ISSUE ELEVEN: SPRING 2013
CHANGE MAKER Charting Scotland’s growth as a land of entrepreneurs DEALS IN MOTION The inside track on Jim McColl’s route to the top A TIGHT-KNIT PLAN The cashmere queen plots her next move in retail PAR FOR THE COURSE How an IT man got his wings in angel investment
ISSUE ELEVEN: SPRING 2013: SCOTLAND EDITION
A POINT TO PROVE
The Scottish stars who’ve created emerging businesses on the back of sporting success BUSINESS NEWS: COMMERCE: FASHION: INTERVIEWS: MOTORS: EVENTS
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BUSINESS QUARTER: SPRING 13: ISSUE ELEVEN Welcome to this latest edition of BQ Scotland. As ever, we hope you find something enjoyable, informative and useful to read. What is becoming abundantly clear is that finding the balance between the needs of modern industry and protecting the environment is far more on a razor’s edge. Humankind’s search for metals and minerals is ever more daring when you consider the prospects of mining the ocean depths – using massive machines made in the UK - around the mysterious hot air vents several miles below the surface. Across the globe there are threats to the environment, as we prospect for oil and gas in the pristine Arctic Ocean and see the aftermath of the Macondo blowout in the Gulf of Mexico. All businesses have to be respectful and understand their corporate responsibilities. Throughout this edition, the energy needs of Scotland emerge as a theme. With Scotland’s coal-fired power station at Cockenzine now closing and Torness Nuclear Power Station, which provides an electricity baseload for Scotland, reaching the end of its lifespan in 2023, there are big questions about how we keep the lights on in the UK. With Aberdeen enjoying another boom in the oil and gas industry, our BQ Live Debate – which we took to the UK’s energy capital – looked at how the emerging renewables industry and other regions of the UK might benefit by collaborative working. Throw in the arrival of abundant shale gas that is likely to change the economics of energy and we have an interesting future landscape. But that landscape – which is important to Scotland and its tourist sector – has to be maintained and remain unspoilt. It is interesting to note that one shale oil company triggered dozens of earth tremors near Blackpool in Lancashire when it became the first company to begin fracking. Thousands of wintering birds were affected which halted the expansion. Fracking involves blasting water and chemicals at ultra high pressure into rocks to release the shale gas: one area with potential is the Scottish Borders. In our interview with Fergus Ewing, Scotland’s
Minister for Energy, Enterprise and Tourism, he steers clear of giving any kind of green light to fracking in Scotland. This is rather smart for our tourism minister. In the Year of Natural Scotland – when we are all being encouraged to embrace our own country – it would seem strange to approve widespread fracking in Scotland. Let’s not forget Scotland has had a shale oil industry before. In 1928, the shale oil industry was assisted by the fact that it paid 4 pence less duty per gallon than the imported light oils then coming from Iran. In 1951 this rose to 9 pence, bringing a massive benefit to the industry based in the village of Pumpherston. But when Britain joined EFTA (the European Free Trade Association) in 1962 that had to stop and the shale oil industry closed down within weeks. The shale bings of West Lothian are part of the legacy – but so too is world-class Grangemouth oil refinery with its ethylene cracker plant, which is still one of the few places in Europe – along with Mossmoran in Fife - where lighter shale fuel can be turned into plastics. Why is this so important? The cost of oil impacts on everything we do in business – from logistics through to the prices of farm fertilisers. So expect far more scrutiny of Scotland’s renewables policy as we head into the nosier (but hopefully respectful) months of Scotland’s referendum debate. Enjoy BQ and thanks again for supporting us. Kenny Kemp Editor of BQ Scotland
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BUSINESS QUARTER |SPRING 13
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CONTE BUSINESS QUARTER: SPRING 13 THE CHANGE MAKER
Features 26 EN GARDE The Scottish sports stars with a point to make in business
32 CHANGE MAKER Exclusive interview with Fergus Ewing, the Scottish Government’s Minister for Energy, Enterprise and Tourism
38 LIVE DEBATE Forging closer ties between the two North Easts of Scotland and England
BUSINESS QUARTER | SPRING 13
44 DEALS IN MOTION Jim McColl, one of Scotland’s most successful businessmen, goes behind the deals that chart his rise to the top
54 A TIGHT-KNIT PLAN Cashmere queen Belinda Dickson plots the next stage of her firm’s expansion
74 PAR FOR THE COURSE How technology man turned angel investor Paul Atkinson got his wings
DEALS IN MOTION
TENTS SCOTLAND EDITION
50 COMMERCIAL PROPERTY
The deals and developments shaping Scotland’s skyline
A TIGHT-KNIT PLAN
58 WINE Skyscanner’s Mark Logan faces a Spanish imposition
60 MOTORING Martin Mutch enjoys a fleeting romance with an Italian beauty
64 EQUIPMENT Behind the handlebars of the retro riding revolution
08 ON THE RECORD Local butchers bite back while new energy sector opportunities emerge
12 NEWS Who’s doing what, when, where and why, here in Scotland
24 AS I SEE IT Special report on the supercapacitor and its world-changing impact
54 PAR FOR THE COURSE
The Italian menswear master who’s pushing the boundaries of fashion
80 A BIT OF A CHAT With BQ’s backroom boy Jock Yuler
82 EVENTS Gatherings, seminars and conferences that could boost your business
74 BUSINESS QUARTER | SPRING 13
ON THE RECORD
>> A steak in the future: the local butcher bites back The horsemeat scandal has had a silver lining for Scotland’s producers and sellers of quality meat. Karen Peattie finds out more Food scares come and go, but the horsemeat scandal has become a moving story, leaving consumers confused and angry. If we can’t trust what it says on the label, how can we be sure that our food is safe? And who, ultimately, is responsible for ensuring that it is? Clearly, there are many questions still to be answered. The story may no longer be headline news but it isn’t going away, and the major retailers – and catering groups – embroiled in the scandal have a massive task ahead of them as they pull out all the stops to win back the trust of the British public. But there is also good news. Scottish meat sales have increased since the start of the horsemeat scandal with some butchers reporting sales up by more than one-fifth. The meat sector has also received a boost with the launch of a £1m campaign, funded by the Scottish Government, to strengthen the Scotch label, develop new markets and support the marketing of the Scottish meat brands – beef, sheep and pork. Scotland, of course, has provenance in abundance and the “shop local” mantra is currently very much in evidence. A survey by Quality Meat Scotland (QMS) revealed that 92% of butchers’ shops experienced increased footfall in February (January 23-February 23), following media coverage of the horsemeat scandal. Of that 92%, the majority (66%) reported an increase in footfall of 10-20% with a further 23% reporting a 20-30% increase and 3% stating their footfall had increased by 30-50%. The QMS email survey of around 300 members of the Scotch Butchers Club also revealed that 95% of butchers believe customers’ trust in the Scotch Beef brand has increased in the wake of the horsemeat issue. Jack Broussine at QMS suggested the survey results are further welcome evidence of consumer awareness of the credibility and integrity of the Scotch Beef brand. “Our industry has made a major commitment to
BUSINESS QUARTER | SPRING 13
Below: The McGowan family of Incheoch, Glenisla - Neil McGowan, wife Debbie, with children Tally (8) and Angus (7) Below right: George Fleming of Aberbothrie, near Alyth
ON THE RECORD
traceability and quality assurance from farm to processor which puts our brands – Scotch Beef, Scotch Lamb and Specially Selected Pork – in a strong position at a time like this.” At the Scottish Federation of Meat Traders Association, chief executive Douglas Scott said the survey findings confirm the feedback he has been receiving from members. “Many butchers are reporting that not only are they seeing existing customers visiting them more frequently, they are also seeing completely new faces,” he pointed out. “New customers are asking a lot of questions about the provenance of meat and how meat products are made. Butchers are keen to make the most of this opportunity and ensure their new customers continue to shop with them.” John Sinclair, owner of Craigie’s Farm Deli and Café in South Queensferry, has seen a sharp surge in sales of Scottish food and drink in the butchery, café and shop, and attributes this to customers’ desire to buy trusted products. During a week in February, sales at Craigie’s soared 40% at the butchery counter while there was a 33% increase in the shop and café compared to the previous week. With the food and drink sector booming, Scottish industry leaders also have ambitious plans to grow the value of food and drink sent abroad to £7.1bn in just five years. When you consider that oil and gas exports are currently worth £7.6bn, this hits home how crucial food and drink is to the Scottish economy. “Food and drink is now Scotland’s fastestgrowing export sector,” said James Withers, chief executive of industry body, Scotland Food & Drink. “We set ourselves a target to break the £5bn barrier in annual exports of food and drink by 2017 – and we have achieved that six years early. It’s a credit to food and drink businesses up and down Scotland and reflects the collaboration between industry bodies and
Government which have all come together through Scotland Food & Drink. “By 2017, we now want to break the £7bn mark. The 50% growth in whisky exports and 63% increase in food exports since 2007 make us ambitious for even greater success. Whether it is in Europe, North America or Asia, our culinary footprint is growing around the globe. “If we ensure we have the right environment here for businesses to grow and increase production, alongside a truly united approach from Government and industry, I believe we can hit the new target of £7.1bn over the next five years. Doing so would mean we will have almost doubled our export trade in food and drink in a decade.”
