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WOMEN IN FINANCE: GETTING ON THE BOARD

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Adam Bloch

fdu group’s Adam Bloch believes it is time for more boards to introduce more women to the CFO role and looks at the difference between the UK and the US in making this happen.

Adam Bloch

Adam Bloch

How many women are on your board? Probably not that many. In the UK women account for 17.3% of FTSE100 and 13.2% of FTSE250 board members across function, an increase of nearly 50% since 2010. In particular the female CFO is under represented with only seven female CFOs in the UK’s FTSE250. A recent report by Lord Davies of Abersoch, ‘Women on Boards 2013’ put the onus onto UK companies to increase the presence of women on boards to 25% by 2015. I believe they have some way to go in order to achieve this.

The US was in a similar position with 54 female CFOs in the US Standard and Poor’s 500 Index in January, but according to a Bloomberg ranking study it’s seen an increase of 35% in female board representation within the top 500 in the last year after a huge push by companies to encourage more women to the board.

Liz Huebner, former CFO for Getty Images, who is now Board director at Blucora where she also chairs the Audit Committee says US companies are concerned about the lack of females on boards: “The figures are rising for CFOs but very slowly. Some states in the US have taken affirmative action, where they select women to readdress the balance. On my board, there is only one woman and we have an opening. One of the top three criteria is that the next member is a woman. ‘If you don’t ask, the chances of it happening aren’t very good,” adds Liz.

Alison Carnwath, the UK’s only female chair of a FTSE100 company board, Land Securities, believes there’s no shortage of females who could take the role. “Capability and supply have changed so much so that it’s now generally recognised that many females are ambitious for board appointments and sentiment is less prejudicial than it used to be. Those who rise to the top of business, do so and should do so, on merit. Equality cannot be overriding here.”

“There’s generally a longer established pipeline of females who have come up through the legal and accountancy professions than say marketing or graduate schemes. Women don’t always want to give up their entire life to such a highly pressurised role as a CFO, but there’s been a steady increase of those who aspire to that role,” suggests Alison, who is also a CFO mentor. She believes there are more CFOs in the US because women working higher up are audible and championed by the press.

And in the US more young females are majoring in accountancy, currently representing over 50% of those recruited into finance roles. Liz adds: “It’s a great field that gives you the opportunity to use skills that sometimes women are better at. You have to be very collaborative, work across many lines of responsibility and be pretty persuasive.”

Employment lawyer and partner for Trowers & Hamlins, Tania Tandon, believes law and regulation can have an effect. “In the UK, under the Equality Act 2010 people are protected from being treated less favourably because they are female. There is, however, no provision for them to be treated more favourably (because they are female).”

The US is more open to change and progression. Boards in the UK should expand searches to a more diverse pool of candidates in order to enable positive change in the overall economy. Diversity theory is a strategy for building a better board, including identifying qualified women to pursue careers as future directors. Why not have boards sponsoring women in senior management to pursue board positions in other companies?

While traditionally, the membership of board appointments in the UK has been made by the ‘old boy’s network’, things are slowly changing. Boards are beginning to look further afield. This, combined with true position specification of the CFO role, will ensure a wider selection of the best people for the job, and be more likely to increase the pool of women too.

However, there are still some challenges for ambitious women. Sex discrimination cases are hard to prove in court. Tania said: “The degree of sex discrimination (if any) at senior level is difficult to quantify. Although the compensation for discrimination is not capped so the stakes are high, there are very few reported tribunal cases because many are settled outside of court.”
Making the necessary comparisons for a discrimination case, however, can be tricky. For example, Tania mentioned cases where female employees have argued that they were dismissed because their male bosses’ female partners did not want them around – would that have been the same if they had been men?

Another challenge women deal with is how to balance careers with childcare. Even though attitudes are changing in terms of company laws and flexibility, for most, having a family cannot be ignored. For Liz it meant returning to work after only seven weeks. “I was in a senior position and felt I had to get my work done. Women in the US only have three months maternity,” she adds.

In the UK women can elect to go back to work if they want and can elect for the husband to share in the childcare. Alison adds: “There’s no doubt about it if you’re off work for a year it’s going to be more difficult to slot back in.”

Female finance professionals are often pigeonholed on support and control-orientated roles, rather than being seriously considered and accepted as strategic executive leaders. More transparency of real recruitment criteria and publishing of companies’ statistics would improve the status quo.

