Podcast transcript: EY CFO Outlook: The power of positive impact, with Tom Hickey, Kenmare Resources

George Deegan: Welcome to the EY CFO Outlook Podcast. In this series, we feature some of Ireland's finance function leaders sharing interesting perspectives on a range of topics, from driving growth in their business to leading major finance transformation. I'm George Deegan, a partner and sponsor of our CFO Agenda program here at EY. In this podcast, we welcome Tom Hickey, CFO of Kenmare Resources, operators of the Moma mine on the Northeast coast of Mozambique. Kenmare Resources are a major supplier of mineral sand products to customers in over 15 countries. With the raw materials used in products such as paints, plastics and ceramic tiles. Jonathan, over to you.

Jonathan: George, thank you very much. Tom Hickey of Kenmare Resources, how are you?

Tom Hickey: I'm very well, thank you, Jonathan. Nice to be here today.

Jonathan: It's lovely to meet you. We've got a lot of things to talk about from your history, if we can call it that, your role to date, and where you see yourself going next. But I want to begin with an overview of what you do. What is your role as CFO and to the uninitiated, we heard a little from George there. What do Kenmare Resources do?

Tom Hickey: Sure. Well, I'm the CFO of Kenmare Resources, which is a mining company active in Northern Mozambique. We operate and own 100% of the Moma mineral sands mine, where we extract, process and ultimately sell on mineral sands products, titanium dioxide, zircon rutile, not exactly household names, but all over this room, all over most rooms you'll be in pretty much fundamental to modern life used in anything where light penetration, light reflection is important. So it will be in paints, it will be in tiles, it will be in any input that you see that requires some degree of colour. And it's a non-recyclable fundamental part of all of those elements. Kenmare has been in Mozambique for nearly 40 years, found the resource developed. The resource has been through all of the ups and downs of the resource price cycle and over the last number of years has been thriving, growing, investing and you know, still have 50 plus years of mine life. I'm the CFO of Kenmare Resources. I've been there for just under a year, although I had worked in natural resources for many years prior to that. In essence, my job is to be the bridge between the day-to-day operations. The thousands and thousands of tonnes of earth and sand that are moved and processed. The people, the equipment, the facilities, all the supports that are required to do that, and making sure that we do it in an efficient manner, making sure we do it, I suppose firstly in an environmentally friendly way, which we do, secondly, in accordance with our plans and our budgets, and thirdly, in the way that our shareholders expect us to do it. And our lenders and other stakeholders, including government, expect us to do it.

Jonathan: It's a little bit of added value to what the normal CFO would do from what you describe. We're going to get to that in just a little bit. But I mean this as a compliment. You are a young man and many people would be surprised at your age, given the background that we're going to talk about in a minute. But you started in the 80s in Dublin at a time when most of your generation felt they had to look abroad for a better outlook. What did Tom Hickey do?

Tom Hickey: Well, I suppose one of the prerequisites to being an accountant is having very little imagination and Dublin in the 1980s certainly didn't assist that. So, I grew up in a pretty normal family. Parents father worked in CIE for 40 years. There was no history of business in the family. There was no particular direction or recommendation and I actually went straight to work after school. I went to work in the civil service for three years. I worked in the four courts. It was a really interesting time when many people would recall the General Martin Cahill, that was under 24-hour surveillance, and I was the guy who sat in front of the judge and called out the names and wrote down the judgments, the court registrar effectively, which was a great life, life learning. While I was doing that, I was doing my BComm at night and I suppose I gravitated, being somewhat academic, gravitated towards commerce because I had no idea otherwise what I wanted to do and I wanted to get a good general grounding in business, in organisation, in a world that, you know, aside from school subjects, was unfamiliar to me.

Jonathan: Did you feel that world wasn't open to you?

Tom Hickey: I think there was a perception in my family that it wasn't necessarily for people like us. But I never encountered that myself and I never really was burdened by it in any way. You know, opportunities came my way. I applied for them. It was very meritocratic, you know, I got on reasonably well wherever I went. And, you know, I would have to say, as I'm sure many of my peers would say, that the background, the values, you know, the perhaps the insecurities of growing up in Ireland where high unemployment and lots of people had to emigrate, created a good work ethic, created an ambition and made you appreciate the opportunities you had. And look, I'm sure many people would say the values that our parents gave us, you know, are still very much rooted in how we work today.

