Shaun Drummond

Australia’s CFO scene faces an invasion of blooded corporate warriors from overseas. Photo: Tanya Lake

Companies are hiring more finance chiefs from overseas who have been through the worst of the global financial crisis and been forced to make massive cuts and radically change their business, said finance executive recruiter Heidi Mason.

Up to 40 per cent of finance chiefs Mason placed in Australia in 2012 were from overseas – mostly the UK – and international experience in economically tough markets as well as culturally different markets in Asia remain the most sought-after traits.

“The biggest factor for our clients is that they have been through something so much tougher than we have done,” said Mason, the head of the Financial Officer practice at the local arm of international search firm Russell Reynolds. “That experience is what is really appealing to people right now.”

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Will Willitts

Siemens has appointed company insider Ralf Thomas as its new finance chief to succeed Joe Kaeser who has moved up to become chief executive’s post following the departure of Peter Loescher in a bitter boardroom battle, a news report said.

Thomas, 52, has been finance chief of Siemens’ industrial products business for five years, “overseeing a series of successful acquisitions of industrial software companies,” Reuters reported on its web site. He takes over as group CFO immediately. He succeeds Joe Kaeser who was promoted to chief executive after the ouster of former CEO Peter Loescher.

Shares in Siemens, a maker of gas turbines and high-speed trains, rose nearly 1 per cent to €89.42 by midday European time, putting them among the top gainers on Germany’s DAX index, Reuters reported on its web site.

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Shaun Drummond

Two companies hit by the downturn in mining investment hired new CFOs this week.

NSW Hunter Valley heavy equipment and engineering company SubZero Group appointed Robert Lojszczyk as finance boss on Wednesday from his role as chief financial officer at NSW Government owned coal miner Cobbora Holding Company.

His appointment comes after the company, formerly called SVC Group, was sold in April to shareholders in SubZero Holdings via a share purchase agreement for $30 million.

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Australian Power & Gas’ CFO Warren Kember has been appointed as interim CEO amid a raft of board changes following AGL gaining majority ownership of the energy retailer.

On Monday, AGL announced that its CFO, Brett Redman, company secretary Paul Williams and head of capital markets John Hobson would be appointed to the board of the small energy retailer after AGL achieved majority ownership of APG.

AGL has so far acquired more than 80 per cent of APG’s shares and has launched a 52c a share on-market offer for the remaining shares.

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Shaun Drummond

South Africa is targeting Australian companies, including Telstra, looking to send jobs offshore, spruiking lower costs and better language skills. Photo: Paul Jones

South Africa wants to be in on the rush of Australian call-centre and administration jobs going offshore, arguing it is as cheap as the likes of the Philippines, India and Malaysia, but with a more familiar cultural face.

Its push is being backed by the South African government as it sees outsourcing of business processes as a major job creator. The country specialises in ­customer service, but will soon offer incentives to attract skilled workers such as actuaries.

“I can’t recall ever being cold-called by a country before,” one executive of an Australian telecommunications company told The Australian Financial Review at a briefing hosted by South Africa’s Trade Department.

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Queensland coal miner New Hope has promoted CFO Shane Stephan to CEO. He will take over from retiring chief executive Robert Neale in January.

Financial controller Matthew Busche will take over from Stephan and present chief operating officer Bruce Denney will stay in his role.

Like many coal exporters, New Hope has suffered recently from declining coal prices but has had some relief from a lower Australian dollar.

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Shaun Drummond

Grant Thornton chief executive Robert Quant said he expected a pick-up in work from legislative change as well as from improvements in business confidence. Photo: Louie Douvis

Accounting firms expect a jump in advisory and compliance work when the new federal government makes legislative changes, but many are also ­hoping for an indirect lift from increased business confidence.

The change couldn’t come too soon for most, with the big four firms cutting prices and competing with mid-sized firms for smaller clients as business has sat on its hands in the lead-up to the election.

“Many of these firms are literally in the bunkers due to the economy and the downturn and the lack of certainty,” said professional services firm consultant George Beaton.

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Shaun Drummond

Exporters in the smallest sector are expecting the least gain in volume due to the lower value of the Australian dollar, according to Citi’s quarterly trade index. Photo: Jessica Shapiro

Businesses are hoping a lift in confidence from the Coalition win on Saturday will open individual and corporate wallets, but treasurers and CFOs know global forces hold more sway over their fate than expectations of a more stable local government.

This is particularly true for small importers and exporters. Luckily the economic gods appear to be getting kinder, but smaller players continue to benefit the least from recent market swings and regulatory change, according to a quarterly survey of trade expectations out today.

Those businesses with a turnover below $150 million still rate access to finance ahead of the high Australian dollar – which was by far the most pressing issue for all businesses bigger than this – as the biggest brake on growth, with most believing tougher global banking regulation is hitting that sector hardest.

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Coles is applying for a banking licence so it can offer savings accounts, adding to its existing insurance product backed by parent Wesfarmers.

See article in Capital from September 2012 on branching into new markets where former Coles CFO, Tony Buffin, foreshadowed the move and explained the rationale.

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Shaun Drummond

CFO Shane Fitzsimons says 60 per cent of GE’s revenue is now earned outside the US.  Photo: Louise Kennerley

The finance boss of GE’s markets outside of the United States says the global conglomerate still expects double-digit growth from emerging markets despite a slowdown in developing economies.