It is too early to speculate on the long-term impact of the horsemeat scandal. Consumers do have short memories, though, and this time next year people may well be stocking up on processed meat products and cheap burgers having forgotten all about the revelations of recent months. But if people remember the Scottish meat industry’s “Keep Calm and Eat Scotch Beef” message – quickly and rather cleverly produced on promotional T-shirts in the wake of the event, then support for local producers and the subject of provenance should remain front of mind. n
I believe we can hit the new target of £7.1bn over the next five years - meaning we will have almost doubled our export trade in food and drink in a decade
BUSINESS QUARTER |SPRING 13
ON THE RECORD
>> Sun rising on an industry of untapped potential While not without its detractors, the shale oil sector presents a huge opportunity for Scotland to grab its share of what a new report predicts will drive the next energy revolution Gordon Grant, director of Ineos at Grangemouth, is a business figure worth sitting up and listening to. He operates Scotland’s major oil refinery and chemical complex and believes the chemical industry in Scotland has a job to do in sending out a strong message to attract new young people. He chairs the Reputation and Skills Group of Chemical Sciences Scotland, supported by Scottish Enterprise, which is working to ensure the qualifications are joined-up with the ethics and safety of this vital industry. “What we need to talk about is the chemical industry’s place in the challenges the world faces at the moment: feeding, watering and heating the world’s population is a key aspect.” He said Scotland is in a unique position in Europe. “The chemical world is changing as we speak. Shale gas in America has revolutionised the chemical industry. Scotland has two of the three ethylenecracking facilities in Europe - out of 46 - that can utilise the lighter shale gas. We can be at the forefront of that change.” Grangemouth is one of the plants, while the Fife ethylene cracker, at Mossmorran, operated by Exxon Mobil, is the other. Shale oil production has been growing in the United States from 110,000 barrels a day in 2004, to 553,000 barrels a day in 2011, and increasing in 2013. It is expected to rise to 1.2 million barrels per day by 2035. “Shale gas in America and Europe will produce vast quantities of feedstock. This gives us a huge advantage, but today we don’t have shale gas in Scotland. We can import it. That gas is available to Scotland at an advantageous price.” He said that if the current unit price for gas was 100p; then the shale gas being sold in America is at 1p. Even with refrigerating, shipping to Scotland, and re-gassing it, it was still only 6p. “This is a huge game-changer. 18 months
BUSINESS QUARTER | SPRING 13
ago no-one was talking about shale gas in Scotland – now it is here. A report by PwC entitled Shale Oil: the Next Energy Revolution is a timely contribution to the debate, which ties in oil and gas and even Scotland’s renewables. “There is potential for shale oil production to spread globally over the next couple of decades. If it is does, it would revolutionise global energy markets, providing greater long term energy security at a lower cost for many countries,” says the report. The PwC analysts believe that global shale oil production has the potential to reach up to 14 million barrels of oil per day by 2035, which would be 12% of the world’s total oil supply. They also estimate this increase could reduce oil prices in 2035 by around 25-40%, equivalent to US$83 to US$100 a barrel. This would certainly have an impact on the economics of oil in the North Sea, although politicians appear undaunted. The Scottish Government’s recent Oil and Gas Analytical Bulletin predicts a £75bn bonanza for Scotland, with First Minister Alex Salmond saying: “There can be little doubt that Scotland is moving into a second oil boom.” The Shale report says the economic benefits of such oil price - of US$135 a barrel in 2035 - will vary significantly; large net importers such as India and Japan might see their GDP boosted by 4-7%, while for the UK, China,
the Eurozone and UK it will be 2-5% GDP. Conversely, major oil exporters such as Russia and the Middle East could see their trade balances worsening unless they develop their own shale oil resources. The report adds: “The potential environmental consequences of an increase in shale oil production are complex and appropriate regulation will be needed to meet local and national environmental concerns. Shale oil could have adverse environmental effects by making alternative low carbon transport fuels less attractive, but might also displace production from higher cost and more environmentally sensitive areas such as the Arctic and Canadian tar sands.” Mary Church, campaigns co-ordinator at Friends of the Earth Scotland, is clearly not a fan of shale oil. She says:"We already have about five times more coal, oil and gas than it is safe to burn without guaranteeing catastrophic climate change, so the last thing we need to do is to exploit new kinds of fossil fuels." "Scotland has 25% of Europe's renewable energy potential and a vast wealth of knowledge and experience to realise it. Instead of trying to play catch-up on fracking with the United States, the oil and gas industry should use their expertise to help turn Scotland into a world leader in offshore renewables." The report’s authors estimate shale oil could displace 35-40% of waterborne crude imported to the US. Increased shale oil production could lead to oil prices that are significantly lower than projected in current forecasts. In the equation about global oil prices, a lower price acts as a boost to consumers’ real disposable income and is similar to an indirect tax cut. The US and Eurozone are likely to benefit significantly, although net gains to UK consumers would be lower in part because there are also losses on existing North Sea oil and gas revenues if global energy prices fall. n
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Call to make Scottish industry more fashionable, manufacturing a future for apprentices, Premier now in a league of its own, focus on a firm with Reel potential, and rate confusion for bosses
The Scottish fashion industry has not achieved an international reputation, yet the talent is here
>> Order book rebound Manufacturers reported a rebound in orders and continue to expect moderate growth in output over the next three months, according to the CBI Monthly Industrial Trends Survey released in February. Of the 436 manufacturers in the UK, 15% responded that order books were above normal and 29% said they were below, giving a balance of -14%. This represents an increase of 6 points from the January survey and above the long-run average (-17%). Export order books also improved, registering a balance of -20% in line with the long-run average (-21%), but remained well below December levels (-11%). Manufacturers expect moderate growth in output over the next quarter (+5%), driven mainly by motor vehicles & transport equipment and food, drink & tobacco. Expectations for output price inflation for the next quarter remain high (+20%). Motor vehicle & transport equipment manufacturers reported their strongest inflation expectation in four years, offsetting the cooling of price expectations in the food, drink & tobacco sector.
>> Making safety child’s play A new software application used to identify potentially vulnerable children is being developed in Scotland to help protect children from abuse and neglect. Barrachd is working with councils across Scotland to prove that information previously missed can be gathered and consolidated using analytics to aid social care. Barrachd was founded in 2007 in Edinburgh as an IBM hardware vendor. In 2009 they began offering unique software solutions focusing on planning and business analytics.
BUSINESS QUARTER | SPRING 13
>> Cashmere entrepreneur proposes creation of Scottish Fashion Hub Scottish ‘cashmere queen’ Belinda Dickson is seeking private and public sector support to create a dynamic Scottish Fashion Hub to provide critical infrastructure and business and marketing support to young fashion designers seeking to break into global markets. Dickson has won numerous awards including an OBE for services to the textile and fashion industries as well as the success of her Belinda Robertson cashmere business (the company, which bears her former surname is about to embark on major changes). “With some notable exceptions, the Scottish fashion industry has not achieved an international reputation, yet the talent is here. We need a Scottish Fashion Hub to help designers translate creative talent into commercial success,” Dickson said. She added: “The fashion world is changing rapidly and it’s being driven by brands like Zara who have pioneered ‘fast fashion’. It takes solid understanding of business processes from production to sourcing, merchandising and marketing to succeed today. Scottish designers
currently lack access to the professional support they need to succeed on a global stage.” The aim of the Scottish Fashion Hub is to nurture design and related fashion businesses by providing them with a shared low cost workspace in Scotland as well as a showcase space for trade fashion buyers both in Scotland and overseas. The plan also includes: shared IT, telecoms and web infrastructure; shared accounting; HR and legal services; and mentoring from industry professionals. Dickson says the project is at a discussion stage with potential partners and its success will depend on achieving the right economies of scale and attracting sufficient investment. Separately, she will close the doors of the Belinda Robertson store in Dundas Street in Edinburgh for the last time in April as she refocuses the retail operation towards online retail, while continuing to support existing concessions. She will retain offices in Edinburgh and plans to increase her wholesale activities and also to expand the Cashmere Barn discount outlet in East Lothian which has been very successful. BQ shares a lunch date with Belinda Dickson on page 54.
ONLINE: For the latest breaking business news from Scotland and the wider UK visit BQ’s website www.bq-magazine.co.uk
>> Drug discovery boost A new pharmaceutical drug discovery initiative is to be centred at BioCity Scotland in Lanarkshire, in partnership with the University of Dundee. The project will bring at least £16.3m of research funding to Scotland following the announcement by the Innovative Medicines Initiative (IMI) of the launch of the European Lead Factory. An international consortium of 30 partners in the European Lead Factory, will be working to accelerate the development of a new generation of drugs. This partnership, the first of its kind, is supported by the Innovative Medicines Initiative (IMI), and creates opportunities for the discovery of new medicines through access to a proprietary, high-quality compound collection. In addition to the £16.3m of IMI funding, further financial support for the Scottish-
based part of the project worth £3.5m will come from the Scottish Funding Council and the Scottish Government. In partnership with the Scottish Universities Life Sciences Alliance (SULSA), the University of Dundee will place a team of drug discovery scientists at BioCity Scotland to conduct screening and medicinal chemistry activities for the project.
The project will bring at least £16.3m of funding to Scotland
>> Manufacturing a future for apprentices GA Engineering, a Dundee manufacturing business, is creating 60 new apprentice roles after receiving a £1.8m asset based finance facility provided by Lloyds TSB Commercial Finance and Bank of Scotland. The engineering firm, which manufactures precision components for the oil and gas, chemical, computer, nuclear, medical and machine tool industries, is launching a new training academy at its Dundee HQ that will take in 60 apprentices over the next five years. The announcement, which was made during a visit by the Scottish Finance Secretary John Swinney, comes on the back of three years of unprecedented growth years, which has seen the company’s turnover increase from £3m to £12m.
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BUSINESS QUARTER |SPRING 13
>> A dun deal for Premier Dunedin, the UK buyout house, has backed the management buyout of Premier Hytemp, a global leader in the manufacture and supply chain management of engineered alloy components for the energy industry. The group was bought from Sir David Murray’s Murray International Holdings Ltd for £34.5m. Premier Hytemp, formed in 2008 when Sir David’s Premier Alloys bought Hillfoot Steel, is headquartered in Edinburgh and employs 200 people worldwide, with manufacturing facilities in Edinburgh, Sheffield and Singapore as well as operations in Calgary, Canada and a soon-to-be-opened base in Dubai. The deal comes after Dunedin announced its exit from market leading conference and training venues business etc.venues, which saw Dunedin realise a money multiple of more than three times its investment. Dougal Bennett, the partner who led the deal for Dunedin and joins the board, said: “Premier Hytemp fits with Dunedin’s strategy of investing in UK headquartered companies that are market leaders in their niche and which have strong international growth prospects.” Donald Wilson, Premier Hytemp’s chief executive, said: “We have seen how Dunedin works with its portfolio companies to grow their operations internationally and we believe that this offers a very exciting opportunity for us.” The buyout team includes Will Gold, chief financial officer, and Doug Harrison, chief operations officer. Also involved for Dunedin were Simon Rowan (investment director), Jon Ma (investment director), Oliver Bevan (investment director) and Jamie Moodie (senior associate).
>> STV to hit the road again STV Productions has been commissioned to make a third series of Celebrity Antiques Road Trip for peaktime broadcast on BBC2. The 20 episodes will be on screened later in 2013. Celebrity Antiques Road Trip and Antiques Road Trip have been ratings success stories and in 2012 Antiques Road Trip picked up the British Academy Scotland Award for Features / Factual Entertainment.
BUSINESS QUARTER | SPRING 13
>> Aberdeen team branches out into new market Aberdeen-based CAN, an inspection and mechanical services business, has unveiled a separate business unit called ENGTEQ, which will specialise in asset integrity management and enhanced specialist engineering services for clients. ENGTEQ is an evolution of the services previously offered over the past three decades within the CAN Group, bringing together CAN’s integrity management and engineering services into one standalone unit. ENGTEQ has a workforce of 180 employees, 100 of which will be moving into a £5m, state-ofthe-art engineering centre in Aberdeen. The business unit will be led by the engineering director Simon Hurst who has worked with CAN over the past five years and has developed a highly qualified and skilled engineering capability. Innes Walker, CAN Group director said: “The rationale behind separating our offering was to bring a clearer focus and differentiation to the asset integrity engineering services we provide. This aims to highlight the distinct and independently managed services, which can be tailored to match the needs and requirements of our clients.
>> A firm with Reel potential The First Minister has unveiled a plaque on a visit to the Reel Group’s Arctic House headquarters in Dyce. The company is a comprehensive testing and inspection business, part of the Global Energy Group, with head offices in Inverness and Aberdeen. Alex Salmond was shown the dedicated facilities where workers prepare client reports after returning from offshore duties.“Scotland has a long-established strong reputation as an international hub for oil and gas and I am delighted that Reel has established its global HQ in Aberdeen. Since Reel was founded in the city in 1995, the company has developed into a global service company with operation from locations in the Americas, Europe, Africa and Asia.” Last year Mr Salmond welcomed the firm’s plans to open a Mumbai operation to tap into Indian opportunities.
>> Sales climb at CR Smith CR Smith, Scotland’s most well-known windows, doors and conservatories company, has reported steady improvement across all areas of the business. For the year ending 31 March 2012 sales were reported at £18.4m (2011, £15.7m) with operating profit of £272k (2011, £41,000). Employee numbers also rose by 10%, increasing from 300 to 333 in the past 12 months. CR Smith, which has been owned by entrepreneur Gerard Eadie for 35 years, attributes last year’s results to a continuing growth in demand for the best quality products and services. It has invested in both product and people to grow its market position and has new product developments in the pipeline for 2013.
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managing your portfolio. The issue with investment opportunities is that they rarely stay opportunities for long. Too often one blinks, and they’ve gone. Which is why we at UBS believe in proactively managing your portfolio. It means your client advisor will seek out new investment opportunities, based on the latest market developments. And regularly review your portfolio, balancing and optimizing it, according to your risk profile. But one thing remains constant throughout all of this. Our commitment to meeting your financial goals. And that’s something we’ll never stop doing.
The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. In the UK UBS AG is authorised and regulated by the Financial Services Authority. Colin Aitken UBS Wealth Management Wemyss House Edinburgh EH3 6DH Tel: 0131 247 2921
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>> Rate confusion for bosses Three out of five Scottish business owners do not know how their business rate valuations are calculated, research from the Federation of Small Businesses shows. In evidence to the Scottish Government’s review of business rates, the FSB in Scotland calls for the system to be made more accessible and comprehensible. The small business body, which has around 20,000 members in Scotland, also says that MSPs should regularly scrutinise the work of Scottish Assessors, the officials charged with working out business premises’ notional market values. The FSB confirms that the chief rates relief programme for the smallest firms, the Small Business Bonus Scheme, has mitigated the impact of other spiralling overheads since its introduction in 2008. However, the survey work shows that many businesses wrongly believe that their premises’ valuations are calculated by their local authority. Small businesses also expressed their frustration that very similar premises seem to be valued differently. Many reported that they found the system both confusing and inaccessible. Colin Borland, the head of external affairs in Scotland for the FSB, said: “Business rates are here to stay but Scottish small enterprises want a system that’s easier to understand and more accountable. “The Scottish Government was bold when it removed the rates burden on many of the smallest firms. “It was bold again when it chose to level the playing field by making the largest retailers pay a more proportionate amount. The FSB is asking them to be bold once more and design a 21st century business property taxation system which is fair and transparent.”
