Half of CFOs say their companies have applied for R&D tax credits
46% have applied for R&D grants - CFO Forum 2014
CFO Forum hears that innovation should now become a key focus as positive indicators at all-time high.
Over 100 CFOs gather at annual CFO Forum to talk innovation, performance and growth.
17 September 2014. Innovation should form a key part of every business strategy as the economy continues on its journey of recovery, and developing innovative new products, services and processes will be critical in order to capitalise on the improved market conditions and ensure continued growth, according to Deloitte.
Speaking at the annual Deloitte CFO Forum in Dublin today Shane Mohan, Partner, Consulting, Deloitte said: “Our quarterly CFO survey results show that CFOs are more optimistic than they have been in five years. We know that CFOs want to play a greater strategic role in their company, and driving innovation is a key part of that. How they can contribute to that process and drive improved return on investment on innovation initiatives is now becoming an integral part of their role.”
To help understand the extent of innovation across Irish based corporates, the most recent Deloitte CFO Survey investigated how organisations are availing of R&D grants and tax credits. Just under half (46%) of CFO respondents cited that their firms have applied for R&D grants in the past and 50% have applied for R&D tax credits. 36% and 39% of those surveyed have not applied for R&D tax credits and R&D grants respectively.
Just over a third (34%) of CFOs have emphasised the added incentive provided by both R&D grants and credits, in relation to supporting innovation within Irish companies. In terms of how Revenue could better facilitate the current R&D tax credit incentives, the most popular methods identified by CFOs were the deferral of costs related to R&D personnel and the provision of greater tax credits.
Mohan commented: “Incentivising innovation through grants and tax credits encourages Irish companies to produce more products which will help satisfy the growth in industry specific demand. This type of growth has been flagged by CFOs as the main driver of growth in their companies over the coming 12 months. This potential increase in production would also help service the growing demand for exports.”
Over 100 CFOs gathered in Dublin today at the Forum to hear how CFOs can drive innovation, performance and growth. Speakers include Denis Kearney, Global Business Services Director, The Coca Cola Company, Donard Gaynor, Non-Executive Director, Glanbia Plc, Matthew Locsin, Director, Monitor Deloitte and Gary Keegan, Director, The Irish Institute of Sport.
Commenting at the Forum on the CFO’s role in the innovation process, Alan Flanagan, Partner, Deloitte commented: “We know that CFOs play a pivotal role in providing financial leadership. Integral to this is what we refer to as the CFO role of Catalyst, which is focused on how CFOs drive organisational change and transformation, and foster an innovative culture within their organisations. From the Quarter 2 2014 CFO Survey, we know that CFOs believe that information provision and analytics to support decision making, along with performance management processes to manage the innovation pipeline, are the key roles which the finance function plays in the innovation process.”
Flanagan added: “This is indicative of the ever-evolving role of today’s CFO, and further emphasises the need for CFOs to be true strategic business partners to their organisations. Just over a quarter of survey participants believe that innovation attempts frequently or always return capital invested, and so there is a real opportunity for further improvements to companies’ bottom line. For their part, CFOs need to put in place the appropriate metrics and measures to understand which parts of the business are performing and which are failing to add value. This includes rigorous assessment of M&A opportunities, capital expenditures and other investments, including alternative strategies to traditional approaches.”
The last two CFO survey results (published in May and August) highlight a number of firsts in the history of the CFO survey and a number of interesting trends that appear to be emerging in 2014:
1. Availability of credit from all sources is improving: Quarter two marked the first time in the survey’s history when a majority of CFO respondents believe credit to be easily available across domestic and overseas banks, corporate bonds and equity.
2. CFOs are more optimistic than they have ever been: Optimism continues to be on the rise amongst CFO respondents, with a net 62% of CFOs more optimistic about their companies’ financial prospects this quarter – this equates to the highest level of optimism reported by this survey since its inception.
3. For the first time, a majority of CFOs now believe it is a good time to take greater risk onto their companies’ balance sheets: The cautious optimism displayed by CFOs as indicated in previous survey results appears to be dissipating, as 62% of CFOs believe it is a good time to take greater risk onto their balance sheets.
4. Talent costs and availability is increasingly a key concern for CFOs: while this has been evident in previous quarters it is more pronounced in quarter two as two out of every three CFOs surveyed believe employee numbers will increase in the next 12 months. 70% of CFO respondents believe that talent costs will impede their company’s performance over the next year while 57% believe talent availability will have a negative impact on performance.
5. Companies’ performance and investment plans are largely going to be driven by economic growth in Ireland and overseas markets: The biggest contributor to driving company performance, aside from industry specific demand, is economic growth both at home and abroad, according to CFOs.
6. Capital expenditure is on the rise: Three out of every four CFO respondents believe capital expenditure in their companies will increase in the next year, continuing an upward trend which we have seen in the last three quarters.
About the survey
The Deloitte Q2 2014 CFO Survey is the twentieth in a series of quarterly surveys by Deloitte of Chief Financial Officers of major Irish based companies. The survey was conducted in June and July 2014. The Deloitte CFO Survey is the only survey that seeks to establish the views of CFOs of listed companies, large private companies and Irish subsidiaries of overseas multinational companies in relation to the financial markets, economic outlook and business trends on a quarterly basis.
For full details of the Deloitte Q2 2014 CFO Survey, please visit www.deloitte.com/ie/cfo-survey.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/ie/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
The information contained in this press release is correct at the time of going to press.
Deloitte’s 1,350 people in Dublin, Cork and Limerick provide audit, tax, consulting, and corporate finance services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges.
Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.