Success ingredientNicholas Allen

Nicholas Allen, a graduate of the University of Manchester, has served on the Securities and Futures Appeals Panel, the Takeovers and Mergers Panel, the Takeovers Appeal Committee and the Share Registrars’ Disciplinary Committee of the Securities and Futures Commission

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Link Asset Management Non-Executive Chairman Nicholas Charles Allen has spent half of his life in Hong Kong. He is not only addicted to golf, but also intellectual challenges, as he confesses to James Kelly

FROM LINKS

The week Nicholas Allen arrived in Hong Kong in September 1983 as a keen

young accountant was a particularly frenetic time in the colony’s history. It was the week the government pegged the Hong Kong dollar to the United States greenback. The stock market plummeted. The currency fluctuated. There was uncertainty in the air.

Thirty three years later, Allen’s enthusiasm for his adopted home, and for a challenge, has not waned. As Non-Executive Chairman of Link Asset Management, he oversees Link Real Estate Investment Trust, Asia’s largest REIT with a portfolio of shop-ping malls, fresh markets, carparks and offices spanning Hong Kong, Beijing and Shanghai.

British-born Allen earned a bachelor of arts honours degree in economics and social studies from the University of Manchester. He now sits on the university’s Hong Kong foundation and is an active networker among the more than 3,000 alumni in Hong Kong.

It was his father, a director at a stevedoring company, who suggested that “accountancy might be a sensible occupation.”

Out of AfricaAfter graduating in 1977, Allen moved to London to work as a trainee chartered accountant with Coopers & Lybrand. While he liked the London-life, he also enjoyed the travel his work specializing in auditing oil and gas assets offered, with trips

TO LINK

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Success ingredientNicholas Allen

Allen first joined Link as an independent non-executive director in February 2016 then became chairman two months later

to Angola, Yemen, and Gabon – places that remain challenging for even the most experienced accountant.

“I joined the accounting profession not just because my father asked me to, but I felt it would give me a good base to go into business, a good understanding of business. I think the big attraction of the profession is that it is global and therefore you have the opportunity to travel,” Allen says.

“It’s a discipline that is similar every-where you go, so I always intended that having worked in London for a while that I would take a posting in an overseas office.”

After becoming an audit manager, an opportunity came up in the firm’s Hong Kong office.

At the time, Coopers had about 300 staff in its Sunning Plaza office in Causeway Bay. In one of those Hong Kong career trajecto-ries of fate, Allen until recently sat on the board of Hysan Development Company, the landlord of Sunning Plaza, which has been demolished for redevelopment.

“I was fortunate then to be working and operating not just in the great city that Hong Kong is, but also through a period when China was opening up and, as a result, the accounting profession was thriving. Accoun-tanting firms were opening their offices in China and starting to provide the accounting services that were demanded in China.”

After the firm merged with Price Water-house to become PricewaterhouseCoopers

in 1998, staff numbered more than 2,000. “The accounting firms based here in Hong Kong developed their networks in China and became the auditors of the big Chinese companies, as the Chinese government sought to bring its state-owned enterprises into a new governance atmosphere by having them subject to the rigours of being listed companies on stock markets,” says Allen.

In 2002, Arthur Andersen affiliates in Hong Kong and China joined Pricewater-houseCoopers. Allen’s major clients from that time were Lenovo, Swire Pacific, and the Hong Kong Jockey Club.

“I was running the Assurance (Audit) practice which was a large practice of about

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5,000 people in 12 offices in Hong Kong and China,” he says. “It gave me as an accountant, and as a member of the Hong Kong Institute of CPAs, the experience of running a business as well as the experi-ence of operating as an auditor looking after clients.”

Par for courseIn 2007, at age 53, Allen retired from PwC. “The retirement age was 55 at the time but I thought I’d go out a little bit earlier.” For the next two years Allen worked on his “addiction” – his golf handicap. “A golf addiction is a healthy barrier to working too much.” His handicap today is 12.3.

As much as he enjoyed the fairways of Hong Kong, the boardrooms beckoned. In 2009, he was approached and joined the boards of Lenovo, CLP Holdings, and Hysan Development as an indepen-dent non-executive director.

“I was able to have a continued interest in business after exiting from PwC. I don’t think I would have had that opportunity if I had a discipline other than accounting because you are readily invited to boards which need that expertise.”

In his last 10 years at PwC, Allen headed what was called the forensic ac-counting and litigation support practice and was regularly a partner who signed off on reports to be used in legal mat-ters. Since leaving PwC, he has acted in

several such cases. “That’s been part of my, if you like, retirement portfolio and I feel it’s important to remain busy, to keep occupied and, to be intellectually challenged. Unless you are absolutely fantastic at golf, you can’t play golf the whole time,” he says.