The Hong Kong-based chief financial officer of GE’s global growth and operations, Shane Fitzsimons, said 60 per cent of the company’s revenue is now earned outside the US.

He said it is on track to meet growth targets of above 10 per cent in its “growth markets” for 2013, which includes Brazil, Russia, India and China as well as the resource countries serving those emerging markets.

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Sally Rose

Corporate finance professionals want the government to ditch one of the pillars of its “thin capitalisation” reforms or, at the very least, stagger its introduction.

Treasury plans to abolish section 25-90, a clause in the thin-capitalisation rules it says has created a loophole that has been abused by multinationals to unfairly minimise their local tax bill.

Critics argue the change will have unintended negative consequences for local companies and their ability to invest locally and offshore.

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Sally Rose

Connected ... Billionaire Roman Abramovich was governor of autonomous okrug for 14 years and has business interests there. He approached Linc Energy with an interest in deploying its technologies for underground coal seam gas extraction. Photo: Reuters

A new partnership with a brash oligarch presents big opportunities for an emerging Queensland company in Russia. In November, Russian billionaire and Chelsea Football Club owner Roman Abramovich touched down in his private jet to inspect Linc Energy’s underground coal gasification demonstration facility in Chinchilla, Queensland. Since then, Linc Energy and one of the tycoon’s companies, LLC YakutMinerals, have signed an accord. A feasibility study is now under way with a view to a joint venture in remotest Arctic Russia.

Perched on a peninsula at the country’s north-east tip, the Chukotka region lies across the Bering Strait from Alaska. Linc Energy’s chief financial officer Stuart Jones is charged with risk management of the study and potential project from the company headquarters in Brisbane. He has no plans to visit to Russia: it is sufficient that Linc Energy’s founder, chief executive Peter Bond and other members of the management team have visited the site and nearby administrative centre, Anadyr, bringing back the information Jones needs.

“The operating environment in Russia will be supportive of the project out of necessity,” says Jones. Despite Russia being a major gas producer, the relative weakness of the ruble means it is far more profitable to export than reserve for domestic consumption. But Jones says: “Like many governments around the world Chukotka’s administration is focused on securing energy supply from within their own region.” 

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Shaun Drummond

China is moving fast to relax restrictions on its currency, the yuan, but while banks have been quick to spruik the advantages of the liberalisation, few finance chiefs can identify immediate benefits.

On a visit to China in April by then PM Julia Gillard, it was announced the Australian dollar would be directly exchangeable with the Chinese yuan, also known as the renminbi (RMB). Importers and exporters said while it was a laudable change, it would take a long time to move both Chinese suppliers and buyers away from US dollars.

Another factor creating resistance to change is the uncertainty about how the exchange rates between the Australian dollar and the US dollar, and the $A and the yuan, will fluctuate. “The majority of currency analysts expect the US dollar to depreciate against the RMB in the short to medium term. If they are right, moving from $US to RMB to pay suppliers will expose us to additional cost inflation,” says Paul Witheridge, the chief financial officer at Australian importer McPherson’s.

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Christopher Joye

The new Basel III-compliant hybrid market is a tremendous capital arbitrage opportunity for Australian banks. And much more so than most appreciate. These instruments, ranging from additional Tier 1 “convertible preference shares” to Tier 2 “subordinated bonds”, can be immediately converted into equity by the Australian Prudential Regulation Authority (APRA), or written off completely – in which case they rank below ordinary shareholders – in any stress scenario.

The latter characterisation is important. As recent disclosure documents have carefully warned investors, APRA has refused to define the circumstances under which it will pull the trigger on the powerful “non-viability” clause that it now requires to be embedded in these investments to ensure they are compliant with the “loss absorbing” demands of Basel III. So here’s the arbitrage: in all downside scenarios these hybrids are either equity or worse than equity (that is, written off). But the cost to the bank is much lower than equity.

ANZ Banking Group’s recent convertible preference share priced at around 6.1 per cent, while Westpac’s latest subordinated bond priced at circa 5.3 per cent. This is substantially cheaper than issuing new equity, with ANZ and Westpac shares paying franked dividends of 7 to 8 per cent and, critically, giving shareholders all the capital growth potential and voting rights owners possess under the Corporations Act. In contrast, the hybrids have no equity upside but retain all the downside, and are denied the control rights and minority protections afforded to shareholders.

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Shaun Drummond

Zlatko Todorcevski’s major project as Brambles's new chief of finance is the demerger of its document management business, Recall. Photo: Rob Homer

Brambles finance boss Zlatko Todorcevski has regularly worked overseas, but since landing the role of chief financial officer at the logistics business just under a year ago, the air miles have gone into overdrive. When Capital first caught up with him in June, he had visited about eight countries in three months and was about to head off again.

The schedule is not surprising given 90 per cent of Brambles's’ earnings come from outside Australia, but Todorcevski has also had a lot to learn about a deceptively complex business that is in the middle of divesting the last part of its conglomerate model.

Deutsche Bank transport and logistics analyst Cameron McDonald knows Todorcevski from when they were both in the graduate program at BHP nearly 20 years ago. He was pleasantly surprised to see his old colleague back in a global company when Todorcevski was hired to replace Greg Hayes, whose retirement was announced in July 2012 on the same day as Brambles said it was aborting the sale of its document management business, Recall.

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