The cliché about first impressions is true: there is never a second chance. And with CFO tenures averaging just over five years, there is little time for finance chiefs to waste when starting a new job. Here are some tips for getting off to a good start.
Find an Ally
It is crucial to quickly get to know the finance team. But since no one can be everywhere at once, it’s good to have an observant adviser within the company, says Blythe McGarvie, former BIC Group CFO and now CEO of Leadership for International Finance, a corporate finance and leadership consultancy.
McGarvie suggests finding someone in the company to “be your counselor, letting you know if the troops need more attention or if they’re confused.” An ally does not have to be a peer or a direct report; hers was a junior colleague who was attuned to the workforce and unafraid to share his observations. Over time, his suggestions became indispensable, as McGarvie realized that the people who needed help rarely came into her office asking for it.
Get Things under Control
A CFO who wants to position himself as a strategic partner to the CEO should avoid getting bogged down in the controller function, says Bill Maw, CFO of Liquidnet, a vendor of electronic securities-trading systems. “My number-one risk is the controllership, but I want to worry about it the least,” he says.
A new CFO should establish a strong controllership function early on, whether that means adding positions, hiring people, or reorganizing. “You want to have a team and processes in place that make you extremely confident,” Maw says. “That’s not going to happen in 90 days, but you have to have the commitment in place to support you going forward.”
Don’t Skimp on the Finance Department
CFOs want to control costs, and what better way to do that than tightening the purse strings of the finance department, right? Wrong, Maw says. “CFOs often think they’ve got to set an example from a cost perspective, and they kind of cheapen themselves,” he says. Cutting the budget for finance solely to be a model for the company is a mistake, he says, because it can restrict the quality of finance talent. And more than anything, a new CFO needs capable, engaged employees.
Be a Collaborator
When it comes to strategy, it’s easiest to forge ahead if executives across the company are on board, says Suzanne Bates, president of Bates Communications and a business-communication coach. Particularly for a new CFO, it’s important to vet plans with the right people, whether launching an IT transformation or introducing a new initiative, she says. “Keep them updated on where things stand so that they’re hearing how the project is advancing. That way you’re constantly winning buy-in for the next move.”
A new finance chief should also look for informal support and feedback on how to make projects more efficient and less disruptive to the business, Bates adds. “Lots of the things the CFO does have a big impact on the other business functions,” she says. “It’s critical for the CFO to gather input and make sure that he is doing what he can to make it as easy as possible.”
A new CFO should spend lots of time listening, McGarvie says, noting that many finance chiefs spend too much time talking and not enough time taking notes on what they hear. “When you’re new, you find so much information and get so many ideas, but it’s not wise to act on those ideas immediately,” she says. Rather, the first 90 days are an opportunity to determine which strategies, people, and processes are healthy and which need improvement. “You can tell by talking to people whether they believe in the current strategy. Those sorts of clues really help you long term when it comes time to review the strategy,” McGarvie says.
The listening process will also help a new finance head understand the political factors within a company, says Howard Seidel, an executive coach at Essex Partners. “As much as we want to believe organizations are very rational entities, they’re not,” he says. “Even if you try to make a change in an organization and it makes sense on paper, there may be things in the way.” Understanding such potential obstacles will smooth the way when it is time to start making big decisions, perhaps as soon as Day 91.
By Marielle Segarra
Safaricom post-IPO investor wealth rises to Sh1.3trn peak
The Safaricom stock hit a historic peak recently, closing at a high of Sh32.80 per share on Friday, thereby swelling investor wealth eightfold since its listing on June 9, 2008, inclusive of dividends.
Shareholder wealth as measured by market capitalisation has now touched Sh1.314 trillion, representing an increase of a whopping Sh1.114 trillion from the time the company listed 40 billion shares at Sh5 a share 11 and a half years ago.
When the company’s cumulative dividend pay-out totalling Sh301.2 billion over the 12-year period is added, Safaricom investors have enjoyed a return of 708 percent on initial investment of Sh200 billion. The dividend alone has been enough to allow investors to recoup their capital at listing and remain with an additional Sh101.2 billion balance.
The gains last week also pushed the company valuation as a share of the entire market to 50.4 percent and underlined its dominance on the stock market. Crossing the 50 percent threshold means Safaricom’s market worth is now more than the combined valuation of all the other 61 listed companies.
Analysts have attributed the rally in the last one year to sustained foreign demand, with the growth in dividends being a key factor in driving its attractiveness to investors who have few other options to make money in the market.
“The feel-good factor surrounding Safaricom has spilled over into the New Year, on bullish sentiments by foreign investors,” said Standard Investment Bank analysts in a note.
Last year, the stock led the market in net foreign inflows at Sh4.6 billion, which backed a share price gain of 42 percent to Sh31.50 between January and December 2019. During the year, foreign investors accounted for 75.4 percent of total traded volumes on the counter.
Since the beginning of this year, the stock has gained 4.1 percent. The company’s ability to continue to generate record profits — combined with a generous dividend policy that sees it pay out 80 percent of net earnings to shareholders — helped maintain demand through a bear run that gripped the NSE between 2015 and mid last year.