Allen was appointed to the Link board in February last year and assumed the chairmanship from Nicholas Sallnow-Smith in April for a nine-year term. His appointment followed a global search to fill the position, and Allen was inter-viewed “eight or nine times.”

The decision to take on the role was easy. “I’ve always been interested in what’s going on within Hong Kong and, as far as Link is concerned, when I was the partner running the assurance practice in PwC, Link was one of our big listings. I’ve seen it at its birth and its very positive growth, but also the public profile that it has had over that period.”

Link REIT is the first real estate investment trust listed in Hong Kong, and is currently Asia’s largest REIT and one of the world’s largest retail-focused REITs in terms of market capitalization. Wholly owned by private and institutional investors, Link REIT has been listed on the Hong Kong Stock Exchange since 25 November 2005 and is a constituent stock of the Hang Seng Index.

The portfolio owned by Link REIT consists of properties with about 10 million square feet of retail space,

“ I was fortunate then to be working and operating not just in the great city that Hong Kong is, but also through a period when China was opening up.”

Link REIT’s portfolio consists of properties with about 10 million

square feet of retail space, around

72,000 car park spaces, and projects under development in Hong Kong (as at

June 2016).

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Success ingredientNicholas Allen

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around 72,000 car park spaces, and projects under development in Hong Kong, as well as properties with about 1.8 million sq. ft. of retail and office space in China (as of June 2016).

According to the unaudited interim results of Link for the six months ended 30 September 2016, total revenue grew by 10.1 percent to HK$4.6 billion and net property income rose 11.1 percent to HK$3.4 billion. It recorded total assets of just under HK$170 billion.

Link also holds a unique position in the Hong Kong community and is often held up to intense public and media scrutiny given its extensive Hong Kong footprint and interaction with its tenants and shoppers.

Allen was fully aware of the challenges the Chairman role would present. “As an independent director you sit on the other side of the table and occasionally lob in a hand grenade of a question and leave man-agement and the chairman to deal with it,” says Allen. “When you are the chair while

you are obviously not making executive decisions you must solve such issues. It’s a real step up in terms of commitment and it’s not something you can switch off and on to. It’s something you are constantly involved in particularly for a high profile company such as Link.”

Old styleFollowing his practice as an auditor, Allen likes – to use one of his favourite words, to “triangulate” – to get several different perspectives and see if they add up. This means a strong relationship with his Chief Executive Officer George Hongchoy who, in addition to regular, ad hoc discussions, he meets every week for a one-on-one 90-min-ute session, interaction with board members outside of meetings, as well as getting to know senior Link staff apart from the man-agement team through a series of lunches. And, of course, site visits – so far Allen has visited around 40 Link assets.

“We all have a style as an auditor. My kind of style as an auditor was really quite hands on. It may be a slightly old-fash-ioned style of auditing because auditing today can have greater elements of form filling than it used to have.”

Allen believes this old fashioned, hands-on approach should be a habit of audit committee chairmen and internal auditors. “I want an internal auditor that is somebody who management at differ-ent levels is comfortable enough to pick up the phone and say ‘hey, I’ve got a bit of a problem here’ or ‘I think I might have a bit of a problem’ and it’s not like ringing

up your local police station and making a confession,” he says.

“As an audit committee chair I try and make sure that the [internal auditor] gets the opportunity to network within the organization, that they get invited to the right places. For me that’s really important.”

PaybackAllen is also driven by a sense of gratitude and an obligation to repay the profession and the city he has made home for half of his life.

He is grateful to the Institute for the opportunities it has offered him in his career and therefore gives back to the profession through his membership of the Institute’s Corporate Governance Working Group.

Allen is also Chairman of Vision 2047 Foundation, an organization initially founded by Hong Kong movers and shakers during the “doom and gloom” of the mid ’80s to address issues leading up to the Handover. He describes it as “a conversation group that meets primarily with overseas visitors and answers their questions candidly about what is going on in Hong Kong.”

Thirty three years on, Allen remains a formidable champion for Hong Kong. “I’m a big fan of Hong Kong,” he says. “It’s been everything that I wanted it to be when I left London to come out and work here, and an organization like Link is just such a big part of the fabric of Hong Kong, given the shop-ping malls and the fresh markets that operate here, so I am honoured to step into that [chairman] role and continue that engagement with Hong Kong.”

“ As an audit committee chair I try and make sure that the [internal auditor] gets the opportunity to network within the organization, that they get invited to the right places.”

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