Consulting » FD VOX POP – Class of ’98 looks to the future.

Name: David Maloney[QQ] Company: Avis Europe Interviewed: February 1998 What are the three biggest issues that you will be facing as an FD in 1999? Trying to explain to the City that we’re a European business, not just a UK one. Year 2000 – you can test everything you do, but the real issue is what everyone else is doing; but because of the legal issues, no one wants to open their books and show you. Helping the business meet its targets! What’s the biggest impact the euro will have on your company in 1999? We need to understand whether our customers are going to want to be billed in euros. Other than that, making sure we’re ready for the transition of the UK to the currency itself. Our planning assumption is that it won’t necessarily be as scheduled. It might roll forward. How will talk of recession affect your planning for the year? It’s difficult to tell whether there’s going to be a recession. One thing that is for certain is that in the last three months, whether it’s a psychological issue or the feelgood factor or whatever cliche you want to use, people have definitely cut back on their spending. We anticipate that that will continue through 1999, and we’re planning on that basis. What should the government do in 1999 to make life easier for you? They put a £25 registration tax on all the cars we buy from 1998 – they could take that off! For a business like ours, buying maybe 40,000 cars a year in the UK alone, it’s a lot of money. What’s the best piece of advice you can give to fellow FDs for 1999? Look forward – we’ve got the euro, the year 2000 and developments within the UK. So the resolution should be “Be prepared”. Name: Patrick Ponchon Company: Xerox Ltd Interviewed: April 1998 What are the three biggest issues that you will be facing as an FD in 1999? Implementation of a pan-European finance system; Year 2000; and euro implementation What’s the biggest impact the euro will have on your company in 1999? No major impact as we are already operating europe wide. How will talk of recession affect your planning for the year? There could be a slowdown in demand which may affect our marketing investment. What should the government do in 1999 to make life easier for you? Nothing particular. What’s the best piece of advice you can give to fellow FDs for 1999? Keep focused on your vital few priorities and do not try to solve world hunger. Name: Andrew Goodburn Company: Ricardo Group Interviewed: CEO Rodney Westhead profiled, June 1998 What are the three biggest issues that you will be facing as an FD in 1999? Continually driving down costs and improving efficiencies; implementing a groupwide ERP system; and expanding into Germany … all to improve earnings growth. What’s the biggest impact the euro will have on your company in 1999? Our major European customers are likely to insist on payments in euros. How will talk of recession affect your planning for the year? If we try hard enough, I am sure we can “talk” ourselves into recession. What should the government do in 1999 to make life easier for you? Commit Britain to joining the euro so that we can play a leading role in the development of European economic and monetary union. Then companies can develop their own corporate strategies accordingly. What’s the best piece of advice you can give to fellow FDs for 1999? Always remember that a highly motivated workforce can deliver better results to the shareholders than a “penny-pinching” FD. Name: Duncan Mayall Company: Williams Grand Prix Engineering Ltd Interviewed: July/August 1998 What are the three biggest issues that you will be facing as an FD in 1999? Cost control – it seems to just escalate; Emu – whether Britain will enter and what we are going to do about the euro; and changes in the industry – specifically for us, in the medium term, Bernie Ecclestone planning to move (F1) into the public domain as far as possible. What’s the biggest impact the euro will have on your company in 1999? The biggest impact will be hedging our euro income with our expenditure. It just simplifies the risks. We’re already getting people wanting to deal in euros from January, which is fine. How will talk of recession affect your planning for the year? We’re certainly being talked into a recession, especially with the problems in the far east. There will be a downturn which will affect our sponsors and that’s where most of our income comes from. So we would have to gear for a slight reduction and fight hard for increased sponsorship to keep up with costly advances in technology. What should the government do in 1999 to make life easier for you? It’s too easy to say something about tobacco sponsorship, but Formula 1’s been given plenty of grace on that. The single biggest thing, because of the amount of research and development and recapitalising on high technology equipment, would be to be a lot more generous on capital allowances. We spend £2m to £3m a year but we get very little back as a tax allowance. For Frank (Williams), that’s just a cost of production. What is the best piece of advice you can give to fellow FDs for 1999? Plan your retirement. Plan it a couple of years earlier than you have been thinking about up to now! Name: David Davies Company: London International Group Interviewed: September 1998 What are the three biggest issues that you will be facing as an FD in 1999? Year 2000 – in April we want to have everything tested and fixed, so it’s a key issue in 1999. Emu is less of an issue – with the systems upgrades we’ve been doing, we can handle a range of currencies. US expansion – with Durex condoms launching and the expansion of the medical gloves business. What’s the biggest impact the euro will have on your company in 1999? The challenge is whether euro pricing leads to further harmonisation of our retail prices across Europe. It’s not so much Emu driving that, but the consolidation of retailers, particularly coming out of Germany, which are investing in other European