Risk & Economy » Brexit » FD Q&A – the year ahead: Derek Sommerville, ACCA

Derek Sommerville, director of finance at the ACCA, gives his views on the year ahead

What have been the biggest challenges for your business over the past year, and what role did finance play in addressing them?

The biggest challenge has been dealing with uncertainty. This can take multiple forms, whether it be in predicting revenues, the confidence in the performance of underlying business drivers, or the impact political uncertainty will have on the economic environment within which we operate.

As finance is responsible for synthesising information on behalf of the organisation, we gathered and analysed huge amounts of relevant data and carried out scenario planning and sensitivity analyses to understand the potential impact uncertainties. We advised on how resources might be re-allocated to address changes in predicted revenues, counteract changing economic conditions in specific markets, or hedge against currency movements.

What are the key political and economic risks/opportunities you face in the year ahead?

Following on from above, without doubt uncertainties created by Brexit, the forthcoming Trump presidency in the US.

Next will be the 2017 elections in Germany and France, as both are likely to generate uncertainties that could present both risk and opportunity. For example, although the softening of sterling has had a negative effect on our overseas buying power, it has also resulted in an increased affordability of the ACCA qualification in a number of our international markets.

Which capex projects will you be focusing on in 2017, and how will these be financed?

Our capex roadmap for 2017, and indeed over the three-year period to 2020, focuses on addressing our legacy IT infrastructure. We are firmly in the e-commerce space and need to re-position our infrastructure to support this.

I am lucky enough to control a balance sheet strong in liquid assets, so I am likely to finance from a combination of cash held in our balance sheet and cash generated from ongoing operating activities. I am, however, cognisant that money is relatively inexpensive at the moment, so may consider partial financing via a loan.

How do you expect the balance of your role to change in the coming year; between compliance and forward-looking/strategic? And why?

Increasing regulatory activity will require effort to be directed towards compliance, whether this be addressing tax across our international footprint, or GDPR and increased focus on localisation of data protection in general.

That said, the balance of my role will continue to become ever more directed towards forward-looking, strategic activity.  Given that the organisation has embarked upon a highly ambitious, international growth strategy, I need to be aware of how the landscape is likely to change and impact upon our plans, and implementing mitigating action where appropriate.

Advice for other FDs for the coming year?

Hold your nerve! 2017 will no doubt throw up a number of uncertainties, whether this be driven by ongoing political change and the impact it will have on economic conditions, or changes to the regulatory environment. Although uncertainty initially suggests risk, and an impulse to ‘batten down the hatches’, we should be on the lookout for the opportunities which will present themselves, and be bold enough the embrace the positive prospects which change will provide.