Transitioning to Transurban: leadership, development and the business

Friday 16th October, 2015

Transurban’s* CFO, Adam Watson, joined the organisation in late 2014 from Australia Pacific Airports Corporation where he was the Chief Financial Officer. Adam previously held a number of senior executive roles at BlueScope Steel across corporate finance, mergers and acquisitions, joint ventures, and capital investment in Australia, the US and China. Prior to this, Adam held senior roles at Spotless Group Limited, including General Manager Corporate Development and Chief Financial Officer of international operations.

placeholderEvolve Intelligence took the opportunity to sit down with Adam as he nears his first year anniversary at Transurban to learn about his approach to leadership and performance, the experience of taking on a major ASX company CFO role for the first time, what he is learning in the process and what the future holds.

EI: Adam, thank you for taking the time to talk to us today. To begin with, tell us what you are truly passionate about?

AW: Thanks. Well, from a business perspective, I am most passionate about building, developing and leading high performing teams that drive and lift performance. I get immense satisfaction out of seeing people grow, achieve greater heights in their life and then go on to more senior roles. From a personal perspective, I am very passionate about creating and leaving a legacy whereby the communities we serve benefit from the work we do.

EI: How do you define leadership?

AW: For me it is about having a clear vision and strategy, having the right structures in place and communicating constantly and consistently with your teams. I believe that being authentic and having courage are key components of good leadership as well.

EI: Who has had the greatest influence on your career to date?

AW: There have been a number of people over the years but in particular the experiences I had at Bluescope, and some of the leaders there such as Brian Kruger (now CEO at Toll Holdings) and Paul O’Malley (current CEO of Bluescope), were instrumental in shaping who I am. I would add the experience of working through and post the global financial crisis was the greatest learning experience anyone could wish for. You learn more about business, and yourself, working through challenging times than when everything is all rosy. You learn to make tough decisions whilst still having respect for those employees who are negatively impacted, you learn resilience and teamwork are key.

EI: What attracted you to Transurban?

AW: A number of things but most importantly is their vision to address the transportation challenges facing our cities and communities. The genuine passion and commitment to this purpose and the values of the company are what impressed me greatly. In addition, the industry sector interests me and the growth opportunities and leaving a permanent, structural legacy in the market also appealed.

EI: On joining Transurban, outside of the usual on-boarding process, what did you personally focus on in the first days and weeks?

AW: I left Melbourne Airport on the Friday and started at Transurban the very next Monday so I didn’t have a lot of time to prepare, but I was fortunate enough to have some preparation time before joining to understand the business and challenges that lay ahead. I did reflect personally on what I would focus on upon joining which included thinking about how to develop a high performing finance function, develop the team and future leaders, ensuring there were disciplined capital structures in place and that there was robust governance. In my second week I took the whole finance team offsite, which proved to be a very beneficial exercise. The team started out by telling me that they were a solid group and with no real issues; however by the end of the session they were telling me all the things that could be done and that needed to be done. My approach was to outline my vision for the finance function and expectations of performance in an authentic way, and then I mostly listened. It was a powerful exercise and I think if I had waited too long to run such a session it would not have been as valuable. In a way it was a make or break session for me coming in as the new CFO - my deputy was the Acting CFO up until my arrival so getting him and the whole team on side was key.

EI: This is your first front line CFO role in a major ASX – how have you found the transition?

AW: I have found the experience to be exhilarating and I am thoroughly enjoying every minute. Yes this is my first time as a front line CFO of a major ASX company and a great learning curve, but my prior experiences, particularly at Bluescope where I was at one stage the CFO for the $5bn North American business, was very good preparation as was the role at Melbourne Airport. As part of my learning and preparation in taking on this role, I have been out and about meeting and listening to as many people as I can, both internally and externally, in the last 12 months. I also immersed myself in the first half financial reporting period to ensure that I was completely across all the numbers and issues. The approach allowed me to assess the capability of my team whilst confirming the strategy I started putting in place with regard to restructuring our debt exposure, capital raising and capital management programs.

EI: How would you characterise your finance function structure and team when you arrived? Have you made any major changes?