Alison said: “It’s up to all of us women, who want to make it to this level to do our jobs properly and make it known that we are up for further promotion and ambitions; to get annoyed if we have male bosses in the dark ages. We never ask that question of men – how can we encourage them – we are all competing equally here and so we should.”

Confidence is returning to the market but top talent is still cautious about moving between companies still exists, so an employer needs to put in place means of retaining and continually training their employees. By ensuring talented employees, no matter what their gender, are given the ability to develop their careers and achieve company and personal goals – companies will not only help to meet Lord Davis targets, but may just be giving their board the skills it needs to succeed in a rapidly-changing world.

Adam Bloch – co-founder and managing partner of fdu group Adam has 16 years consulting and advisory professional services experience with global public and private companies. He has a background in board and executive level recruitment in multiple industries with a particular interest in the technology, media and communications sectors.

fdu group– fdu provides companies of all sizes with access to the finance expertise they need at every stage in their business lifecycle. They offer a unique combination of executive search and recruitment on a full-time, interim and part-time basis and expert advice and practical resources to help companies meet their performance goals.

Business

Euro zone business activity shrank in January as lockdowns hit services

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Euro zone business activity shrank in January as lockdowns hit services 1

By Jonathan Cable

LONDON (Reuters) – Economic activity in the euro zone shrank markedly in January as lockdown restrictions to contain the coronavirus pandemic hit the bloc’s dominant service industry hard, a survey showed.

With hospitality and entertainment venues forced to remain closed across much of the continent the survey highlighted a sharp contraction in the services industry but also showed manufacturing remained strong as factories largely remained open.

IHS Markit’s flash composite PMI, seen as a good guide to economic health, fell further below the 50 mark separating growth from contraction to 47.5 in January from December’s 49.1. A Reuters poll had predicted a fall to 47.6.

“A double-dip recession for the euro zone economy is looking increasingly inevitable as tighter COVID-19 restrictions took a further toll on businesses in January,” said Chris Williamson, chief business economist at IHS Markit.

“Some encouragement comes from the downturn being less severe than in the spring of last year, reflecting the ongoing relative resilience of manufacturing, rising demand for exported goods and the lockdown measures having been less stringent on average than last year.”

The bloc’s economy was expected to grow 0.6% this quarter, a Reuters poll showed earlier this week, and will return to its pre-COVID-19 level within two years on hopes the rollout of vaccines will allow a return to some form of normality. [ECILT/EU]

A PMI covering the bloc’s dominant service industry dropped to 45.0 from 46.4, exceeding expectations in a Reuters poll that had predicted a steeper fall to 44.5 and still a long way from historic lows at the start of the pandemic.

With activity still in decline and restrictions likely to be in place for some time yet, services firms were forced to chop their charges. The output price index fell to 46.9 from 48.4, its lowest reading since June.

That will be disappointing for policymakers at the European Central Bank – who on Thursday left policy unchanged – as uncomfortably low inflation has been a thorn in the ECB’s side for years.

Factory activity remained strong and the manufacturing PMI held well above breakeven at 54.7, albeit weaker than December’s 55.2. The Reuters poll had predicted a drop to 54.5.

An index measuring output which feeds into the composite PMI fell to 54.5 from 56.3.

But despite strong demand factories again cut headcount, as they have every month since May 2019. The employment index fell to 48.9 from 49.2.

As immunisation programmes are being ramped up after a slow start in Europe optimism about the coming year remained strong. The composite future output index dipped to 63.6 from December’s near three-year high of 64.5.

“The roll out of vaccines has meanwhile helped sustain a strong degree of confidence about prospects for the year ahead, though the recent rise in virus case numbers has caused some pull-back in optimism,” Williamson said.

(Reporting by Jonathan Cable; Editing by Toby Chopra)

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Volkswagen’s profit halves, but deliveries recovering

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Volkswagen's profit halves, but deliveries recovering 2

BERLIN (Reuters) – Volkswagen reported a nearly 50% drop in its 2020 adjusted operating profit on Friday but said car deliveries had recovered strongly in the fourth quarter, lifting its shares.

The world’s largest carmaker said full-year operating profit, excluding costs related to its diesel emissions scandal, came in at 10 billion euros ($12.2 billion), compared with 19.3 billion in 2019.

Net cash flow at its automotive division was around 6 billion euros and car deliveries picked up towards the end of the year, the German group said in a statement.

“The deliveries to customers of the Volkswagen Group continued to recover strongly in the fourth quarter and even exceeded the deliveries of the third quarter 2020,” it said.

