TWO MORE experts have kindly agreed to give us their thoughts on the year ahead for their business, teams, and themselves.
UNUM CFO Steve Harry and Pizza Hut UK Restaurant’s FD Henry Birts give us their views.
For the thoughts of the FDs of Xchanging, Mimecast, St Aubyn Estates, HSS Hire and Mind Candy, click here
What have been the biggest challenges for your business over the past year, and what role did finance play in addressing them?
Steve Harry (SH): Operating in a low interest rate environment is a key challenge. There is a key role for finance in optimising our investment strategy to maximise returns while also balancing this against risk appetite. Pricing actions have also been necessary to mitigate the pressure from low interest rates and finance has been at the heart of the debate in balancing sales, persistency and profitability.
Henry Birts (HB): The last year has seen some significant changes for the Pizza Hut Restaurants business. Our separation of the restaurant business means that we’ve transformed it from a corporate business unit into a standalone, private entity, which included a complex divestment process from Yum! brands. Finance was at the heart of the separation, along with IT, as this was where most of the services and infrastructure were shared between the two businesses.
The finance team has also had to transform itself to meet the needs of a private equity owner; there’s been a wholesale change the way we report financials and the way we make decisions.
Another major challenge has been reinvigorating the Pizza Hut Restaurants concept, brand and guest experience. This has been a delicate balance between radical innovation and commercial thinking. The finance team has played a key role in balancing these priorities, ensuring financial constraints are not stifling innovation, whilst making sure that the new concept drives maximum returns within our cash parameters.
Will you pursue more expansionary or defensive strategies in the year ahead, and what will those strategies be?
SH: Strategy is likely to have a greater focus on growth next year, though pricing discipline will remain key. We also expect our increased investment in analytics capability to support a more segmented strategy across employer segments. Auto enrolment will also continue to act as a trigger for wider employee benefit reviews across business.
HB: We will pursue more expansionary strategies, albeit through our existing estate.
Through a national long-term investment of £60 million which includes significant renovation of our estate, an innovative new menu and a strong focus on the customer experience, we have a joined-up approach meaning that marketing, finance, and all of our separate functions are aligned and take a holistic, focused approach to how we communicate the brand.
As well as constantly evaluating on our existing estate to ensure we’re in the best place to meet consumer demand, we are also looking at selective new restaurant opportunities where we believe we can get attractive returns.
What actions should government undertake to improve the business environment for UK corporates?
SH: Economic outlook is improving. Significant changes in economic policy at this point could be de-stabilising. Announcements on corporation tax rate reductions going forward are likely to increase attractiveness of UK for corporates. Extension of Auto Enrolment from pensions to also include Income Protection would help address the significant protection gap in the UK workforce.
HB: Reduction of VAT within the hospitality industry is key. The hospitality industry is a huge employer and driver of job creation and the UK economy and more reliant on people and service than most industries to add value. This would be a major positive for job creation, consumption and the broader economy.
Will the furore over corporate tax avoidance fade in 2014?
SH: No, not while austerity measures are still in place (likely to be beyond 2014 as per David Cameron’s speech at the Lord Mayor’s Banquet).
HB: No, I believe the moral rather than technical legal responsibility of companies will continue to play an increasingly important role.
Advice for other FDs for the coming year?
SH: As businesses emerge from the economic crisis and the outlook improves, FDs / businesses will be turning their attentions to the growth agenda and an increasing focus on investment cases. It is crucial to maintain the financial rigour and discipline that has served your business well as we move into the next phase of the cycle.
HB: Be cautiously confident, and invest judiciously.