markets. The euro will provide additional transparency. How will talk of recession affect your planning for the year? For us, it has more to do with what might happen to sterling, rather than the buoyancy of the UK economy. Condoms and medical products tend to be recession-proof, they’re non-cyclical sectors. Of course, if the whole thing went off the rails and we saw massive changes either way in interest rates, that would be interesting. What should the government do in 1999 to make life easier for you? Our future’s in our own hands, largely. What’s the best piece of advice you can give to fellow FDs for 1999? It’s important to feel challenged and enjoy what you’re doing. Name: Liz Airey Company: Monument Oil & Gas Interviewed: October 1998 What are the three biggest issues that you will be facing as an FD in 1999? Lack of profitability of the oil and gas exploration and production business in much of the world with the oil price at 25 year lows. Reconfiguration of our industry that is taking place in response to the oil price. Taking long-term investment decisions against this backdrop. What’s the biggest impact the euro will have on your company in 1999? We will not know the true impact – which is on the economy of Europe – for many years: it depends how well the ECB handles the decisions it will face in 1999. How will talk of recession affect your planning for the year? A UK recession looks likely in 1999 but (as a commodity business) our business is affected by the outlook for the world economy. We believe the difficult outlook worldwide will bring very tough times, but also opportunities. Our strategy is to be financially strong during this period so that we can capitalise on these opportunities. What should the government do in 1999 to make life easier for you? I am not sure we want an easier life here – just a more profitable one. What’s the best piece of advice you can give to fellow FDs for 1999? Opportunities to create value tend to be largest where the problems are greatest. So if you have not got any problems maybe you should be looking for some! Name: David Liddle Company: Dibb Lupton Allsop Interviewed: November 1998 What are the three biggest issues that you will be facing as an FD in 1999? Cost management – any economic downturn heightens the need for vigilance. Risk management – there is much greater awareness of this as a business concept and everyone wants to minimise risk; it’ll be the fashion accessory for 1999! Information management – improved information management to help me with the other two. What’s the biggest impact the euro will have on your company in 1999? Hopefully not much on January 1. The extent to which it will affect us will be client driven and so far we haven’t had major clients asking to be billed in Euros. We have a Brussels office which will be at the frontline, but I think any impact here in the UK will be slow. Ask me again next year. How will talk of recession affect your planning for the year? This one is harder than picking a winner at the races. It depends which tipster you follow and there’s always a good explanation when it doesn’t win. The Chancellor’s forecast will certainly be optimistic so we are talking about the downside probability compared with that. There’s a large body of opinion which favours a slow down rather than negative growth as the likeliest scenario so that’s where I’ll put my money. As a firm we expect a slowdown in deal activity and a shift towards reconstructions and recovery programmes and possibly more litigation. To some extent the signs are there now but the pace of change is not yet clear. What should the government do in 1999 to make life easier for you? Introduce lots more complex legislation! What’s the best piece of advice you can give to fellow FDs for 1999? In your busy schedule each week remember to leave a few hours for yourself. Name: Peter Jenkins Company: Regus Interviewed: Financial Millennium (December 1998) What are the three biggest issues that you will be facing as an FD in 1999? It’s like the old “location, location, location” saying about property – for us it’s “managing growth, managing growth, managing growth”. But the top three would be: – Managing growth – Raising additional finance – Possible flotation What’s the biggest impact the euro will have on your company in 1999? We’ve got a team of people working on it, but actually we don’t think it’s a huge issue for us. We are a very European business already. We’ve obviously got to sort out dual-billing where people want it. There is a simplification of our forex exposure management, that’s the biggest help for us. How will talk of recession affect your planning for the year? Maybe I’m pessimistic, but we’re definitely going to see a slowdown. It’s hard to predict what size of recession it will be. I think we’ll know early in the year whether it will be a soft or hard landing. One of the worries is that you get into a situation like Japan, where you’ve got nowhere to go – interest rates are so low, and actually that’s the only tool the central bankers have to stimulate the economy. A recession could be good for our business. Our move-outs have significantly decreased over the past few months because companies don’t want to take on new commitments. As the recession comes on, we’ll be watching our debtors even more closely. What should the government do in 1999 to make life easier for you? Do nothing. Everything it (the government) ever does makes our lives more complicated. Finance directors generally are facing a barrage of new legislation, new accounting standards – it would be nice to have a bit of a breather from new measures. Long term, going into the euro would benefit us through simplification. What’s the best piece of advice you can give to fellow FDs for 1999? I suggest that everyone has their millennium celebrations this year (1998) – we’re all going to be far too busy come the end of next year. All leave will be cancelled, so you’re better off getting the celebrations out of the way early.