Volkswagen’s shares, which had been down as much as 2%, turned positive and were up 1.5% at 164.32 euros by 1158 GMT.

Sales at the automaker rose 1.7% in December, at a time when new car registrations in Europe dropped nearly 4%, data from the European Automobile Manufacturers’ Association showed.

Like its rivals, Volkswagen is facing several challenges due to the coronavirus pandemic as well as a global shortage of chips needed for production.

It also sees tough competition in developing electrified and self-driving cars. The merger of Fiat Chrysler and Peugeot-owner PSA to create the world’s fourth-biggest automaker Stellantis adds to the pressure.

Volkswagen said on Thursday it missed EU targets on carbon dioxide (CO2) emissions from its passenger car fleet last year and faces a fine of more than 100 million euros.

The group is expected to release detailed 2020 figures on March 16.

($1 = 0.8215 euros)

(Reporting by Kirsti Knolle; Editing by Maria Sheahan and Mark Potter)

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Global chip shortage hits China’s bitcoin mining sector

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Global chip shortage hits China's bitcoin mining sector 3

By Samuel Shen and Alun John

SHANGHAI/HONG KONG (Reuters) – A global chip shortage is choking the production of machines used to “mine” bitcoin, a sector dominated by China, sending prices of the computer equipment soaring as a surge in the cryptocurrency drives demand.

The scramble is pricing out smaller miners and accelerating an industry consolidation that could see deep-pocketed players, many outside China, profit from the bitcoin bull run.

Bitcoin mining is closely watched by traders and users of the world’s largest cryptocurrency, as the amount of bitcoin they make and sell into the market affects its supply and price.

Trading around $32,000 on Friday, bitcoin is down 20% from the record highs it struck two weeks ago but still up some 700% from its March low of $3,850.

“There are not enough chips to support the production of mining rigs,” said Alex Ao, vice president of Innosilicon, a chip designer and major provider of mining equipment.

Bitcoin miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify bitcoin transactions in a process which produces newly minted bitcoins.

Taiwan Semiconductor Manufacturing Co and Samsung Electronics Co, the main producers of specially designed chips used in mining rigs, would also prioritise supplies to sectors such as consumer electronics, whose chip demand is seen as more stable, Ao said.

The global chip shortage is disrupting production across a global array of products, including automobiles, laptops and mobile phones. [L1N2JP2MY]

Mining’s profitability depends on bitcoin’s price, the cost of the electricity used to power the rig, the rig’s efficiency, and how much computing power is needed to mine a bitcoin.

Demand for rigs has boomed as bitcoin prices soared, said Gordon Chen, co-founder of cryptocurrency asset manager and miner GMR.

“When gold prices jump, you need more shovels. When milk prices rise, you want more cows.”

CONSOLIDATION

Lei Tong, managing director of financial services at Babel Finance, which lends to miners, said that “almost all major miners are scouring the market for rigs, and they are willing to pay high prices for second-hand machines.”

“Purchase volumes from North America have been huge, squeezing supply in China,” he said, adding that many miners are placing orders for products that can only be delivered in August and September.

Most of the products of Bitmain, one of the biggest rig makers in China, are sold out, according the company’s website.

A sales manager at Jiangsu Haifanxin Technology, a rig merchant, said prices on the second-hand market have jumped 50% to 60% over the past year, while prices of new equipment more than doubled. High-end, second-hand mining machines were quoted around $5,000.

“It’s natural if you look at how much bitcoin has risen,” said the manager, who identified himself on by his surname Li.

The cryptocurrency surge is affecting who is able to mine.

The increasing cost of investment is eliminating smaller players, said Raymond Yuan, founder of Atlas Mining, which owns one of China’s biggest mining business.

“Institutional investors benefit from both large scale and proficiency in management whereas retail investors who couldn’t keep up will be weeded out,” said Yuan, whose company has invested over $500 million in cryptocurrency mining and plans to keep investing heavily.

Many of the larger players growing their mining operations are based outside of China, often in North America and the Middle East, said Wayne Zhao, chief operating officer of crypto research company TokenInsight.

“China used to have low electricity costs as one core advantage, but as the bitcoin price rises now, that has gone,” he said.

Zhao said that while previously bitcoin mining in China used to account for as much as 80% of the world’s total, it now accounted for around 50%.

(Reporting by Samuel Shen and Alun John; Editing by Vidya Ranganathan and William Mallard)

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