>> Forward thinkers named Innovative Scottish companies such as Adrok Limited (Edinburgh), Formedix Limited (Glasgow), Omega Diagnostics Group (Alva) and Sigma-Aldrich Company Limited (Irvine) all appear on the latest report into Regional Selective Assistance (RSA) funding. RSA funding for Scottish companies in the last quarter comes to over £12m and is supporting around £61m
BUSINESS QUARTER | SPRING 13
>> City to show the world what the future holds Glasgow will receive £24m of UK Government investment to demonstrate how a city of the future will work. Glasgow beat off competition from 30 other UK cities to host the Technology Strategy Board’s Future Cities Demonstrator. The city will show how providing new integrated services across health, transport, energy and public safety can improve the local economy and increase quality of life. It will allow UK businesses to test new solutions that can be exported around the globe. Announcing the investment during a visit to Glasgow, Minister for Universities and Science David Willetts said: “With more people than ever before living in our cities, they need to be able to provide people with a better quality of life and a thriving economy. “This £24m investment will make Glasgow a city of tomorrow, demonstrating how cities can work more efficiently with a reduced environmental impact. We are in a global race and Glasgow can keep the UK at the forefront of innovative technology ideas.” The Glasgow Future Cities Demonstrator aims to address the city’s pressing energy and health needs. The demonstrator will also show how innovative use of technology can improve the Council’s service provision, while additional potential benefits include improved crime prevention, a reduction in anti-social behaviour and improvements in travel infrastructure. Councillor, Gordon Matheson, Leader of Glasgow City Council, said: “This is a huge boost to Glasgow‟s ambitions to build a better future for our city and its people. This investment and the work we will be doing will put us at the forefront of innovative and smart cities not just in the UK but in Europe and beyond. Glasgow is a city which is constantly evolving and regenerating and we are always looking to the future.”
in capital investment from recipients, according to Scottish Enterprise. It is also creating or protecting up to 1,274 jobs. Meanwhile David Gauke MP, Exchequer Secretary to the Treasury, spoke in London on the importance of Enterprise Investment Scheme (EIS) investment - which is popular with Scotland’s angel investors - as a tool for economic recovery and how, since the mid
1990s, EIS and Venture Capital Trusts (VCT) schemes have raised over £13.3bn investment for 20,000 companies in the UK. David Gauke said: “EIS is one of, if not the most, successful and widely respected Venture Capital relief schemes in Europe. “We regularly engage with officials from across the continent who are interested in our scheme and how it works”
The VAT cost of property refurbishments In the current climate, more and more building works involve the refurbishment of existing properties rather than the construction of the new ones. This approach can also present opportunities to save VAT, finds Scott Craig. With the VAT rate at 20%, significant additional costs can be incurred in a project if that VAT cannot be recovered. For every £10,000 spent an additional £2,000 can be paid in VAT. Limited budgets can often mean that compromises have to be made and in some cases the works postponed or scrapped. The good news is that in certain circumstances building works can be liable to only 5% or even 0% VAT. Furthermore, if the renovated property is used by a VAT-registered person for business activities or if the converted property is a dwelling, the VAT incurred may be recovered. To qualify for the lower rates of VAT the buildings must be used for either residential or a relevant charitable purpose. The term ‘residential’ includes dwellings (regardless of size), and relevant residential buildings such as student accommodation. The term ‘relevant charitable purpose’ includes buildings that are used by charities for non-business purposes. This usually means free activities and includes such buildings as churches, schools care homes and day centres. If you believe you are constructing a dwelling or charitable building, make sure you confirm its VAT status. If you have a qualifying property, the application of the reduced or zero-rate will depend on the nature of building works being undertaken. The zero rate of VAT applies to the construction of a new residential dwelling or new charitable building. The 5% rate applies to building projects where a non-residential building is being converted into a residential or charitable one. This 5% rate also applies where the works refurbish a residential or charitable building that has been empty for two or more years. Furthermore, 5% applies to conversions that change the number of dwellings,
Scott Craig, Head of VAT, Scott - Moncrieff
It is worth knowing that a special VAT refund scheme puts do-it-yourself builders and converters in broadly the same position as a developer. This scheme allows DIY house builders to recover the VAT they incur on construction and conversion costs
for example the conversion of one house into flats and conversely a block of flats back into a single dwelling. In October 2012 the Government withdrew the zero-rating that previously applied to approved alterations to listed buildings. This will result in an additional cost to those who own and are responsible for listed buildings. In some cases projects may still be able to benefit from the zero rate until 30 September 2015. If zero-rating no longer applies to a project it is worth considering whether the 5% rate could apply to some of the works. We can only hope that this tax raising measure does not result in buildings that form the architectural heritage of this country falling into disrepair or ruin. Finally, it is worth knowing that a special VAT refund scheme puts do-it-yourself builders and converters in broadly the same position as a developer. This scheme allows DIY house builders to recover the VAT they incur on construction and conversion costs. The timing of such claims is crucial, and DIY house builders must ensure that claims are submitted within three months of completion.
The specialist VAT team at Scott-Moncrieff can assist you to confirm the VAT status of your building works and minimise the cost of irrecoverable VAT on building works. Scott Craig is a partner and Head of the VAT team at business advisers and accountants, Scott-Moncrieff. 0131 473 3500 firstname.lastname@example.org
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>> Back-to-back wins Technology services company Proserv has secured two major contract wins worth in excess of £15m for work in the North Sea, strengthening the company’s position in the subsea controls and communications field. The first deal is with TAQA for the control of subsea wells approximately 16.5km from the Tern platform in the Cladhan field. Proserv will implement a system to control three subsea wells using Proserv’s proprietary Open Communications Controller technology. The second contract, also with a major operator, involves work to control subsea wells. Proserv will use its cuttingedge system, which will control a number of wells and manifolds using a fibre-optic communications system.
>> GT holds top spot Grant Thornton retains its position as the number one financial advisor by deal volume during 2012. Experian Corpfin has confirmed the firm as the number one financial adviser to UK companies by deal volume for 2012, with reported deals advised on rising to 121. This is the second year the group has topped the annual ranking and was achieved
despite the total volume of industry deals falling by 3% last year. The technology (30 deals), consumer (21 deals) and manufacturing & industrial (26 deals) sectors were the busiest in terms of deal activity that Grant Thornton advised last year. Neil McInnes, head of corporate finance at Grant Thornton, Scotland, said: “Despite economic conditions remaining tough throughout we have grown our market share and are delighted [with the accolade].”
>> Stonepack on the march Stonepack, one of Scotland’s largest suppliers of bagged aggregates and renders, is to expand by opening a new three-acre site. The firm employs 16 people and the move will create ten jobs. The new premises at the Greendykes Industrial Estate in Broxburn mark Stonepack’s first venture in Central Scotland. The purchase has been supported by a six figure commercial loan with Santander Corporate & Commercial banking. Stonepack is owned and managed by husband and wife team Anna and Hayden Thomas, a family business going back four generations. Stonepack has operated from Forfar, near Dundee, for more than eight years.
>> Cash to fund transformation Technology business LUX Assure has received £3.25m to transform the company from a technology development business to a service provider for the oil and gas industry. The investment comes from ConocoPhillips; Statoil Technology Invest; Archangel Informal Investment (Archangels); and the Scottish Investment Bank, a division of Scottish Enterprise. LUX Assure’s CoMic™ and OMMICA™ products will form the core of the company post investment. CoMic™ is used to deliver improved corrosion management. Corrosion costs oil companies millions of pounds each year and CoMic™ enables optimisation of chemicals used for corrosion protection. OMMICA™ offers a simple method to monitor hydrate inhibitors. Laurence Ormerod, chairman of LUX Assure said: “This major investment will allow LUX to capitalise on the excellent chemical monitoring products developed by the company. CoMic™ and OMMICA™ products have been very well received by the industry so this seems to be an appropriate time to dedicate the company to growing sales, both within the UK and overseas. We are delighted to have ConocoPhillips and Statoil as new shareholders.” Since 2010 Archangels, Scotland’s business angel funding syndicate, along with SIB have invested £800,000 in LUX Assure. Andy Laing, investment executive at Archangels said: “This has been a welcome opportunity for Archangel to support LUX Assure’s continued growth and to demonstrate that business angel groups can successfully co-invest with venture capitalist firms.”
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>> Instrumental deal Techcomp (Group) has bought Edinburgh Instruments, the world’s leading manufacturer of lifetime fluorescence spectrometers, lasers and gas sensors for scientific research and industrial markets, for around £2m. The business is based in Livingston, and formed in 1971 as the first spin-out from Heriot-Watt University and the first private company on Britain’s first university research park. It was an early pioneer of time correlated single photon counting, laser and gas sensing technologies. Chairman Dr Derek Shepherd said: “Edinburgh Instruments has prospered under strong leadership, a motivated team of highly qualified employees and with investment from Scottish Enterprise and Hamamatsu Photonics KK in the early years. Our products provide research institutes world-wide with the most advanced photonic analytical capabilities available today. EI is now ready to start a new phase of development.” Chris O’Connor, CEO of Hong-Kong-based Techcomp Europe Group, said: “We are delighted to have the opportunity of adding Edinburgh Instruments to our portfolio of businesses and to be able to expand our range of technologies and products. EI has a fantastic reputation for innovating and supporting leading edge research globally and we are excited about investing in the business and working with the employees to take it to the next level.” Professor Smith, EI’s founder and retired chairman, a pioneer of advanced photonic research, has joined Techcomp Group as Chief Scientific Officer. CEO Alan Faichney, having led the business for the past two and a half years, will pursue other interests.
We provide research institutes world-wide with the most advanced photonic analytical capabilities available today
We’re lending to businesses in Scotland. Whether you’re looking to consolidate, diversify or grow, Bank of Scotland Commercial Banking could have the funding solution your business needs. Through loans, overdrafts, hire purchase and leasing, we offer ﬂexible funding terms to suit your business’ cash ﬂow needs. And we approve 80% of all overdraft and loan applications.
Accessing the right business funding for you
We can help businesses across Scotland access funding through initiatives such as the Funding for Lending Scheme, where we have reduced the interest rate by 1% for the full term on all approved business loans, commercial mortgages and hire purchase applications. We’re also supporting businesses through the Enterprise Finance Guarantee, boosting lending for businesses that lack adequate security. Cash ﬂow can also be enhanced through our invoice ﬁnance solutions and asset based lending which can free up funds tied up in your credit invoices and other assets.
Local knowledge supports our funding decisions
With many relationship managers based locally, we have a unique insight into the challenges and opportunities facing Scotland. That means we understand the lending requirements of local businesses, and as a bank proud of our Scottish roots, we also have a track record of helping enterprises across Scotland succeed.
Our local knowledge is supported by specialists for key industry sectors across Scotland, including property and healthcare. And our local International Business Managers can help businesses with ambitions beyond Scottish and UK borders. It’s a powerful combination and you can be assured that we have funding solutions to help support business needs across Scotland, both now and in the future. By supporting your business ambitions, we can strengthen the Scottish and UK economies, creating an environment for sustained business success. To discuss funding requirements for your business, please call us on 0131 522 2965.
Lending commitments that count • We increased our year on year gross lending to Scottish businesses by 14% in 2012. • We are committed to increasing our business lending further in 2013. • We were the ﬁrst UK bank to access funds under the Funding for Lending Scheme. • We’ve reduced the lifetime interest rate on our business loans by 1%.
