone – well the same should apply to your financial technology use. Having a finance system with user-friendly design and tailored access means you can devolve certain finance tasks to non-finance users. This allows them to input their own information, or login to access crucial reports without going through an overburdened finance team,which is a real benefit as it gives the finance team freedom to focus on more value added tasks.

Pick and choose Web service integration is another element we’ve been seeing in our personal gadgets for years. This (not so new) technology allows your systems to integrate and share data in real-time without being tied in to one supplier across your full suite. So, just as your smartphone uses a range of 3rd party apps, your organisation can choose the best systems for each department, ensuring accurate information is shared with the finance system from the entire business.

A head in the Cloud and a step ahead in finance Without a doubt you are probably using cloud-based systems already, such as Gmail, Spotify, DropBox, or Netflix etc. As of February 2015, 93% of UK businesses were using at least one cloud service1. This is only set to grow year on year. In fact, 43% wish they moved sooner2. Which goes to show how quickly the business world is adopting cloud services - and how important it is to NETFLIX keep up to date.

Updating not outdating We’re all familiar with how quickly technology can evolve. It doesn’t take long before any investment becomes less efficient than the competition, outdated, or worse, completely unsupported. And when the time does come to update systems, more often than not you’ll find yourself at the mercy of spiralling costs, available storage space and compatibility with other software and hardware. But with the cloud, updates to your finance system happen with no unexpected costs whatsoever, and completely free of the hassles associated with on-site servers.

What’s more, because any software change is handled by your supplier, the associated time and costs of hosting is left in the hands of the experts, leaving you to focus on more important uses of your time and money. The idea of a finance system being cloud-based is the beginning of a much more flexible way of working.

Mobile tech, mobile business With the sales of smartphones surpassing traditional PCs, having a finance system that can work on mobile devices has come to be expected by all. More of us are working from personal devices rather than dedicated work computers, which promotes productivity, flexible and efficient working environments,saves on hardware costs and reduces downtime – win, win. This automated, mobile access to software is a massive step forward for finance, but much like a bad restaurant with a new renovation, if the user-experience isn’t any better the benefits of change will be short-lived. The sole purpose of having any software is to make life easier, not slow it down. So if your supplier isn’t keeping up to date, then your business is beginning everyday on the back foot. These days, all finance systems perform the necessary everyday tasks like purchase orders or budget account enquiry; added value comes in working with a supplier that differentiates itself in ways that aid your wider goals. That’s where cloud systems, improved mobile capabilities and intuitive software really start to excel your current and future financial potential.

How are you going to adapt? Many of the world’s most notable software suppliers including Adobe have already moved towards an entirely Cloud based service, spending decades updating and improving connectivity between other programs and developing intuitive user interfaces. This attitude towards systems and software is equally as important in finance systems. With the rate that financial software is developing, the adoption of new technologies is less about ‘whether’ you will adopt, and more about ‘when’.

1 www.itproportal.com/2015/02/21/cloud-adoption-still-rise-it-departments-take-lead 2 www.pcworld.com/article/2685792/infographic-smb-cloud-adoption-trends-in-2014.html

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