Pieter de Jager - CFO Andulela Investment Holdings: "I don't count my chickens before they hatch"

“Financial management in the manufacturing space is the most technically challenging arena for finance professionals,” says Pieter de Jager, Chief Financial Officer of Andulela Investment Holdings. He joined the board of Andulela Investment Holdings as CFO in 2008. Andulela is an investment holding company listed on the Equity Investment Instruments sector of the main board of the JSE Limited. The company employs over 550 people and seeks to hold primarily South African strategic investments in mining and metals companies.

After completing his accounting studies at the University of Pretoria and UNISA, Pieter served his auditing articles at Ernst & Young. Upon completion of my articles he joined a large multinational manufacturing concern in the electrical engineering sector. "It was a real birth of fire to make the transition from the largely theoretical audit profession to operational financial management in the manufacturing space, which I still deem to be most technically challenging arena for finance professionals."

Thereafter he spent the following six years working in the FMCG and Transport & Logistics sectors for the likes of Premier Foods, National Brands and Imperial Cargo at group financial manager level. "Being an extremely competitive person, I found myself stagnating at a crossroad in my career and decided to enrol for an MBA degree to enhance my management skills."

Shortly after starting the MBA at GIBS (University of Pretoria), Pieter accepted an expatriate CFO role in the diamond mining sector based in Kinshasa, The Democratic Republic of the Congo. "This was most probably the most testing two years of my professional life," says Pieter. "Travelling to Johannesburg every two weeks to attend lectures and exams, I had to concurrently study, work on MBA research assignments as well as manage the entire executive finance and commercial functions of an operational diamond mine." The mine was owned by a Russian private equity group, which necessitated further international travels to Moscow for board meetings. "I successfully overcame these challenges by remaining focused on the goal to always finish what I start, keep my head down and most importantly remain humble in my achievements."

Following his tenure in the DRC, he joined Sir Sam Jonah (former CEO of AngloGold Ashanti) in a newly established private equity venture: Jonah Capital as Group CFO. "Based in Sandton, Johannesburg we were involved with various mining and related services investments in Sub Saharan Africa as well as reverse listing a PGM tailings retreatment operation on the JSE Ltd in 2008. This was when I also joined the board of Andulela Investment Holdings Ltd as CFO. I have largely remained as the CFO of Andulela through a change in controlling shareholder during 2009/2010. During this period I became experienced in corporate finance, mergers & acquisitions, corporate governance and compliance."

How do you perceive the role of the CFO has changed in the last five to ten years?
In the recent past the role of the CFO evolved to include more strategic leadership responsibilities. As integral part of the strategic steering committee I find that more reliance is placed on the CFO for economic and market insights. Acquisitions and business strategy decisions weigh heavily on these inputs.

How do you see the role of the CFO evolving in the next decade or so?
With the ever evolving legal and corporate governance landscape, I believe that the CFO will become increasingly more tasked to focus on ethics and compliance systems implementation and monitoring. I foresee the role of the CFO also including extensive involvement with drafting, presenting, implementing and monitoring corporate governance as well as social and ethics projects throughout the organisation. This will obviously increase the workload and deliverables even further

What do you enjoy most about your job and why?
Personally, I find it imperative to have a good working relationship with all my personnel and the other executives. Hence my informal morning meetings with them to plan the day's deliverables, discuss and resolve any issues and to track progress all work projects. More importantly, I want to ensure that each employee maintains a healthy balance between work and personal life through regular direct personal interaction.

Would you say that accurate forecasting and budgeting is still feasible for a financial department in today's tumultuous financial markets?
I don't believe that companies will ever function without budgeting and forecasting. It remains the essential framework for strategic planning and measuring performance. One cannot discard budgeting due to economic instability or uncertainty. Cyclical volatility has been witnessed throughout history and remains a fact of business. Through in-depth research (consensus forecasts, economic and market research reports) the budgeting assumptions and inputs should withstand scrutiny to account for eventualties.

What do you see as the greatest challenge for South African companies in the global economic situation and for your industry in particular?
We are witnessing a period of consolidation and rationalisation. Where large multi-national firms are putting a hold or slowing down on capital projects and expansionist acquisitions. SA companies are feeling the pain in one form or another. It remains a challenge to cut costs, renew the focus on core business and exit out of non value adding activities/services/products whilst continually reviewing internal business processes for efficiency. Players in the industry where Andulela operates in are reviewing and restructuring debt levels and discontinuing marginal businesses & markets.

Which skill(s) do you think a finance professional should master to be most successful in his work?
First and foremost you are an accountant and should remain up to date with the latest relevant financial reporting standards, disclosures and listings requirements. In my case, the proverbial buck stops with me as far as interim- and annual audited financial reporting to shareholders are concerned.

Secondly, one should be aware of all applicable statutory and legislative changes that impact the business operations and decisions. Changes in the Companies Act and Tax Act have had a significant impact on group restructuring plans and mergers & acquisitions deal structures in the past two years.

Lastly the value-adding "soft skills" like operational and strategic leadership coupled with inter-personal motivational abilities. Moving my organisation and finance departments from complacency to world-class best practices required a mixed basket of persuasion, motivation, patience and persistence.

Which achievement or project in your business career are you most proud of?
It is difficult to highlight one specific project as being the most important of my career. All successfully completed projects were stepping stones to career advances and seemed most important at the time. One is only as successful as your last project or achievement. I have been blessed with a number successful projects for example: Implementation of large 1000-user ERP software system at Imperial; securing long term diamond production off-take export agreements in the DRC; assisting in the reverse listing of an asset into Andulela on the main board of the JSE Ltd; assisting with the acquisition and integration of a large national steel processing operation into the listed Andulela group.

I am currently implementing a new ERP/MRP software system at the steel processing subsidiary group. As mentioned before, I don't count my chickens before they hatch and cannot complete any project on my own in isolation. It requires team work, persistence and motivation. For the moment this one is most important.

Please name something - a procedure or process for instance - that was implemented in your company before you were appointed CFO, which you changed after you took the position of CFO.
It actually seems insignificant in the bigger scheme of my career, but the first thing that jumps to mind was to tackle a poor accounts receivable (debtors) book at my first job in commerce. I was the youngest of the executive management team and I was extremely nervous in proposing a radical change of the procedure to incentives sales representatives (of whom some were nearly thirty years my senior). Using the principle of "a sale is only a sale when the money is in the bank", I managed to convince the executives to only calculate sales incentives once the full invoice had been paid.

By implication this approach resulted in Reps becoming involved with the collection of payments from customers and making fewer sales to customers with poor payment histories. The resulting improvement on the payment collections and debtors-days outstanding was immediate and overall beneficial to the company as a whole

Who is your role model in life and why?
Jack Welch, the former CEO and Chairman of GE. His fearsome no-nonsense legacy of only being No.1 of No.2 in your particular industry, or else leave it completely, holds a valuable lesson for individuals in the workplace and life in general. People need to motivate themselves to be the best at what they do.

Another interesting business concept was coined by Jack Welch in an interview with the Financial Times on the global financial crisis of 2008-2009, Welch said, "On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers and your products."

What vital piece of advice would you give young ambitious finance professionals?
Don't be a generalist, be a specialist and be confident about it!

If you also would like to share your ideas with the CFO community, please get in touch with us to arrange an interview with you.Please contact Jurriën Morsch on [email protected].

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