Area Director, Commercial Banking, Scotland South
CALL US NOW ON 0131 522 2965 GRAHAM BLAIR
Area Director, Commercial Banking, Scotland North
lendingforscotland.com Any property given as security, which may include your home, may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it. All lending is subject to a satisfactory credit assessment. Calls may be monitored or recorded. Authorised and regulated by the Financial Services Authority. Licensed under the Consumer Credit Act 1974 under registration number 0593292. We subscribe to The Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk Invoice Finance, Asset Based Lending and Hire Purchase & Leasing facilities are provided by Lloyds TSB Commercial Finance. When using these products and services your agreement will be with a Lloyds Banking Group company whose terms and conditions will apply. Lloyds TSB Commercial Finance is a trading name of Lloyds TSB Commercial Finance Limited.
>> BQ people on the move French Duncan has appointed Paula Galloway, former director at a Big Four firm, as an audit partner, as the expansion of its services across Scotland’s central belt continues. Paula has worked in Ireland, Hong Kong and Scotland over the course of her career. For the last 11 years Galloway was an audit director at KPMG. Smarter Grid Solutions, the UK’s leading dedicated smart grid technology company, has appointed two board members to support its growth plans. John Scott, has held a number of senior management roles within the energy industry, including director of engineering, National Grid, and technical director, while Gerry Docherty has significant commercial experience of growing successful software businesses. Both join as non-executive board directors. Inverness Airport Business Park has appointed David Hastings, one of Scotland’s leading urban development professionals, as chairman. Hastings, who remains chief executive of Strathleven Regeneration Company, will lead IABP, working closely with strategic development partner Roxhill Developments, which signed a deal to develop the park in 2011. Wright, Johnston & Mackenzie have announced changes in their spin-out consulting business, Family Business Solutions which works with their in-house family business legal team. The team is led by head of tax, Susan Hoyle and Liam Entwistle who is head of the firm’s dispute resolution services. Susan also works with George Stevenson, who was the founding chair of the Scottish Family Business Association. Fiona Forrest joins property consultancy Knight Frank from the Grampian Valuation Joint Board’s assessors department and has
amassed valuable experience of the Aberdeen market during her four years with the organisation. Her appointment coincides with a move from the professional team to the agency department for Claire Herriot. Maclay Murray & Spens, one of Scotland’s top commercial law firms, has hired seven partners from Semple Fraser, following that firm entering administration. The partners are: Simon Etchells, Colin Keenan, Paul Haniford, Barry McKeown, Bill Fowler, Anju Suneja and Joanna Campbell-Smith. The move sees one corporate/renewable energy and six real estate and specialists join MMS and reinforces the firm’s already considerable reputation for excellence in those fields. The announcement follows the appointment of seven partners in MMS’s London office over the past 18 months, with expansion to its Aberdeen team expected shortly. Meanwhile corporate law firm Anderson Strathern has augmented its banking and finance team with the hire of Alex Innes, Douglas Gourlay and Euan Anderson, also from Semple Fraser. FWB, the leading executive recruitment firm, has announced the following appointments: Helen Page has joined Clydesdale & Yorkshire Banks as chief marketing officer. Helen was formerly managing director for marketing and innovation, UK Retail, at RBS, and in a key appointment for the bank, has been appointed to lead marketing, brand and complaint-handling activity. Macfarlane Group has the appointment of Stuart Paterson as a non-executive director and chairman of the Audit Committee. Stuart is currently finance director at Forth Ports, the UK port operations and property group. Gavin Willins is the new head of Scotland
for BNP Paribas Real Estate. He joins from CBRE where he had been a director in the capital markets team for eight years. Exova, the world’s largest dedicated testing group, has appointed Phil Coles as European managing director for its Food Division. Phil was formerly managing director at Brookes Avana (Premier Foods). Pamela Smyth has joined Forth Ports as group general counsel and company secretary. She was previously group legal director with Miller Group. Graeme Hardie has joined FNZ (UK) as a non-executive director. FNZ specialise in providing market-leading platform technology and investment administration services to the financial and investment sectors worldwide. Graeme is also a non-executive director at Metro Bank UK Ltd. Having helped recruit the new CEO, Professor Chris West from Australia, FWB is delighted that Barbara Smith has joined The Royal Zoological Society of Scotland as chief operating officer. Barbara has joined from Chester Zoo where she was managing director, and will bring a wealth of strong commercial experience to the Zoo. Mike Douglas, formerly of Aegon, has joined @sipp, the specialist providers of self-invested pension products as its chief executive. Jarvie Plant, one of Scotland’s leading plant hire and vehicle rental companies has appointed Ken Lewandowski as a nonexecutive director and Douglas Smeaton as sales director. Gaia Wind, a small wind turbine manufacturer, has appointed John Gallagher as sales director. He was formerly with BDR Thermea, a large European engineering group.
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Because there are never enough hours in the day, call on a Business Gateway adviser With the advice and practical support of a Business Gateway adviser you can make your plans for growth happen. To find out whatâ€™s available in your local area, call 0845 609 6611 or visit www.bgateway.com/growth
Eligibility for one-to-one advice varies, contact 0845 609 6611 to find out if you qualify. Business Gateway services are delivered by Local Authorities, Scottish Enterprise and Scottish Government with the support of associated partner organisations. Maximum charge for BT landline is 3p a minute.
Growing your business – Are you ready? Growing your business potential can appear daunting at times with many factors standing in your way. With around 5,500 Scottish companies currently exporting, this represents just 5 % of the overall UK companies trading internationally. This means a huge untapped potential for Scottish companies for overseas opportunities. The question is, are you and your business ready to export? Here are some steps to help you along the way. ASSESS YOUR EXPORTING READINESS By realising and developing your export potential you’ll soon find a wealth of business opportunities in overseas markets that will help safeguard your company’s future. Not sure where to start? Complete a free export assessment at www.sdi.co.uk/exportcheck to receive a tailored report on the next steps your business needs to take to go global.
BUILD YOUR EXPORT SKILLS You may be unsure about routes to markets, pricing or legal issues. Master the basics with Scottish Development International’s (SDI) export skills programme. There are sessions designed for those new to exporting or businesses further on in their exporting journey. Whatever stage you are at, researching which market is right for you is a key ingredient in your exporting journey. SDI’s exporting guides can help you undertake a thorough analysis of your chosen market. Visit www.sdi.co.uk/exportskills for more information.
PLAN YOUR EXPORT STRATEGY Learn to put a successful export strategy into practice and gain a competitive edge by focusing your time, energy and resources to best effect. Identify your options and test them before finalising your plans with the help of our strategy
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Learn to put a successful export strategy into practice and gain a competitive edge by focusing your time, energy and resources to best effect development training. Find out more at www.sdi.co.uk/exportstrategy.
GROW YOUR MARKET If you are already an experienced exporter but looking for further global opportunities and need help preparing for market expansion, there are several ways SDI can help support you, either from our programme of advanced workshops or our supported international trade missions or exhibitions. Find out more at www.sdi.co.uk/exportguide.
SETTING UP OVERSEAS If you have managed to secure an overseas base but need support on how to manage this whilst maximising opportunities, then our network of in-country specialists can help. They are on hand to advise you on everything from partnering to acquisitions – whatever country. Visit www.sdi.co.uk/overseasbase to find out more about our in-country expertise.
Entering new markets takes time and sustained effort and Scottish Development International’s Smart Exporter trade skills programme is on hand to help companies understand and take advantage of the international opportunities on offer. If you are business thinking about exporting into new markets, visit www.sdi.co.uk/export-from-scotland to find out more about SDI’s support services including free export training and market information.
CASE STUDY Despite the on-going economic challenges, more and more Scottish companies are looking to grow their business internationally, taking advantage of the exciting opportunities that exist in both the traditional export markets of the US and Europe and emerging economies such as Asia, South America, the Middle East and Africa. Last year, Scottish exports increased by £1.6 billion to just under £24 billion, demonstrating the continued global demand for Scottish products and services. Tartan Twist, an award-winning, design-led gift company, is a business who is capitalising on this demand and realising their international growth ambitions. The company was launched in 2008 by Lyndsey Bowditch, a successful design entrepreneur, and Gillian Crawford, a national newspaper journalist. Inspired by their love of Scotland, its history and heritage, their vision was to create a range of luxurious, affordable and authentic Scottish gifts. Winning ‘Best New Scottish Product’ at Scotland’s International Trade Fair in 2008 – the leading showcase for Scottish companies - was a huge boost for the company. Additionally, the company was nominated as Jewellery and Accessory Designer of the Year at the Scottish Fashion Awards in 2010 in association with Vogue.com, an important accolade at the country’s most prestigious fashion event. Although the company’s initial focus was on the Scottish market, it was during the company’s launch at the Scottish Trade Fair in 2008 when the company first received interest from overseas customers. The business secured interest and orders from countries including North America and Japan, which led to Tartan Twist products being sold in York Tartan Stores throughout Japan, launching in January 2009. While the move from national to international business is undoubtedly a big step for any company, support is available to help make the export journey smoother. Providing a wide range of tailored services, Scottish
Development International supports companies looking to expand by giving them access to important research, training, contacts and most significantly, vital knowledge of key local markets. Gillian Crawford, founding partner of Tartan Twist, said: “Last year we undertook an intensive six week Smart Exporter programme through Scottish Development International which allowed us to put together a blueprint for our overseas expansion. We knew we had a product with strong export potential but we were aware that we had to plan our international growth in an organised and structured fashion, following our blueprint and identifying and focusing on our key target markets.” Initially identifying Scots Americans and affiliate Scots in the US as a target market for Tartan Twist products, the company set out to capitalise on the first class reputation enjoyed by Scottish goods in America. Showcasing their products at The Gathering and The Year of Homecoming in 2009, the range and official pendant designed for the event went down a storm with the crowd. Importantly, the event also allowed Lyndsey and Gillian to undertake vital customer research. Building on the business’ success in the US, the company has continued to grow with the launch of its sister brand, LILY BLANCHE EDINBURGH, a collection inspired by their grandmother that blends the contemporary with the timeless. The company is also looking to develop an international component to their website - www.tartantwist.com - and has started researching further overseas expansion as part of their five year business plan. “Working with SDI, we learned to approach new markets in a methodical manner, breaking them down into more manageable sections, researching them thoroughly before visiting and building up relevant contacts,” said Gillian. “The support we have received has been invaluable and we’d certainly recommend the exporting course to other businesses planning for growth.”
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AS I SEE IT
THE SUPERCAPACITOR IS CHANGING THE WORLD Dr Peter Harrop, chairman of IDTechEx, a technology consultancy group, and previously director of technology with Plessey Capacitors in Scotland, says we must wake up to the chemical compounds of the future Supercapacitors or ultracapacitors are now centre stage for the designers of electronics and particularly power circuits. They are improving faster than the batteries and electrolytic capacitors they increasingly replace. More subtly, they reduce the need for and danger from lithium-ion batteries. When placed across a rechargeable battery, they protect it from fast charging and discharging and allow more of the energy in the battery
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to be utilised. The result is that less battery is needed, life and safety are improved and maintenance is reduced. As a result of this and the increasing use of supercapacitors where they do not replace batteries, the growth of the leading suppliers in aggregate has increased from 25% yearly to a blistering 30% yearly rising to over ÂŁ8bn in ten years. Of the 80 or so companies making or about to make supercapacitors and their variants such as supercabatteries only 6% are in Europe. That has to be an opportunity for Scotland.