Jonathan: Finance was very different back then, so the career you started out in is very different to the career that it is now. How did you find your feet and how did you see that there was potential for you to grow in that career?

Tom Hickey: I'm not sure that I did.

Jonathan: Are you an accidental accountant?

Tom Hickey: Perhaps, still. I think that I'm very curious. So, I always read a lot, listened to a lot of music, you know, read around subjects, you know, got distracted. But, liked numbers and liked the symmetry and liked the clarity that they gave and was reasonably good at business subjects in school. You know, when I went into college, continued in that vein and actually realised at a certain point that numbers are only, are only part of a larger story. You know, they're the scaffolding for the story and the story is the important thing. And I actually think that Irish people are very good at recognising the importance of storytelling and I mean storytelling in a good way, entirely truthful, entirely linear, but still, people engage with stories in a way that they don't engage with numbers. And I actually realised quite early on, and particularly when I graduated on – I trained in Arthur Andersen as an accountant which was a fabulous proving ground for people, many of whom have gone on to be successful elsewhere. But then when I worked in what was at the time Ria, the stockbrokers. Ria, the corporate finance, for five years between 1995 and 2000, I realised that was where I saw the synthesis of numbers, diligence, research, analytics, stories, people, entrepreneurs. And it was a huge accelerated learning curve.

Jonathan: And it was all linked, of course, which is what was important.

Tom Hickey: But it also for me to go back to where I came from had it completely demystified the concept of big business. Ultimately, it was two guys in a room, three guys in a room, four women in a room. It doesn't matter, you know, just doing normal things in an incremental way. And some of them weren't that smart. And it was like, well, I could probably do that, at least as badly as they are.

Jonathan: That's a good motivation.

Tom Hickey: And I suppose more to the point, I've been very fortunate throughout my career in having mentors and people who perhaps saw something in me that I couldn't see in myself at the time.

Jonathan: Your first dalliance with resources was with Tullow Oil. Tell us a little bit about that role.

Tom Hickey: Well, my first dalliance with resources was a bit before that in, in Ria where we were raising money for a number of zinc mines in Ireland. I've had the good fortune to be down Tara Mines and Lisheen and others, but Tullow was a client, so I had worked on and off fundraisings for Tullow for 4 or 5 years before I joined in 2000. And the previous CFO was retiring. He'd been there for 15, 16 years and the business was at a bit of a crossing point because as will probably become a theme, you know, natural resources is a very cyclical business. Prices go up and down and they can oscillate wildly. And we were on a down cycle and natural resources businesses were struggling. Tullow had been an exploration business and it needed to kind of change. It needed to get some production, it needed to generate some sustainable finance, financial capacity as opposed to just raising equity every couple of years. And, you know, I'd worked in corporate finance. I could put deals together. I could, you know, synthesise the numbers. You know, I had a good relationship with the team, I knew many of them. And look, I think Aidan Heavey, who was the founder of Tullow, as I said, recognised that I could probably make a contribution to the business before I did. And, you know, ultimately, it was about the people, the opportunity to go in as a CFO of a public company at 31 was amazing.

Jonathan: Which is very young. I mean, that is a lot of responsibility on a 31 year old's shoulders.

Tom Hickey: Yeah. But you see, you don't feel the weight at the time. I didn't realise at the time, as Pat Shortt used to say in D'Unbelievables "I'm glad I was so thick back then", you know, because I didn't know what I didn't know, and you'll try anything. It was, it was a fabulous opportunity. It was a, you know, a company that was ambitious, global, growing, entrepreneurial, and also early, early in its journey. It had been listed for a long time but the finance function was small and there was a lot to do.

Jonathan: We are all guilty of the arrogance of youth, of, you know, perhaps running a little faster than we should when we are first given responsibility. Who was your best guiding influence around that time? Because it was your first time in that big role and no doubt you made mistakes, no doubt you came up against immovable problems as you saw them then, you had to turn to someone. So, who helped?

