Rob Inglis is our Chief Financial Officer. As such, he is responsible for all financial reporting and financial planning for First National, and heads up our shareholder relations program. In this interview, we ask Rob to elaborate on his role and how it supports the Company’s success.
You graduated with a commerce degree from Queen’s University in 1988 and obtained your Chartered Professional Accountant designation in 1991. How did you get your career started?
During my time at Queen’s, a recruiter from what is now PricewaterhouseCoopers came on campus and I was fortunate enough to graduate with a job. I could have chosen to go into PwC’s large audit practice, but instead I thought it would be more rewarding to work with smaller owner-managed companies, so I began in the Independent Business Services division.
How long were you at PwC?
Eight years where I was exposed to a very broad cross-section of companies and tax and accounting experiences. In the last few years at PwC, I was working a lot of nights and weekends. When I joined First National, we had a two-month old daughter at home. Part of my decision to come to First National was to balance my work-family life.
How did you hear about First National?
Actually, an audit partner at PwC mentioned that there was a small financial services business looking for someone in finance. Financial services was not the focus of my practice, but given that I was looking for a change and First National was described as being small and owner-operated, I thought it might be a good fit.
So you interviewed for the job?
Yes, I came in to see Stephen and Moray and described what I did at PwC and my areas of expertise and they said, those skills were something that maybe the Company will need in a year or so. About a week later, Stephen called back and said, “our year-end audit starts in two weeks, the job is yours if you want it.” That was March 17, 1997 and 20 years later, I’m still here.
Congratulations. How have you found the experience?
Extremely rewarding. This is not like a typical financial institution where it is so large that you are stuck performing one specific role. Here, it’s very entrepreneurial and the growth we’ve achieved has made my job progressively more interesting. Back then, it was a pretty simple ‘cash business’ and I was the chief bottler washer. If it had stayed that way, perhaps I would have left after a couple of years. But it didn’t. We grew from making about $1 million a year to now when we make more than $250 million. I’ve got five direct reports and they in turn manage a team of 20. So it’s a lot more complex, a lot more interesting but even with all the resources, it’s still a very dynamic and entrepreneurial place to work.
Laymen often think of a CFO as a number cruncher. Can you talk about how your work helps FN to be a better business?
I think the most rewarding and challenging aspect of my role is that I get a chance to contribute to First National’s development.
When Stephen and Moray had the idea to start a third-party underwriting and fulfillment business, they needed financial information on the costs to run Scott McKenzie’s underwriting department. Because the finance team had designed the accounting system to track costs by distinct department, this information was readily available. I was able to provide details by expense category and to break out direct expenses versus overhead expenses. From that effort, we all got a high level of confidence that the business model we envisioned would work for our customer and First National. It’s very rewarding being able to help make a new business venture come alive, to see it become successful and know those of us in finance played a part.
As CFO, do you have a guiding philosophy?
I suppose one principle we have is to let the entrepreneurs be entrepreneurs. In other words, to support operations but let the business operators take on risks to grow the value of the franchise. Another guiding principle in my role is to give the numbers we produce in our financial statements meaning.
Why is that important?
Accounting today is sometimes very complex and getting more so as time goes by. As a result, a public company’s financial statements are not easy to comprehend. My job is to help both First National’s management and our shareholders understand the meaning behind the numbers.
How do you do that?
I try to be clear in my financial reporting so that everyone has a good understanding of where the Company is generating cash and how the operations are performing. Sometimes to do that, it’s necessary for the purposes of analysis to eliminate the noise caused by things like fair value accounting. For instance, by adopting the measurement ‘Pre-Fair Market Value EBITDA’, I think we’ve presented a better measure of performance than IFRS accounting otherwise provides by removing the impact of gains and losses on financial instruments. These gains and losses are generally not indicative of the underlying operational performance of the corporation and by excluding them from earnings, a clearer picture of management’s success is presented.
One of your roles is investor relations.
Correct, I work with shareholders and analysts and I think we have a good level of dialogue with the investment community. It’s always important for shareholders to be able to assess whether a management team is successful so we try to highlight values within the business that are sustainable and structural as opposed to temporary in nature.
Financial institutions, because they are regulated, seem to spend a lot of time on government relations. Is that true for First National?
We’re not regulated in the same way a bank is, but we do engage with policymakers, making sure our voice is heard. My department supports our efforts by contributing facts and figures to our Company’s submissions. I got the chance to do that recently when Stephen appeared before a Department of Finance subcommittee reviewing housing trends in Canada.
Are there other ways you can support First National’s business partners or customers?
Behind the scenes yes. As one example, I have used my knowledge of financial reporting to help our commercial team when they’re reviewing a borrower’s needs. Large, publicly traded borrowers like REITs are also subject to arcane accounting treatments, so when our commercial team wants to get a better handle on a customer’s financial picture as part of building a business case for investment, I can act as an advisor.
First National is a lot larger than it was when you joined 20 years ago and yet it doesn’t sound like the entrepreneurial mindset has changed.
No, it hasn’t. And one of the good things about our business is that our management team recognizes the importance of investing in the business and incurring costs in support of growth. Sometimes it’s hard, when it’s your own money, to stay committed to growth. Growth costs money and if the vision is not clear, it can be daunting to make such large investments. In the financial services industry, there’s an advantage to being a large company like we are, especially in economies of scale. The danger is growing too ‘institutional’. We’re large but we’re not an ocean liner that cannot turn and adjust course quickly. Our corporate history is filled with examples of quick and nimble decision making.
Investors often try to determine a company’s “secret sauce.” What’s FN’s?
You are a doubles tennis player in your spare time. As an accountant, do you always keep score during those games?
This is my time away from accounting so I usually leave that to my partner. As they are generally middle-aged men, there are always long arguments about the score.