So Berlin might then seem to be a strange location for the forthcoming Supercapacitors Europe event. However, 25% of supercapacitor demand is in Europe, from Bombardier using large banks of them to recapture braking energy of trains to Riversimple putting them across the fuel cell in a car and extensive use by others as backup in wind turbine blade control, bus door opening, hybrid car, crane and elevator braking and many stand-by power supplies for electronics. The MAN hybrid bus in Germany is a success with the lithium-ion battery completely replaced by a supercapacitor. Mainly, these large and rapidly growing applications in Europe leverage the high power density and above all fit-and-forget benefits of supercapacitors which last the life of the equipment in which they are installed. With the Boeing 787 Dreamliner grounded because of its lithium-ion battery system, in future supercapacitors will partly or wholly replace such batteries in aircraft wherever possible, mimicking what has already happened on the ground. Indeed, supercapacitors can be fully discharged for transport and the majority of them will soon have no flammable toxic electrolyte unlike the batteries they replace. By contrast, air regulations concerning transport and use of lithium-ion batteries may tighten. Supercapacitors Europe 2013, forming part of IDTechExâ€™s technology events, is alongside many very relevant sessions such as ones on graphene which may
permit supercapacitors to exceed the energy density of even lithium-ion batteries. Why then would anyone want to buy the batteries other than on price? Other co-located events concern the printed electronics and energy harvesting that is used respectively to improve the price and performance of supercapacitors and to interface them with systems enjoying considerable market growth. There is even the prospect of thin film supercapacitors over a car or on the back of flexible solar photovoltaics. Others in Europe work on structural, load bearing supercapacitors, part of the trend to integrate components and make them vanish. The event presents the huge effort in Europe to leapfrog existing supercapacitor technology and its applications. It emerges that the west coast Normandy region of France is becoming a center of excellence in supercapacitors – so why not the West of Scotland where there is such a knowledge base? There, companies such as Armor Group, Batscap and its parent company Bollore and the Hutchinson Group, subsidiary of the TOTAL energy group, are interesting examples of an emerging supercapacitor technology cluster in the region. Among them you find technological capabilities for different key stages of the supercapacitor chain, from key components manufacturing to the supercapacitor equipped electric vehicle BlueCar. IDTechEx’s Supercapacitor events are also the main show on graphene and carbon nanotubes applications in supercapacitors. In a previous event in the US, we had speakers on carbon nanotubes in supercapacitors from academics at universities such as Hang Yang University in Korea and State University of New York at Binghamton, companies presenting their advances in implementing graphene and carbon nanotubes in supercapacitors such as
Nanocomp and Extreme Capacitors. This time as the conference is based in Berlin, German progress will be represented amongst others by Fraunhofer IPA which is leading the Electrograph European project focused on the production of graphene through electrochemical exfoliation for supercapacitors. On behalf of the UK, the University of Manchester, part of the British consortia focused on the ‘manufacturability’ of graphene, will talk of topics such as porous graphene for flexible supercapacitors and VTT in Finland on supercapacitors versions with aqueous electrolytes printed on paperboard. Graphene is a two dimensional material consisting of a single layer of carbon atoms arranged in a honeycomb or chicken wire structure. It is the thinnest material known and yet is also one of the strongest. It conducts electricity as efficiently as copper and outperforms all other materials as a conductor of heat. Graphene is almost completely transparent, yet so dense that even the smallest atom helium cannot pass through it. LAAS-CNRS from France, will present the use of supercapacitors battery-free wireless sensor
Of the 80 or so companies making or about to make supercapacitors only 6% are in Europe - that has to be an opportunity for Scotland
AS I SEE IT
networks deployed in airliners in aircraft. Companies such as Graphene Frontiers will speak about their chemical vapour deposition process for implementation of graphene/ nanotube to electrode materials. Imperial College will cover smart skin supercapacitors. It is all there to play for and Scotland needs to be at the table too. We are delighted to have all these prominent institutions in just one place. In addition by collocating our events Graphene Live! and Supercapacitors Europe 2013, there is no other event this year in which you will find out how graphene research is advancing and its potential markets including the perspectives of scale manufacturability through energy applications. Importantly Supercapacitors in Berlin adds a global dimension with speakers from Asia to America including leader CAP-XX from Australia, Graphene Frontiers from the USA and Shanghai Shi Long High-Tech of China, Elbit Systems from Israel and HEL Ltd from the UK. These speakers will detail how why and what next, notably in replacing batteries. The supercapacitor is changing the world, including with technologies from carbon nanotubes to graphene. It’s time for business and industry to sit up and take note. n Supercapacitors Europe 2013 in Berlin from 17-18 April www.IDTechEx.com/scEurope.
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EN GARDE: THE SPORTS STARS WITH A POINT TO MAKE IN BUSINESS Amid the afterglow from the London 2012 Olympics and the anticipation for next year’s Glasgow Games, sports business is currently booming. Richard Orr meets three Scottish sports stars who have created emerging businesses in Scotland on the back of their successful athletic careers
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Sport is often cited as a wonderful training ground for business life. The endeavour required to succeed in sport – at any level – develops an attitude and character which will fortify an individual for all sorts of challenges. This view was recently confirmed when a study by the Isle of Man Government, The Naked Chief Executive, revealed that in a survey of 100 CEOs from the UK’s top FTSE 500 companies, 71% of those questioned said that playing sport in their school days positively influenced their business careers. Furthermore, twice as many (46%) of those CEOs excelled in sport than those who did so academically (23%) when they were at school. We can see this trend across business in Scotland. Sir Bill Gammell, who steered Cairn Energy to becoming a US$10bn organisation, is an obvious example, transferring his talents as an international rugby player into the board room to become one of the UK’s most successful entrepreneurs. Gammell often draws direct comparisons between sport and business, particularly in terms of always striving to be better and taking bold decisions. Financier Roger Jenkins further demonstrates
the transferable skills between sport and business. He and his brother David were both successful track and field athletes. David won Olympic 4x400m silver in 1972, (though he later notoriously admitted to taking performance enhancing drugs while on trial for smuggling steroids), while Roger represented Scotland and GB to an international level. Roger has since thrived immeasurably in the business world. Famed for his relationship with Supermodel Elle Macpherson, he was believed to be the highest paid FTSE 100 CEO in his post as chief of Barclays Capital's Private Equity Group, earning a reported £75m in 2005. David meanwhile is now, ironically, leading a successful sports nutrition and supplement business. There are other, more unusual but equally successful examples around the world. Few people would see the obvious link between heavyweight boxing and kitchen innovation, but in 1996 a certain George Foreman did just that – the three-time world champion took his ‘lean, mean, fat reducing grilling machine’ to market and in the process created a cookery phenomenon across the globe. >>
Scottish swordsman: British Fencing champion Keith Cook
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ENTREPRENEUR People don’t buy grills anymore – they buy ‘Foremans’. So, is there a secret ingredient that equips sportspeople, top level or otherwise, with an edge in the commercial world? Probably not. But what sport does give them is a foundation in basic life skills that are applicable to most endeavours – be that business, study or even everyday hobbies and tasks like DIY. Simple yet essential traits, such as understanding the need for preparation, determination and most of all, hard work to see a job through; communication and leadership skills; and of course, a belief that the task, no matter how challenging, can be achieved. Here, BQ takes a look at three Scots sports stars who have done just that, and created emerging businesses off the back of their athletic careers.
>> Keith Cook – British champion fencer Growing up in the disadvantaged Pilton area of Edinburgh, Keith Cook was smitten by swordsmanship at a young age – owing to hours spent watching the Zorro television series and Luke Skywalker in Star Wars. He used to enjoy mock sword-fights with his Grandmother using rolled up newspapers. But the idea of Keith ever becoming a champion in the regal sport of fencing was fanciful to say the least. An upper-class activity, it was generally only practiced in the most prestigious of fee-paying schools. However it was through a friend who attended such an establishment that Keith got involved in fencing, and he soon began training at an Edinburgh club. “It was a great way to get away from the pressure of everyday life as youngster. “I used to ride my bike to training three times a week. “I couldn’t afford the bus fare, but as a result it made me fitter than the other children, and more driven for success. Nobody else had the will to win that I had. “Before long I was excelling, and that grit helped me produce some amazing results over the years,” Cook remembers. Within a few years he was in the British Junior squad, travelling all over the world, and in
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I couldn’t afford the bus fare, but as a result it made me fitter than the other children, and more driven for success 1998, aged 17, he claimed a senior bronze medal in the team event for Scotland at the Commonwealth Championships in Malaysia. He spent the next decade competing around the world as one of Britain’s best. 2012 was expected to be Keith’s biggest year yet – as the UK Champion he was widely expected to represent Team GB at the London Olympics, but his dream was shattered due to a discrepancy in the selection process, the legal battle against which he is still fighting today. That selection debate, Keith believes, was borne out of a decision by him to step out of the British Fencing ‘pathway’ system – designed to support the UK’s elite fencers – and instead self-fund his career to enable more time with his young family. “I was away from home more than 160 days a year, and I didn’t want to be away from my kids so much,” says Cook. “So I had to think of a way to support my fencing aspirations while staying at home as much as I could. It was an issue, because even though I had been a Leisure Centre Manager in the past, there were big gaps in my CV from when I had been a supported athlete. So in 2010 I created Fencing Fun. It meant I could continue fencing but keep the money coming in.” Fencing Fun mirrors and builds upon the positive experience of Keith’s own childhood – it is a company devoted to introducing the sport of fencing to primary school children, developing their skills in a safe and enjoyable environment, using plastic masks and foam and plastic swords that are ideal for younger children to learn the skills of the sport. “I created my own syllabus – something that would capture the kids’ imaginations. Sword fighting is everywhere on TV – Peter Pan, Transformers, Pirates of the Caribbean – but there was nowhere for any primary aged child to fence in Scotland. I thought that was crazy, because it is the perfect time to capture their enthusiasm. So the Fencing Fun programme
develops skill, speed, agility, timing and fitness – but at the same time it remains fun. “What makes Fencing Fun unique in Britain is that we have our own grading system, due to launch at Easter. “It’s just like karate belts – but instead of belts we use gloves. It means that when the kids go on to clubs when they are older, they can show their coaches their grading and the moves they have learned, so the coach knows they are already quite advanced.” The business model works well – it’s a true niche, captive market that an expert like Cook has the skills to exploit. Children want to try fencing, and they enjoy it. The Olympics have helped – but the retention levels of Cook’s classes speak for themselves. Davidson Main’s Primary School in Edinburgh has run two classes every week for more than two years, with 95% of pupils who started coming back week after week. One child, having taken up fencing less than two years ago, is already British under-10s champion, defeating pupils from the exclusive, fencing focused Sussex House School in London. “We’ve grown so much,” Cook remarks proudly. “Now we coach 520 children a week. I have employed eight coaches, including one in Shetland. We are also beginning to branch out into the corporate market, offering ‘Fencing Experience’ days to staff and management.” Cook’s own status has certainly helped this growth. Last year, he was signed up by technology giant Samsung as one of their sponsored athletes, alongside the likes of Victoria Pendleton and David Beckham. The world-renowned Leon Paul fencing-wear brand has agreed to produce the ‘Grading Gloves’ for Cook’s syllabus. In many ways, for Cook, sport is his business. He opts not to divulge his profit margins, but, he says, “It keeps me fencing.” www.fencingfun.co.uk >>
On the up: Hill runner Angela Mudge
Game changer: Katchet, the device to help cricketers improve their game developed by Colin Smith
>> Colin Smith – Scotland cricketer Ten years ago, Colin Smith was at the peak of his cricketing career – on his way to amassing more than 100 international caps as Scotland’s wicket-keeper and enjoying spells as a professional player in the English County leagues. Despite his prowess on the field – particularly in catching out unwitting batsmen – he felt there was potential to be even better, if only the right equipment were available to practice his catching behind the stumps. “There was nothing out there that could replicate what happened in a game,” the Aberdeen based Smith recalls. “The only option was practice drills with at least four or five people. You needed someone with an accurate arm to bowl, and someone else to ‘nick’ it with the bat – which not many people
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can do on purpose. “And then you needed two or three slip fielders, otherwise the ball ends up in a hedge. So you and a mate couldn’t do a meaningful session on your own.” So he looked around to see what else was available. “I used to use the grass-roller at the cricket ground – it had a half circle shape which, when the ball was thrown towards it, deflected off at an angle and it worked quite well,” Smith recalls. “But the ball had a predictable bounce and the roller would hardly fit in your kit bag! So it was about taking that idea and making something that worked much better.” So Colin got to work – and with his Dad created the prototype of what became ‘Katchet’ – a cricket training aid which, when a ball is thrown towards it, deflects it at unpredictable angles. After drawing up a home DIY prototype, Colin
contacted a manufacturing and design agency, Motion Touch, to create a mass-production product. Initial investment was heavy – and Colin, along with business and cricket colleague Neil MacRae, scraped together £25,000 to make 750 units. “We phoned up retailers and asked if they were interested. “That was quite tough. But I was playing for Scotland, so the marketing ploy would be that I would go to coaches and wicket keepers in county cricket and let them have a go. “One of the first people who bought it was John Buchanan (coach of the all-conquering Australia team of the early 2000s). During the 2005 Ashes series Australia came up to play Scotland in Edinburgh. He loved it straight away and wanted 10 of them. To be able to say Australia uses Katchet is a great selling point – they were the top team in the world at
even confident playing cricket, I was racked with self-doubt. “So at some point I always had to actually step up and do it to prove to myself that I could. That’s how I was with cricket, and it was the same with the Katchcet. “I had a desire to succeed in sport, and I had the same desire for the Katchet. I was willing to do everything I possibly could to make that happen. But me being me – the cricketer – is possibly the most important thing. I had the contacts and the players and coaches knew me – that was the biggest thing.” www.katchet.com
>> Angela Mudge - world hillrunning champion
the time, despite that Ashes series loss. They were our biggest assets, and John gave us an endorsement which we still use today. “The Katchet has grown massively since then. It is now at the stage where it is almost part of the structure of cricket. Every international team in the world uses it, and almost every professional team. “The ECB even made training videos to go with it. If I switch on the cricket and you see the players training in the background, I nearly always see one.” Katchet is now part and parcel of cricket training. Colin and Neil’s company has sold more than 15,000 units since they took the product to market – aided by a patent on the design. Colin firmly believes that his time in sport set him up well for a business career. “I’m not a naturally confident person. I wasn’t
Angela Mudge had a challenging start to life – she was born with pedal defects, meaning her feet were facing the wrong way, as well as one of her twin sister’s feet. But despite spending her early years in braces, the naturalised Scot has gone on to become one of the country’s most decorated, if relatively unknown athletes. In her chosen sport, she has won or medalled at every level – Scottish, British, European and World. Hill-running (or fell-running) is an extreme sport – most easily described as running marathon distances over a mountain. Angela herself has won the most daunting of all these races – the ‘Everest Marathon’. To train her body to do this sport at the highest level takes a significant amount of commitment and many hours a week on the hills and Munros within driving distance of her Stirling home. But, despite the popularity of hill-running worldwide, and Angela’s ability, it was difficult for her to acquire funding or sponsorship, as it wasn’t a ‘priority sport’ in Britain. So Angela needed to find a way to ensure she could fulfil her athletic potential and pay the bills at the same time.