Tom Hickey: I think it was a couple of people, actually, Aidan, who had hired me, Pat Plunkett, who was the chairman of Tullow at the time, who I’d known at ABN and worked for. They were all very clear in terms of saying just keep doing the right thing, just keep focused on the day-to-day business, just keep at it, just keep adding value and making sure that that we don't run out of money, make sure that we keep our relationships with our shareholders, lenders and others, you know, just, you know, first do no harm. Also, I know I'm on an EY podcast, but just to mention another auditor, Robert J. Kidney and Co, who are Tullow's auditors or joint auditors at the time. John Kidney, who was the founder of that firm, was, and still is thankfully, a very wise man, very calm who would give you quiet counsel, a few words, but memorable ones. And it kind of, I mean, it helped me realise, A, that I could do the job and B, that I could do it for a reasonable period of time and do it well. And, you know, I suppose get past the bumps in the road that we all encounter.

Jonathan: The value of mentoring can never be underestimated. As you have gotten older, do you now practice what those preached previously?

Tom Hickey: Totally, totally. I mean, before I started in Kenmare, I was kind of doing a portfolio set of roles, a number of non-exec roles, little bits of mentorship, helping growing companies with funding processes, talking to CEOs and others, sometimes in a very informal way but those informal engagements sometimes grow into more formal engagements. I'm on the board of ufurnish.com, which is a really interesting, exciting aggregator in the furniture space and that kind of grew organically from mentorship and advisory. You know, I'm on the board of teamwork.com in Cork a fabulous business, former EY Entrepreneurs of the Year, and that kind of grew from a little bit of advisory and support at a time when they were just trying to figure out a little bit on their funding direction. And I think this you know, I really appreciate the value of what I got from people who had more experience than me. To the extent that I can stop people making the mistakes I made or help them make different ones, I really enjoy doing that and I find it very stimulating.

Jonathan: But when you advise it is then the responsibility of the person who's listening whether to take that advice or not. When you see people to whom you have given advice not follow it, does that frustrate you?

Tom Hickey: Not particularly. I mean, everybody has to follow their own star. What I really, really appreciate and enjoy is when you give some people advice or a perspective that you hear it come back at you in their words. You know, that they don't do what you said because you said it, but that they filter it through their own kind of assessment and their own circumstances and they find their own way to engage with it. And, you know, the people with whom you have sustained relationships and where you can really add value are the ones who listen, filter, and act.

Jonathan: Your career is, as they'd say “as gaeilge”, a little “bun os cionn”, because while you are the CFO now of Kenmare, there was a bit in the middle where you spent a lot of time as a non-executive director. You listed some of the companies that you're a non-exec director with. You were very young to take that on. People tend to take that on later in their career. Why did you do it the way you did it?

Tom Hickey: I think it was thrust upon me, to be honest. When I joined Tullow, we had an investment in a small geological software business called Icon Science. Which was, you know, starting out very early in its journey, needed a lot of support, and I was the Tullow representative on the board. And I think that that really helped me being young on a board with non-execs myself and not having had that experience really helped me get the perspective of non-execs and really enriched my role as an exec in terms of engaging with a board and understanding how they think about things, their risk appetite, what they're afraid of.

Jonathan: Is that a problem, do you think? With a lot of boards, is that the composition tends to be older with those non-execs in there that, you know, someone like you as a CFO does come in, it's harder for them to connect because it might be a generation or two ahead of them who’s making the decision.

Tom Hickey: Yeah, look, I think that's probably less true now than it was in the past. But it certainly has been a challenge, I'm sure, to many businesses over the years. But, you know, people make a lot about being in places, being in roles when you're young or old or whatever. I mean, there are some very young old people, you know, some of the youngest people I know are in their 80s, you know, with a freshness of perspective and insight and the experience to bear it out. So, you know, I think, you know, age is only a burden if you choose to carry it – aside from physically, it's a burden physically everyday – but if you choose to carry it, it's a burden. And, I had to deal with that when I was, you know, a CFO in Tullow at 31.

Jonathan:  Was it intimidating, though, because when you were in your 30s going in, first of all, to speak to the board and then when you were non-exec, when you were a little bit older, you were surrounded by those who, you know, had a lot more experience than you, perhaps those young, sprightly 80 year olds you were talking about. Were you ever intimidated by sitting next to someone who you would have considered ahead of you at that time?