Safaricom has managed to make large capital investments in telecommunications infrastructure, introduce new services and pay incremental dividends with minimal debt and without seeking additional funding from shareholders.
The firm has therefore been able to build up cash reserves quickly, culminating in two special dividend pay-outs in the past four years.
In the year ended March 2019, the company declared a final dividend per share of Sh1.25 and an additional special distribution of Sh0.62 per share, bringing the total to Sh74.92 billion.
It had also paid a special dividend of Sh0.68 per share during the financial year ending March 2017, on top of an ordinary dividend of Sh0.97 a share.
Driven by growth in M-Pesa revenue, the firm’s net profit for the year ending March 2019 rose by 14.7 percent to Sh63.4 billion.
In the six months to September 2019, its profits recorded a similar margin of growth — 14.4 percent to Sh35.65 billion — again on strong M-Pesa and mobile data revenue performance.
Egyptian investment firm EFG Hermes Holding said in their 2020 yearbook markets report that the rise in profitability and market capitalisation of Safaricom and large banks, while the rest of the market lags behind, will see their dominance become more entrenched at the NSE.
These are the stocks most likely to benefit from an expected return to the equities market by local institutional investors, who have in the past three years tended towards the fixed income segment. “Local institutions remained invested in fixed income for most of 2019, but the impact of the rate cap repeal on local rates and monetary easing could force more local institutional money back into equities in 2020,” said EFG Hermes in the report.
Safaricom’s influence on the market has, however, had the effect of skewing the performance trends of the main indices, depending on whether they are weighted on price or market capitalisation.
The market cap weighted NSE All Share Index is currently at a 16-month high of 171.36 points, reflecting the positive effect of the huge weight that Safaricom has on the index due to its valuation.
On the other hand, the price weighted NSE 20 share index, where blue chips with a high nominal price (such as BAT Kenya, Bamburi, EABL and Standard Chartered) carry more weight, has benefitted less from Safaricom’s gain.
It closed at 2,701 points on Friday, which is below its 2020 high of 2,707 points recorded on January 3.
Rolls-Royce announces highest annual sales of 5,152 cars in 2019
Rolls-Royce Motor Cars has achieved the highest annual sales in 2019 with a global performance unequalled in the company’s 116-year history, the luxury car company announced recently.
According to Torsten Müller-Ötvös, Chief Executive Officer, Rolls-Royce Motor Cars, a total of 5,152 cars were delivered last year to customers in over 50 countries, an increase of 25% on the previous high set in 2018.
With these historic results, Rolls-Royce continues to make a meaningful contribution to the overall performance of its shareholder, BMW Group.
Rolls-Royce sells 5,152 cars in 2019, records best-ever sales in 116-year history
“This performance is an altogether different magnitude to any previous year’s sales success. While we celebrate these remarkable results, we are conscious of our key promise to our customers, to keep our brand rare and exclusive.
“We are pleased and proud to have delivered a growth of 25% in 2019. Worldwide demand last year for our Cullinan SUV has driven this success and is expected to stabilise in 2020. It is a ringing testament to the quality and integrity of our products, the faith and passion of our customers and, above all, the skill. The dedication and determination of our exceptional team at the Home of Rolls-Royce at Goodwood and around the world is part of our success,” Müller-Ötvös said.
Meanwhile, the car company disclosed that it recorded growth in sales across all regions during the year, which was driven by strong customer demand for all Rolls Royce models.
However, North America retained top status with one-third of the car maker’s global sales followed by China and Europe.
Rolls-Royce Motor Cars, through a global network of 135 dealerships sold in more than 50 countries, and as part of its long-term commitment to sustainable growth, the company announced two new dealerships Rolls-Royce Motor Cars Brisbane and Rolls-Royce Motor Cars Shanghai Pudong.
Rolls-Royce Motor Cars is expected to launch later in the year a flagship dealership in London, which would double the size of the previous location.
Hyundai plans to invest $87 billion into producing 44 new electric vehicles
Hyundai Motor Group is set to invest $87 billion in the production of electric vehicles and autonomous driving. This was announced by the company’s Executive Vice Chairman, Chung Eui-sun.
The $87 billion investment would be put to work over the course of 5 years in future mobility technologies like the planned production of new electric models.
Speaking during the Hyundai new year ceremony held at the company’s head office in Seoul, Eui-sun announced that the company plans to expand its electric line-up to 44 models, including 23 battery EVs and 14 hybrids, and two fuel-cell EVs. He said the first new battery EV would be launched next year.
He further said, “To consolidate our leadership in vehicle electrification, we plan to operate 44 electrified models by 2025, including 11 dedicated battery EV models, by bolstering the development of EV platforms and core components.
“In particular, in our fuel-cell electric vehicle business, where we boast the world’s top technological competitiveness, we will hit our stride by providing fuel-cell systems to customers not only in the automotive industry but also in other sectors”.
Eui-sun further revealed that the company is also big on self-driving commercialisation as it aims to develop an autonomous driving platform by 2022 and to start operating self-driving vehicles in 2023 before commercial production the next year.
As part of its self-driving commercialisation plan, Hyundai invested $2 billion last year into a joint venture with Ireland-based autonomous vehicle startup Aptiv.
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