“In 2004, when I was competing at GB level, I looked into doing physiotherapy but it was a long and expensive process to become fully qualified,” she said. “So I opted for sports massage. It was a 10-month course which I could do at weekends, at the end of which I would gain a diploma to practice. “I had to do 100 hours of practical massage to become qualified so I ended up doing some ‘on the job’ training with the tennis players at Stirling University. “When I became qualified I became the uni masseur and they were happy for me to operate from there professionally.” Mudge works with a range of clients, from elite sports people to – perhaps surprisingly – the inactive. “Yes, I give a lot of remedial massage to nonsporting people.It’s the same problems but often a different cause. So you get muscle and RSI strains through lack of activity rather than too much.” The link from sports person to sports masseur is an obvious one – but valuable nonetheless as Mudge can offer clients an insight that many others couldn’t. “Being a sports person myself, I can empathise with the psyche of a person who is injured. I can understand what they’re going through and can advise of what else they can do in a meantime while they recover. “So while a doctor may say ‘stop running’, I can say, well actually you can still do other things, like going on your bike or go to the gym. I can relate to them.” www.angelamudge.co.uk n Richard Orr works for the Winning Scotland Foundation, a foundation set up by Sir Bill Gammell, and is manager of the Champions In School programme, where leading sport figures inspire Scotland’s young people with multiple school visits.
At some point I had to actually step up and do it to prove to myself that I could. That’s how I was with cricket, and it was the same with the Katchet
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‘I THINK SCOTLAND IS CHANGING. AND IT IS CHANGING FOR THE BETTER. IT IS A COUNTRY THAT IS NOT ASHAMED ABOUT BECOMING ENTREPRENEURIAL’ Fergus Ewing wears three large hats as a Scottish Government minister - for Enterprise, Tourism and Energy, all essential aspects of Scotland’s economy. Kenny Kemp meets an enthusiastic patriot who sees consulting and listening to business as the best way to make enduring policy decisions A delicate pane of stained-glass has been placed against a large modern office window in the members’ block of the Scottish Parliament. It reads: Now’s the Day, and Now’s the Hour – a lyric written by Robert Burns for the rousing air Scots Wha Hae, the party anthem of the Scottish National Party. Although it is not quite the hour, with the Scottish Referendum approaching in 2014, we are beginning to ‘See The Front of Battle Lour’ – as the verse continues. The Saltire-styled pane is in the woodpanelled office of John Swinney, the Scottish Finance Minister, who has kindly vacated his room to allow BQ Scotland to interview his Scottish cabinet colleague Fergus Ewing. While there is a loftier debate on Scotland’s future going on, Fergus Ewing is involved in the bread-and-butter business as Scotland’s Minister for Energy, Enterprise and Tourism, three areas of acute interest for readers of BQ Scotland. Fergus Ewing is steeped in the politics of Scotland: a central figure in Scotland’s most famous nationalist dynasty.
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As an 11-year-old boy, in November 1967, he was caught up in the excitement of his mother – Winnie Ewing - triumphing in the shock by-election victory in Hamilton. In one iconic image, a young Fergus is pictured, chin against the train window, with his waving mother in her twin-set suit on the train to London [‘I was put down for SNP membership at birth,’ he says]. Winnie Ewing, who later went on to become the indomitable Madame Ecosse in the European parliament, was Scotland’s first woman SNP Member of Parliament in Westminster. Fergus’ wife was the highly-regarded Margaret Ewing, the former MP and as Margaret Bain one of the 11 nationalists elected in the high-point election of 1974, later a MSP for Moray, who sadly passed away in March 2006, while his sister is Annabelle Ewing, an MSP for Mid Scotland Fife Region. Fergus was elected to the Scottish Parliament in 1999 and became a Minister in 2011. So it is little wonder that he should view everything through a
nationalist prism. Is it now the time and now the hour for Scotland? “I think Scotland is changing. And it is changing for the better. It is a country that is not ashamed about becoming entrepreneurial. It’s a country that now encourages young people not just to go off to study, as I did, to become a lawyer, a doctor or an accountant, but to be an engineer, a surveyor, scientist or a manager.” Fergus Ewing’s starting point is about young people and the future. He opens by talking about his attendance at an event hosted in the Glasgow Science Centre, and run by Springboard, a charity that aims to introduce >>
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young people to careers in tourism. He was particularly impressed with Springboard’s FutureChef, the UK’s biggest cooking challenge for 12-16 years olds. “These types of events, and similarly the young scientist awards, are brilliant because they inspire young people. I went around the tables after the Springbaord dinner and spoke to all the young people to congratulate and ask: ‘Where will you be in five years’ time? And what has made the biggest difference to being able to cook a marvellous meal? Some of the winners were aged 13. The answer was: ‘My chef mentor.” He cites WB Yeats: Education is not about filling a bucket, but about lighting a fire. “If we want to enthuse and inspire young people in Scotland to become entrepreneurs then we have to use these mentoring techniques.” And he is convinced that increasing mentoring – both official and informally – across all industry can help build the nation’s future. “In the case of the chefs, it was giving their time to bring on young people. “We are fortunate in Scotland in that we have a core of business organisations that follow this model too.” He reels off the Federation of Small Businesses, the Institute of Directors, the chambers of commerce, the CBI, the SCDI and other trade bodies, and says they are all making a great contribution to Scotland’s enterprise story. He mixes, meets and dines with all of these business groups in Scotland. “Probably rather too many dinners,” he jokes poking his tummy, although he’s fresh-faced and trim for a 55-year-old and has run several marathons, including the 1998 New York Marathon in a respectable time of 3 hours 56 minutes. Fergus Ewing was a lawyer in Glasgow and ran his own legal practice and small business for 17 years and was a member of the Federation of Small Businesses and the SCDI, so his understanding of the trials and tribulations of SME Scotland has been forged in this time. “They all have one thing in common: their members are involved as mentors, as role models who impart free advice and give their time and experience with the specific aim of encouraging youth and developing
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businesses,” he says. He cites the Prince’s Scottish Youth Business Trust in Scotland, which encourages 18 to 25 year olds who want to start their own business, saying it achieves more in Scotland per head of population than the rest of the UK. “The reason for that is not just a monetary one but they have regional organisations in Scotland where a young person applies for the various grades of help - of £1,000, £5,000 and £25,000 – with a panel of three volunteers. It is this panel that makes it work: a slim, lean management structure reliant on volunteers throughout this country,” he says. With his political life running in parallel, Fergus Ewing’s legal business – with never more than five people working for the firm – taught him that in matters of policy about business it is often best to take the lead from what business needs. “I did a fair amount of work helping people with a business and helping them to keep going. I was keen to help people preserve their family home or business in the South side of Glasgow. “I became a specialist in the area of bankruptcy law. It was largely a staple diet of
commercial and domestic conveyancing, wills, executory, civil and criminal court work,” he says. Fergus Ewing is a big fan of his enterprise predecessor Jim Mather, although he doesn’t share his avid passion for statistics. “Statistics do show that the gap between Scotland and England is narrowing: from 16% to 12%, based on VAT and PAYE registrations per 10,000 adults. “What is of more interest to me rather than statistics which you can always debate, argue, challenge and something expose as misleading, is what we are actually doing.” “It’s not just us as the Government. More importantly, it is what business is doing in rather than Government, particularly in relation to business. “We have, for example, the EntrepreneurialSpark with their hatcheries in Glasgow, Edinburgh and Ayrshire.” Sir Tom Hunter, Sir Willie Haughey and Jim Duffy are the key entrepreneurial figures driving E-Spark, with the Edinburgh Hatchery, at South Gyle, launched on 4 February. The official opening was undertaken by Ann Gloag, co-founder of Stagecoach Group,
and an investor in Scottish start-ups. The Edinburgh hatchery is expected to be home to up to 35 ‘chiclet’ businesses, receiving mentoring support in serviced offices at South Gyle for up to one year. The infrastructure is being provided by Edinburgh Napier University and City of Edinburgh Council, with backing from Royal Bank of Scotland and PwC. “We’ve funded the Scottish Edge fund, where we’ve already given out £540,000 to help 17 Scottish entrepreneurial businesses. This was set up by John Swinney with awards of up to £50,000 to help young businesses and the next round is a further £750,000 with applications closing soon.” [Tuesday, 16 April]. “I’m a great believer in concrete programmes that reach out to individual businesses and young people, giving them practical help and the Prince’s Youth Business Trust and the Edge Fund are two good models in Scotland. And Entrepreneurial Spark has also caught the imagination so we are looking to see more of the hatcheries in other parts of Scotland.” What does he think about Scotland’s business angel community and the creation of the
Scottish Co-Investment Fund, driven forward by Scottish Enterprise, is it a success story that is being copied by the rest of the UK? “Absolutely. I think the angel community generally in Scotland has been one of our unsung successes. The point was made when I had a meeting with the Scottish Investment Bank, LINC and individual business angel groups, that their contribution of investing £500m in Scottish firms over the last ten years, if that was an equivalent US$5bn in the UK, it would be trumpeted from the rooftops. We haven’t heard enough about it – the angel syndicate model of having ‘sifters’ who examine the business plans before putting it to the board of five to all agree a ‘yes’, is a very smart way of funding.” He speaks of the ‘well-honed critical faculties of business people able to detect potential gems’ and applauds the number of wealthy people living in Scotland who are very publicly spirited in their support for young companies. “Things like business mentoring and angel investment are part of the Scottish way. It is gigantic contribution to Scottish commercial life – and it probably always has been. In the days before Big Government, it would simply be done in a merchant’s house or through the chambers of commerce and at a meeting in coffee houses.” Wearing his hat as Minister for Tourism – and representing a Highlands constituency - is he heartened by the enterprising companies emerging in the outdoor leisure and holiday market across Scotland? And what can be done to nurture them? “Yes, there is incredible talent in outdoor activities and sport in Scotland. Especially, snow sports, mountain biking, mountaineering, sailing and leisure cycling and support for running and walking with all its various events. For example, a major part of tourism success in Speyside, where I live, has been the differing range of attractions. “That’s a tribute to a whole lot of businesses and volunteers.” He also mentions a clutch of entrepreneurial people, such as Clive Freshwater, who runs the outward bound activity centre at Loch Insh, near Aviemore, as a terrific activist. [“Clive’s a great character with a marvellous family filled with Olympic sporting achievement.”]