Tom Hickey: I was intimidated maybe by advisors, you know, lawyers, bankers, you know, not knowingly. But, certainly people, you know, in negotiations and in transactions tend to look for your weakness and if your weakness is you're inexperience, they'll try and test it. But no, never in a board sense. Never really in a board sense. I mean, aware of my lack of experience and open about it. I mean, that's the point. I mean, you're intimidated if you feel you're going to be found out or you have something to hide. But everybody on the Tullow board knew what age I was and what experience I had. You know, I was doing the job as best I could and everybody knew that. And so, no, I always found my non-execs very supportive.

Jonathan: You have already referenced that human fallibility exists at every point in the chain. It's not easy to accept that fallibility. You're comfortable with that, that there are things that you don't know. There are things you need to educate yourself on, but you're good on some things and you know you can stand on your own two feet.

Tom Hickey: I think I'm good enough on lots of things. And actually, because I've been in a variety of industries, you know, in businesses that operate globally, public and private markets, you know, successfully and unsuccessfully over many years. I've seen more than most people, and I remember probably half of it. So, that's, I think I've crammed a lot of experience into a career, perhaps more than somebody who's worked in one role or one industry or one, you know, sector, shall I say.

Jonathan: There are universal truths. And one of them is what makes a good CEO. And you've dealt with it now from both sides – you work with the CEO, work alongside the CEO in your current role, you've had CEOs reporting to you on boards previously. When you meet a CEO, what do you look for?

Tom Hickey: I've even been a CEO for about 2 or 3 years in something very small. It's only with time that you realise who you engage with best. I enjoy working with founders and entrepreneurs. I enjoy being the straight guy to their slightly more adventurous…

Jonathan: Founders are the most wonderfully fallible people, aren't they? Because they have a passion, they have a dream, they have a vision and sometimes you need to say, well, “hang on” .

Tom Hickey: Yeah. I mean, you know, I won't say which one of the CEOs I've worked with, but would come to my door with, you know, ten ideas – three of them might be illegal, three of them might be stupid, two of them would be smart and two of them you think “if I ever have an idea like that in my life, I'll be happy”. And your job was to filter it down to the last four and try and understand which ones would work for the business.

Jonathan: And point out the first six are not happening.

Tom Hickey: Yeah, ideally to point out the illegality, even if inadvertent. And that's a skill because I mean ultimately that doesn't just come down to whether you're a good accountant or can do the analytics or show them on a piece of paper that it works or doesn't work, it comes down to relationship trust, persuasion, engagement and listening. And actually, I probably, I have probably learnt over the years to talk less.

Jonathan: When you went back to being a CFO, I'm taking it from the conversation with you that you didn't have to. You could have done a thousand different things. Why did you go back to that role?

Tom Hickey: So, I love natural resources, I find it endlessly fascinating. I love the opportunity to travel. I enjoy public markets and I love Africa. You know, I'm fortunate enough in Tullow and Petroceltic and other places to get to travel a lot and see a lot of the countries where we have assets and understand the impact that discoveries can have on countries good and bad. And unfortunately, there's not a lot of that that you can do in Ireland. You know, I want to live in Ireland, even during my time in Tullow I've always lived here. And, you know, based in Ireland, there's only a couple of natural resources businesses. And when the opportunity came up to succeed Tony McCluskey in Kenmare, Tony, having been there for 31 years, I figured if I don't think about it and go for it, I might be waiting 31 years for the next opportunity to come round. And equally, although I, as I said, I had, had a portfolio type of career and it was really interesting and stimulating, it's nice to have one thing and I suppose finally I…You know, I came to the family thing maybe a little later than some – my kids are still comparatively young and I'm going to be nailed to school holidays until I have a bus pass – so I might as well be doing something with my time. And you know, the Kenmare opportunity is great. You know, it ticks all of the boxes of what I would I enjoy doing.

Jonathan: Let's talk about the changing nature of the sector, though. Even in the time that you've been involved, lots has changed. When it comes to natural resources, companies such as Kenmare have huge pressure on them to ensure that what they're doing, as you said yourself, does no harm. ESG, three little letters that a decade ago didn't mean much but mean everything now. So, how has it impacted a business like Kenmare?