AW: Overall it was a good team with the right structure. From a future capability perspective however, in the last 12 months, I have progressively implemented a more robust succession planning process for the team to ensure we have our leadership risks covered. I have also brought in individuals to key roles such as treasury, investor relations and reporting. These have not been at my direct report level where there have been zero changes or departures, the roles have been at one layer lower where there were some performance gaps. A year in, I would say that the function is now strong and performing highly.

EI: Noting Transurban’s market dominance, who do you see as your competitors?

AW: Governments, which is interesting as they are both our key competitors and also our clients. The challenge here is that governments can do it themselves if they so wanted, so we must provide the reputation, credibility and capability to deliver a better service to customers that creates a win-win for all parties. In a way our other competitor is ourselves! By this I mean if we don’t innovate and deliver we will not be the “partner of choice”. We are also very mindful of technology disruption such as driverless cars and other related technologies. As such we are partnering with a range of companies with regard to technological development. We continuously work on ensuring we maintain a leadership position and our transport networks fit in with technology developments.

EI: Do you think investors and the market in general have a good understanding of infrastructure stocks?

AW: Yes I believe so, but at the same time I think we are still viewed as a yield stock and so when interest rates go up our stock tends to get sold down. We are working hard on our investor relations and communications efforts whilst working to protect the business against elements such as rising interest rates. We are also doing a lot of work with brokers, focusing on our plain language messaging to retail investors.

EI: What are the key milestones for the next year that need to be achieved from a corporate strategy perspective? What is your role in this?

AW: A key focus for us moving forward is to continue our strategy of simultaneously having at least one new and one upgrade project in place in each market we operate in. The role of the finance team in this is to ensure we have the right balance of debt, equity, capital, risk etc. in place to support the goals of the business. Additionally, we are continuing to focus our efforts on the customer and building our customer and brand reputation. Finance plays a key role in these and indeed in all of our initiatives.

EI: Transurban manages a fairly complex array of debt and capital management. What are the major financial/market challenges and risks you face in the next 1-2 years? Are there any regulatory changes on the horizon here or overseas that you feel may impact your operation?

AW: I spoke before about rising interest rates and the potential impact that can have on the business.
There are not any regulatory changes we can see on the horizon that currently present any concerns for us in the markets we operate in. In general there are no major concerns, but of course we are constantly vigilant in monitoring these areas. We will continue to restructure and refinance our debt profile, including lengthening, in some cases, the term of the debt. We recently moved to have our credit rating adjusted to BBB+ which has been well accepted by the market. Prior to my arrival the capital plan strategy was not documented and nor did it receive board signoff, this has now been rectified. My role is to continue ensuring we have the most appropriate financial arrangements and governance in place to support the company’s strategy and vision.

EI: The pace at Transurban is pretty frenetic – how are you balancing work and family commitments?

AW: I knew that when I joined the first year or so would be full-on and I had the commitment and support of my family, which is always important. Looking back, whilst it has been very busy with a fair degree of travel, it has not been as bad as I thought it was going to be! I think my focus on planning and structure has helped. I am also working with an amazing team. The board, CEO, executive leadership team, my team and staff, all put in 100%+ effort every day. It is clearly showing now in the brand awareness, performance and value of the business.

EI: What are your career ambitions?

AW: Firstly I think about adding value, driving the right culture and leaving a legacy. I am fairly open as to what that means in terms of future opportunities. I have no burning desire to be a CEO just for the sake of being a CEO, the role would need to tick all the right boxes. At the same time I am comfortable staying a CFO and right now I am enjoying myself so much I don’t put too much thought into what’s next. I am fortunate to be working with a great CEO and board and to be part of a great team.

EI: Adam, thank you for your time today and we wish you continued success.

AW: Thank you.

 

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*Transurban manages and develops urban toll road networks in Australia and the US. A Top 20 company on the Australian Securities Exchange (ASX), the company has been operating since 1996.

Transurban has a market capitalisation of around $18.5bn, revenues of $1.6bn and employs around 1200 people. The company is focused on optimising current assets whilst exploring growth through acquisitions and unsolicited proposals.

The finance function of the business is comparatively complex as it supports Transurban across the full gamut of business activities, from developing greenfield and brownfield projects, through to project delivery, and operational excellence. In addition, the finance function plays a key role in activities including capital raising, debt and treasury management, taxation, investor relations, reporting, company secretarial, corporate development and legal.