“On the tourism front, this is the Year of Natural Scotland and the idea that I have offered to the Scottish public – which I hope will gain traction – is a very simple one: free travel in April, giving away thousands of bus and ferry tickets, to coincide with the first John Muir day on 21 April.” “I think all of us take for granted the huge array of attractions on offer – on our own doorsteps – and this is a general human failing, to take what we have for granted; the grass is always greener in some other country; well it is not, why not make this year the year we visit the Inverewe gardens, or the National Portrait Gallery, or see for ourselves the Falkirk Wheel, or enjoy the marvellous whisky experience on Speyside, or visit the Camera Obscura in Edinburgh? “Why don’t we take our families out instead of sitting in front of the television?” “We’ve got amazing scenery and wonderful walks – such as the Lairig Ghru – which is a tough 29 miles that I remember doing some years ago.” He wants us to get out and about, take our friends and family. “It is based on our inherent national sense of guilt,” he says with a smile, referring to Scotland’s Calvinist DNA. “That’s a big motivator in Scotland: guilt and fear of being seen as lazy. We all recognise there are a huge number of things on our doorstep.” Fergus Ewing himself lives near Boat of Garten and lists a number of star visitor attractions, including golf courses, and places to see, such as Rothiemurchus, all within a brief car journey of his house. The Minister acknowledges that the internet has helped Scotland as a destination, with more people able to see what the country has to offer, and then making a decision to give it a try. “It has overcome the distance and, hithero, the enormous cost of advertising. Smart websites selling Scottish businesses can be worth thousands in terms of customers.” One of the successes of Scotland’s business tourism has been in conferences and symposiums, with a recent expansion of five-star facilities in Edinburgh, Glasgow and Aberdeen. “It became evident to me as Minister early on that we were beginning >>
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to lose some bids for conferences to other major international conference venues because we were not able to match subvention payments being paid by other European cities, such as Vienna, Barcelona or Copenhagen. “So we set up a £2m fund and have attracted 17 major conferences that we might not have got to come to Scotland. The expected revenue from this so far is £55-56m. That’s been a success story.” He also points out that the investment in Scotland’s top hotels and improvements in its boutique guest houses and other attractions like its whisky trail - are worth a great deal to Scotland. “If you look at hotels, such as the Balmoral, the Caledonian-Waldorf Astoria, the Sheraton Grand in Edinburgh, and then the investment in the National Galleries, the Portrait Gallery, and the Transport Museum, the Science Centre and the new Hydro Arena in Glasgow, and the Burns Centre outside Ayr, if you aggregate all the investment there has been in recent years, then we really have seen in Scotland a massively improved quality to what we offer visitors. You’ll note that CNN voted Scotland as the best country in the World to visit. That’s a tribute to VisitScotland,” he says with some pride. Scotland’s attractions – such as castles, whisky and golf - are magnets to attract high quality visitors and with Glasgow 2014 Commonwealth Games and the Ryder Cup at Gleneagles this means extra business for those keen to grasp the opportunity. “What’s also encouraging to me in tourism is we now have someone like Stephen Leckie, leading the Scottish Tourism Alliance. I think for the first time a private sector body representing tourism has a very strong voice, based on the successful experience of running the Crieff Hydro, which has been in the family for generations. Tourism isn’t complicated: its aim is to make people feel happy.” So what makes people happy? “It’s pleasant people, a welcome and a feeling that they are in a friendly country?” But are we doing enough about this here in Scotland? “I think we are – but we always need to do more. We want to welcome our visitors when they arrive in Scotland and the industry is better than it used to be. We will also make
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them happy by giving them high quality food and drink.” He adopts a more strident nationalist stance wearing his energy hat, although he says he is the ‘new kid on the block and doesn’t want to muscle in on anyone’s balliwick’. “I could never see why Scotland shouldn’t run all of its own affairs. It is illogical that we have to wait for decisions from London about industries, such as oil and gas, about which, until relatively recently, they did not seem particularly interested in, leading to some disastrous and appalling decision-making.” Recent comments from senior oil and gas industry figures in Aberdeen have been critical about the revolving door of UK energy ministers in ever-changing portfolios. “I liked Charles Hendry. And his replacement, John Hayes, appointed in September 2012, is still an unknown quantity. As a Scottish Government, we brought forward an oil and gas strategy last May. And I was determined that it was industry-led – and it is – so it has buy-in from the industry. “Now we are implementing it and helping more Scottish SMEs, setting up a £10m Innovation Fund.” Fergus Ewing and his department are currently working with the UK Government on a joint UK/Scottish Government event in June designed to introduce SMEs to possible sources of investment, including the Scottish Investment Bank, the Green Investment Bank, and Business Growth Fund. “I’m immersed in the oil and gas industry in Scotland and I think there has never been a better opportunity than now.” But hasn’t the arrival and the hype about the plentiful supply of shale gas in the US knocked the Scottish Government’s renewables strategy? Energy economists are now predicting that cheap imports of gas
could make some North Sea offshore wind investment too expensive in the short to medium term. “Whatever happens with shale oil – and whatever way that goes – there will still be a need for renewable energy. Our success in renewable energy has been marked and we are seen in both the European Union and in the finance world as the best place in Britain for renewables; because of our strong support, which is not qualified by vacillation or hesitation or repetition of criticism as down south. I’m struck by the strength of investment as a factor of confidence in government and policy and approach. You can’t be half-hearted in government; fortune favours the bold. So it has proved. On shale oil and gas, our view is that you have to take an evidence-based approach. There is plainly huge potential as the US has shown, but will it work in Scotland and the UK? We have to very carefully consider the emerging evidence about environmental impact and proceed on the basis of evidence. That’s our approach.” He says, despite the talk, there is no imminent sign of any major activity with Scotland’s shale gas reserves. Those who know the history of Young Paraffin Light and Mineral Oil Company, the shale industry at Pumperston with its massive coking stills, and see the pink bings of West Lothian, might sigh with relief that, thus far, there are no plans to re-create it in Scotland. Fergus Ewing is extremely personable. He apologises about his streaming cold, which has floored him the previous week and confined him to his home, so there is plenty of outstanding paperwork to attend to. His aides knock on the door and say his presence is needed back on the floor of the Scottish Parliament. With a friendly smile and handshake, the Minister is off again to ‘face the front’ of political battle. n
I’m immersed in the oil and gas industry in Scotland and I think there has never been a better opportunity than now
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NORTH EAST MEETS THE NORTH EAST The issue: How can the North East of Scotland and the North East of England maximise collaboration between the oil and gas sector and offshore renewables sector to demonstrate competitive advantage, share best practice and create business opportunities? The two North Eastern regions of Scotland and England share the same access to the chilly North Sea. While Aberdeen has been blessed with closer proximity to the oil and gas fields of the northern sector, Newcastle and Gateshead have been less well placed to benefit from the UK’s oil bonanza. But with Aberdeen, Europe’s oil capital, reaching a fresh peak of activity and investment, and with the offshore renewables ‘green rush’ predicted, how can other parts of the UK share in the success? This question prompted the forward-looking
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NewcastleGateshead Initiative, a privatepublic partnership, to target the North East of Scotland to find out how it can grab a share of this buoyant market. At our BQ Scotland Live Debate in Aberdeen, the challenges became clear from the offset. Firstly, there is a shortage of qualified and skilled people across the global oil and gas industry and this puts a premium on their services. Wage levels and contract costs are high in the oil and gas sector, and while this remains it creates an imbalance that is impacting on the renewables industry, where
TAKING PART Terry Savage, group development manager of Global Energy Group Jennifer Hartley, investment manager with NewcastleGateshead Initiative Mike Comerford, director of operations, for SeaEnergy plc George Rafferty, chief executive of NOF Energy Paul Charlton, founder of PDL Solutions. Mike Pettigrew, director of Babcock Marine Neil Patterson, strategic development director of ASCO Group Jim Hamilton, international business director of Balmoral Comtec Michael Spence, partner with Bond Pearce solicitors Andrew Hodgson, chief executive of SMD Robin Watson, chief executive of Wood Group PSN Catherine Walker, inward investment director of NewcastleGateshead Initiative Brian Nixon, chief executive of Decom North Sea John Watson, business development manager of NAREC Kenny Kemp, editor, BQ Scotland In the chair: Caroline Theobald, BQ Live Venue: Malmaison, Aberdeen
BQ is highly regarded as a leading independent commentator on business issues, many of which have a bearing on the current and future success of the region’s business economy. BQ Live is a series of informative debates designed to further contribute to the success and prosperity of our regional economy through the debate, discussion and feedback of a range of key business topics and issues.