Tom Hickey: Look, I don't think it has as much as the outside world might believe. In natural resources, if you're going into a country to explore, you have to behave with the mindset that you're going to be there for 30 or 40 or 50 or 100 years. You know, Tullow has been in Cote d'Ivoire since 1996, it was in Senegal from 1987. Kenmare has been in Mozambique since before 1990. So how you behave, how you engage with stakeholders, communities, the government, you know, how you do your business is absolutely fundamental. I like to say, you know, good companies were doing ESG before it was an acronym. You know, Tullow had active social programmes, Kenmare has been lauded for its social programmes, even in chartered accountants publications back 10, 15 years. I think what the ESG movement has done is that it has put some structure on assessing companies on that basis and trying to understand how it contributes to the investment case, how it contributes to the long term possibilities of the business. And, you know, I suppose we see it as a competitive advantage for us. I mean, we're fortunate enough we don't use poisonous chemicals, I mean, all our processes are done with water and generated by renewable electricity. You know, there's a lot of good things happen in our business.

Jonathan: But you are working in emerging economies as well, and there are inherent risks with that. How do you manage those?

Tom Hickey: Again, you know, I think you have to be available to the government, to the country, to the stakeholders. You have to appreciate their perspective. You know, Kenmare employs nearly 1700 people at Moma, 97% of them are Mozambican. It's a source of huge pride to us that we do that and it's an active policy. But that makes us an important exporter, an important employer, an important influence on the community. And, you know, we need to use that power, that influence very, very, very carefully. And I think, you know, there are no shortcuts. The challenges in natural resources are people who try to take shortcuts, whatever they are, on safety, environmental, you know, the licence application process. Governments, you know, people talk about backhanders. I've never seen one. You know, you get a name for doing that sort of thing once and it sticks with you for forever. You know, it is possible to do business very well, very successfully over an extended period of time in the right way. You know, you lose out on assets, you lose out on projects. There will be people who come who have different value systems or different ways of working or engage with governments in different ways. Okay, fair enough. It has, certainly on the oil and gas side, it's got harder. It's got harder because ESG has limited available capital. It's limited, you know, access to equity markets. It's limiting access to debt markets. So, it's very hard to start a small company now and I've seen that from some companies that I've been involved in very hard to start, but it can still be done.

Jonathan: You talked about your children and you looking forward to the bus pass, when you have a young family, particularly where, in your case, you have to travel, you have to travel to Africa a lot, and the role of the CFO in general, it's long hours, it's, you know, you're stuck in a laptop, you're stuck in the office. How do you juggle it?

Tom Hickey: I think my kids are used to having me around quite a bit, and that's probably because, you know, they've been young through Covid and I was there the whole time, but equally they've been used to me being away and I'm rarely away for more than a week. So, you know, I go away on a Sunday to Moma, I would come back by the following Saturday. You know, the lives of a 7, 9, and 11 year old are pure momentum, you know. What are we doing today? Where are we going today? What's happening tomorrow? A week passes fairly quickly. In fact, the years pass fairly quickly. So, as long as you have the right relationship with them and you give them time when you're there, it's more than manageable. And equally, I think you have to carve out time for yourself. I've got, you know, personal passions. I'm obsessed with athletics, I'm obsessed with music. You know, they see that, they see that I've got interest, they see that I've got curiosity. They see that that that gives you energy and hopefully they ,unconsciously, take that up in their lives and develop a balanced approach.

Jonathan: What do they say you do? It's always very interesting to ask a child what their parent does.

Tom Hickey: “It must be terrible counting all day. It must be terrible. How are the numbers today Daddy?”

Jonathan: And, I suppose your face can't lie. The question is, Kenmare is obviously doing exceptionally well at the moment. Where next for it?

