What are your priorities for 2007?
Phil Lee, finance director, Britannia Building Society:
Ensuring that IFRS is fully bedded in across the business; continuing the
transformation of finance from number production to adding value through
interpretation of the numbers; and driving process improvement.
Aidan Smith, finance director, Liberty International:
Conversion of the group into a REIT and further improvement of the group’s
David McSweeney, finance director, BMT: Developing India and
China, and sorting long-term pension plans.
Peter Linthwaite, CEO, British Venture Capital Association:
Ensuring the UK remains the centre of European private equity and venture
capital activity. To sustain our position we must ensure the tax and regulatory
regimes remain competitive and that economic policy remains focused on creating
a stable, dynamic and entrepreneurial environment.
Are you concerned about the state of the UK or world
Lee: Overall, I’m expecting stability, but I am slightly
nervous about the US and, in particular, if there is a significant fall in
consumption what impact that will have on China and hence knock-on to the rest
of the world economies.
Smith: The UK continues to perform above most expectations,
but decline in the US is beginning to take hold and growth from emerging markets
may not plug the gap. So, on balance, yes I am concerned about both.
McSweeney: I believe there will be a cooling off of the
western economies during the latter part of 2007. The state of the economies are
fine all the while sensible monetary policy is followed and changes in interest
rates are responded to the same way as they have done in the UK, US and the EU
over the past few years. Taxation in the UK could make us uncompetitive here.
Linthwaite: Recent UK economic data points to a continuing
robust economic outlook, but we need to invest in the future in terms of
infrastructure, skills and innovation if the UK’s productivity is to improve.
The US economy is showing signs of strain, which may have a knock-on effect here
in 2007. Attractive investment and export opportunities remain in India and
China that must be seized. Across European markets, greater pressure in ironing
out inconsistencies in the single market would be welcome if Europe is to
compete with the other great trading blocks.
At the moment, the FTSE-100 index is around 6,025 – up about 9.5% so
far this year. What is your expectation for the index at the end of
Lee: I expect the index to fluctuate up and down and
probably end up around 6,400 by the end of 2007.
Smith: 6325 (+5%)
McSweeney: I believe the FTSE-100 will rise to 6,700 to
7,000 during next year, but will have fallen back to 6,250 by the end of the
year, assuming confidence continues to wane.
What advice do you have for finance directors for 2007?
Lee: Get ahead of the game in preparing for the flood of
regulations that is coming our way.
Smith: There’s a lot going on, and with an increased focus
on transparent reporting and good IR the demands being made on the finance
director are increasing. You have to have a good team around you.
McSweeney: Engage with the standard setters for practical
ideas. It’s too full of academics at the moment, leading to too much
bureaucracy. Also, ensure that your organisation has effective risk management;
review your incentive plans to see if they are achieving the medium-term aims
and aspirations of the enterprise; and don’t overstretch resources.
Linthwaite: Keep a careful eye on interest rate and exchange
rate exposure management in 2007, as conditions may become more volatile.