Tom Hickey: I think the really interesting opportunity and conundrum for Kenmare is that it has survived in recent years, thrived in a single asset in a single country. That asset has 50, 100 years of life ahead of it. We could keep doing the same thing forever, but, you know, that would mean, you know, probably changing the change of the shareholder mix, people would look to the company just as a cash cow for dividends. You know, it's important to show ambition and it's important to show, you know, I suppose the energy to do something more. And Kenmare is always looking at potential acquisition opportunities, new projects, new investments either in the same country or in different countries. But, you know, and maybe it goes to the valuation thing, we're trading at, as you know, half our historically invested capital at the moment. So, it's very hard when you look at acquiring something else to see that it's better than buying back your own shares. I mean, we've just recently announced we're considering a share buyback for that reason because, you know, we've invested a lot of cash in the business, you know, the business value doesn't reflect that cash. We believe in the fundamental value of the business. And I think that, you know, the best indication of our belief in that our shares are a good investment is to buy them ourselves and obviously I bought some when I joined for the same reason.

Jonathan: So, there's belief there?

Tom Hickey:  Absolutely. Natural resources business thrives without, you know, belief and conviction to the point of stubbornness and I'm sure Michael Carvill wouldn't mind me saying that, you know, that you need a good combination of idealism and pragmatism to survive as long as he has in the natural resources space.

Jonathan: You mentioned that your predecessor in this role was there for what, 31 years, what's next for you? Can you see yourself having that longevity?

Tom Hickey: I don't think they want an 85-year-old CFO. I declined to sign that contract. Look, I think, I'm ten months into the journey now. I've really, really enjoyed it. It's great to be in a business that has the right values. That is, you know, as I said earlier, ticks all the boxes for what I enjoy doing. I see a future in Kenmare for years ahead. I'm quite happy for that future to be me still doing broadly the same role in obviously an evolved business in 5, 6, 7, 10 years’ time. My CV might suggest otherwise, but I'm not particularly ambitious, I'm just curious, I like doing interesting things. I love the fact that I get to mix my exec role with my non-exec stuff. I find they feed each other and it's very stimulating. And I have to say I'm really enjoying what I'm doing at the moment.

Jonathan: I'm going to finish with a rapid fire round if I can. So simple answers. Apple or Android?

Tom Hickey: Apple.

Jonathan: Books or e-reader?

Tom Hickey: Books.

Jonathan: All the day?

Tom Hickey: All the day.

Jonathan: Cash or contactless?

Tom Hickey: You got to have a bit of both.

Jonathan: Soccer or rugby.

Tom Hickey: Rugby but athletics really.

Jonathan: I was going to say athletics. There isn't an option for athletics but I knew you were going to bring it in. What's the best advice you'd give your 18-year-old self?

Tom Hickey: Slow down a bit. Think a bit more. There's always time and maybe be a bit more ambitious.

Jonathan: If you weren't a CFO, what would you be doing?

Tom Hickey: Oh God, If I wasn't an accountant I probably would have gone to college and do English and I would have ended up doing a PhD on, you know, solar imagery in Ulysses or something. I would have just caught up down rabbit holes with English language. So, I think accountancy saved me from lots of things.

Jonathan: There's time Tom, there's still time.

Tom Hickey: There is and actually my former CEO in Petroceltic, Brian O'Cathain, after Petroceltic went to Trinity College and did a degree in Pure Irish. Now I have a cupla focal, but I don't think that I'll follow that road, but I may do something similar.

Jonathan: And finally, when you retire at whatever age that is, what legacy do you feel you’ll have left?

Tom Hickey: I don't think I'll have…I’ll left one maybe with people who knew me. I’ll have left one with people who knew me, who hopefully, the way I do things will inform them or help them be better. I hope that I managed to simplify things for people. It's very easy to make things complicated, only the truly skilled can simplify. And I've probably tried to do that, if only to hide my own inadequacies at times over the years. And I think you have to trust people and be really honest with people and I hope people I've worked with probably feel I've been honest with them and that's been, on balance good, it's not always easy.

Jonathan: Tom Hickey, CFO of Kenmare Resources, we hope the numbers are indeed good today. Thank you so much for taking the time to talk.

Tom Hickey: Thank you very much Jonathan. I really enjoyed it.

Jonathan: And thank you for listening. You can catch up with all the interviews in the EY CFO podcast wherever you get your podcasts. Don't forget to rate, review and most importantly, to subscribe. Until next time, thanks for listening.

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