costs are rising to meet oil and gas project prices. This is an unsustainable and costly model, so the North East of England, which has been hit harder than most regions of the UK in recent years in terms of its high unemployment, is seeking a more formal collaboration that will share the dividend across more of the country. The panel talked about creating clusters of expertise stretching from Teesside all the way to Nigg, on the Highland Region coast and to the Moray Firth, where UK industry can share more equitably in the future. There was also a feeling that
the renewables industry was enjoying huge subsidies that the oil and gas industry, with its hefty tax burden, was paying for, while the renewables industry and the electricity pricing of green power was shrouded in complexity. THE DEBATE Caroline Theobald introduced the evening, encouraging the gathering of senior figures to stimulate debate, not discussion. It was pointed out that the North East of England is Scotland’s biggest trading partner and all agreed the regions shared many common interests, including a passion for football. Catherine Walker, is inward investment director of the NewcastleGateshead Initiative, a public-private partnership funded by the two councils of Newcastle and Gateshead, that are working as one destination, and the private sector. The initiative has about 180 private sector partners. She said: “Our reason for partnering this event is to raise the profile of Newcastle and Gateshead in the North East of Scotland. The very start of that journey is around partnership and collaboration.” Brian Nixon, chief executive of Decom North Sea, a not-for-profit privately funded membership organisation, is preparing the UK oil and gas industry for the decommissioning now going on in the North Sea. “We are not just interested in the oil and gas industry, we are engaged with renewable energy, and although it is probably the last thing on their mind at the moment, the message we have from the oil and gas experience is: don’t leave it the way we did until it was too late. There is an opportunity to plan and prepare now for decommissioning of offshore wind structures and the time to do that is now.” “We are keen to pursue opportunities in the renewables sector,” he said. Terry Savage, of Global Energy Group, headquartered in Aberdeen, said. “We’re a genuine Scottish success story. We were founded in 2005 and we support the international energy industry. We have a £200m plus turnover with offices in Aberdeen and Inverness. One of the challenges we face is about resources. Human resources. We have people based in the Highlands and it is a lifestyle decision for them. They know they
I sometimes think there is an invisible wall between Scotland and England, yet we share the same coastline. If we can overcome that then this is a great start could come to Aberdeen, where they would earn more money.” John Watson, of the National Renewable Energy Centre, a government R&D testing centre in Northumberland promoting offshore renewables technologies, which has completed the installation of an offshore anemometry research platform off the coast at Blyth, said: “You can have a conversation about the energy debate without it being tied up with nationalism. “As a Scot living in the North East of England, I sometimes think there is an invisible wall created between Scotland and England, yet we share the same coastline. If we can overcome that, then this is great start.” Mike Pettigrew, managing director of future business for Babcock Marine, said 60% of his firm’s business was in defence and this is a declining market, but he had concerns about winning new markets. “In offshore renewables, I have been strongly concerned by the level of nationalism shown by certain foreign companies which display national loyalties. I would hate to see us in 25 years’ time saying: ‘Who put all this infrastructure with sub-stations, etc, into the Scottish and
British waters with wind turbines and where were all the British jobs?’ I’ve nothing against competition because I know we can compete. But unless we are asked, we will be sending jobs back home to Spain, and I feel that has to be properly debated.” Paul Charlton is chief executive of PDL Solutions Europe, an engineering design and analysis company, set up 13 years ago and based in Hexham, providing front-end analysis for prime contractors and equipment suppliers in the energy business, including oil and gas, nuclear and now offshore. He feels that there are plenty of reasons for companies to work together. “Our export strategy was to go from Northumberland to the East: so we went to Newcastle upon Tyne! We were very successful and ventured south to Teesside and since 2005 the Northern venture in Lothian was straightforward, and Borders was part of the kingdom of Northumbria in 600AD. And now Aberdeen is our second biggest market. “This ‘wall’ that says if you’re not in Aberdeen you can’t so business in Aberdeen, or if you’re not Scottish then you can’t do business in Scotland, is wrong. We are living proof that >>
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you can do business. It wasn’t that difficult.” Mike Pettigrew: “It is a strategic imperative that we diversify our markets. So for Babcock Marine, with our engineering design and asset support, it is important to look at the opportunities in energy in its widest forms. We are good at marine, we’re good at energy, and we do more nuclear energy than any other company in the UK. “My targets are offshore gas and offshore renewables, nuclear decommissioning and new build, but we want a level-playing field when bidding for work.” George Rafferty, is chief executive of NOF Energy, a business development organisation set up 25 years ago, with 420 members, the bulk of the membership is located in the North East of England, with the second largest concentration in Aberdeen. NOF energy works with Oil & Gas UK, and Decom North Sea, and is looking how the North East of England and Aberdeen might be able to collaborate better. “We are about identifying opportunities for our members and then working to actually get a share of these opportunities. We also want to build a supply chain community across the energy sector, so we’re looking for greater collaboration between Aberdeen and North-East of England.” George explained that informal networking by NOF Energy, through introduction, should be incumbent on his members to help each other because it is down to relationships. But the issue of the skills gap was never far from the surface. Jim Hamilton, business development director of Balmoral Comtec, offshore engineering
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company and part of the Balmoral Group, privately owned group based in Aberdeen, said: “We manufacture a range of high-tech composite and polymer products that are primarily used sub-sea. We are growing and developing around the world, where there is massive opportunity.” Jim’s remit is to travel to other areas serving Balmoral’s clients in Brazil and the United States and he points out it is not just Aberdeen that is booming, but the whole global industry. “If you are looking at the competitive advantage and how to get these together with the renewables side of it, it’s the knowledge, expertise and people. The biggest problem you have linking the renewable and oil and gas sectors together is that at this moment in time, there are not enough people in the oil and gas sector, never mind looking at how that is going to be linked and crossed over to the renewables side.” Terry Savage explained that his business enjoyed great employee retention, with 2,000 people employed in the Highlands and the Nigg fabrication plant is the largest acquisition. “The legacy of Nigg was building topsides and we’re looking at building topsides at a realistic level. That’s one of the challenges. UK plc needs to look at what it is good at doing and what we can realistically do. “The challenge about oil and gas and renewables is the split down the middle over resources, especially in Aberdeen.” “You can’t actually group the two sectors together. It is almost impossible to be competitive with oil and gas rates in the renewables industry. When we are short of
resources, these resources are being used in the oil and gas industry because it is so buoyant. It’s a huge challenge, how you satisfy that demand. “I would suggest that part of it is that opportunity exists out with the hub of where it is extremely busy at the moment.” This is good news for Newcastle and Gateshead, and indeed, for the rest of the UK, yet the UK still is not benefiting as much from the opportunities as it might do. Mobility of workers remains a major concern in the UK when jobs are available. “The biggest shame is to find projects that go beyond the UK. We are up against Babcock, and they won the work. We were obviously disappointed but we were happy that it went to Babcock. It would be tragic if that work was going abroad. The work should be staying in the UK and as a cluster we should be making sure we are actually looking after each other.” Neil Patterson, strategic development vice president for Asco Group, the leading logistics company operating in the North Sea, with a base at the Port of Sunderland, partnering with Technip, spends a lot of time travelling beyond Scotland and agreed with Jim Hamilton and Terry Savage. “We handled approximately 80% of things that go and come back offshore. We will handle almost anyone who operates equipment offshore through our bases in the UK and Norway. Yes, we will get involved in renewables, but it will be at oil industry pricing. That is something the renewables industry is struggling to comprehend.” Robin Watson, chief executive of Wood
Group PSN, the brown field division of Wood Group, the Aberdeen-based FTSE100 oil and gas company. It employs 42,000 across the globe, with 29,000 in Wood Group PSN, with 8,000 working in the UK. Two thirds of business and opportunities are overseas. “We support the upstream oil and gas sector and from Aberdeen we outsource around the UK to support our business, around 1.3 million man hours a year of engineering in central Scotland and east and west coast of England. We have a fantastic footprint there with 800 people supporting our business from the North Sea client base. “We’ve grown significantly over the last two years. Wood PSN has become a strategic partner with NOF Energy. We feel some citizenship and responsibility that the wealth that we are creating and generating from the North Sea and elsewhere is appropriately spread across the business.” He said this was an economic necessity because of the skills shortage in the North East of Scotland, and technical capability is being shared around the globe. “It comes back to political leadership and the lack thereof. “The real conversations are around the balance of the UK’s energy portfolio. I am an industrialist and my view of the world is from this standpoint. I think the engineering skills are very transferrable and similar. The economics of renewables don’t stack up with alternative sources in the current climate. Oil and gas is a self-sustaining and self-funding economic proposition.” He pointed out the clash between skills,
technology and capability in reality most of the right technical skill sets are supporting the most buoyant sector. John Watson said it was a fair point but if you looked at a lot of oil and gas companies they started out as essentially state-aided businesses. “How do you get in purely marketdriven position? Renewables cannot compete with oil and gas and they are existing in an entirely different era. “How do we bridge the gap? There is a smugness of some who think they can go their own way but they could help renewables to be more competitive.” Mike Comerford is director of operations for SeaEnergy plc, which has been around in oil and gas services and field development since the 1970s when it was known as Ramco Energy. SeaEnergy moved into renewables by recruiting a team from Talisman, then set up the demonstrator offshore turbines in the Beatrice field. SeaEnergy successfully partnered with Scottish & Southern Energy, RWE and EDPR in winning development opportunities on two sites. In 2010, SeaEnergy Renewables was sold to Repsol for £38.6m. “In parallel, we’ve developed some specialist ship designs for services to the renewables industry and we have a consultancy business that is undertaking studies on re-engineering the process of onshore fabrication of turbines, towers and foundations and how they might be manufactured more effectively. “This is mass manufacture and installation on a very large scale.” He said cutting the gap between operations
and maintenance is vital and this is calculated in the cost-per-technician-hour. “In the UK, compared to Holland, Denmark and Norway, we are extremely poor at clustering or genuinely collaborating. We have a very competitive attitude – which is good to have - but I think, at times, we end up like a monkey with his fist in the jar, we can’t get the biscuits out because we are trying to hang on to them all.” He witnessed the UK’s marine architecture industry disappearing because there wasn’t enough clustering. “For the renewables industry, we have to drive down the costs of installation hours, because this industry can’t afford oil and gas pay rates and price. It is a utility industry and it has to get much smarter at clustering. This is a great opportunity.” He feels the UK has to grow its supply chain by winning business in Germany which is well ahead of the UK, and that means sharing the delivery and developing the innovation. Michael Spence, a solicitor with Bond Pearce LLP, specialists in the corporate energy sectors, with the firm involved in the first onshore wind farms in Cornwall in 1989. “We have market leading expertise in the oil and gas industry from bases in Aberdeen and in London.” On 1 May, Bond Pearce merges with Dickinson Dees to become Bond Dickinson, in Newcastle, with a £100m turnover business. “We are looking to collaborate ourselves across our two centres. There are themes between oil and gas rates and renewables. The economics of renewables are more complicated because it depends on >>
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We are in it together. If we get the right political leadership, everybody can win a lot better
electricity market reform.” There was a feeling around the table that ‘electricity market reform’, which was essential for the development of UK offshore renewables, was difficult to understand. “For me, what would help is if industry collaborates or clusters, but what does the North East of Scotland do to encourage growth and activity in the North East of England to involved people? Michael Spence continued: “You can do things remotely, you don’t have to be sideby-side. What can we do to make renewables more simple and straight-forward, and seem less uncertain and more obvious.” Jen Hartley, from NewcastleGateshead Initiative, working in trade and investment, said: “I’ve witnessed that British companies
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have a respected name for their work in many markets overseas. “We are world-leading in what we do in oil and gas. But where are the gaps? And how can the North East of England be involved in transferring skills and attracting some of the big projects. That’s our task.” Andrew Hobson, chief executive of SMD, a private company with a £130m turnover, and the world’s largest manufacturer of robotic vehicles, explained his firm’s key sectors were oil and gas, deep-water mining and renewables, which is 30% of the business. He is chairman of Sub Sea North East, and sits on the board of Sub Sea UK, and vice chairman of the North East Local Enterprise Partnership. He is also a leader on skills development for offshore renewables engineering.
“You’ve got Scottish Enterprise in Scotland: in England, we’ve got chaos. The Local Enterprise Partnership is the economic development and growth grouping across several local authorities from Durham up to Northumberland and across the Pennines to Cumbria. “The rebalancing of skills from a servicebased set of economies to an advanced manufacturing one is important for both Scotland and the North East of England.” Brian Nixon said that supply chain mapping in decommissioning, identifying all the opportunities and the equipment that is needed, gives businesses a clearer picture of where work is needed. In decommissioning, the scale of the work means that here are collaborative joint-venture opportunities for smaller businesses. “A facilitated workshop around themes such as decommissioning can bring companies together. It was about identifying companies with complementary skills that would enhance the business offering, there is a way of stimulating that kind of collaboration.” Robin Watson pointed out commerciality is often a barrier to collaboration. “It is difficult to get the genuine collaboration that you would like to have because often it doesn’t work on a practical basis.” George Rafferty said one of the barriers is the British business psyche, which is about keeping things to themselves. “That has to change”, he said. Andrew Hobson: “We do have an ongoing debate between Scotland and the North East of England. We share a lot of common interests, if you look at the HighSpeed2 rail projects, it isn’t going to reach either North Easts for some time! I think we do collaborate a lot already. We’re a huge exporting business but we have collaboration contracts with the major contracting companies in the North East of Scotland. “We do see the benefits of technologies and project management skills being spread across the two regions.” “The North East of England is an economically deprived area, and there are tensions there as well. “I have this desire to work on something for the common good because there are very
few sectors that the UK excels in and offshore is definitely one of them and we need to make this happen in the UK with offshore renewables. I’m determined to make this happen in the UK, for not just an individual company or a region.” There was also a feeling there was not enough consistency in the UK’s energy policy, with several saying the revolving doors of UK energy ministers was detrimental to stability and development. Paul Charlton: We are already collaborating with Aberdeen with a third of my business here. We need to share best practice and one way is to eliminate the perceived barrier of the distance and that we use technology to the full.” Catherine Walker said that when she is speaking about inward investment in the US she is able to talk about the geographical spread of from Newcastle to Aberdeen, which did not phase potential investors. As the debate continued, there were question marks over the existing political strategy on offshore renewables and the how the politicians could best protect the UK and Scotland’s interests within the European context. There was criticism of how the onshore wind farms did not benefit UK companies, and firms, such as Vestas, halted production in Scotland. Neil Patterson returned to the issue of skills and the mobility of employees. “I echo the views about attracting people into our industry, collectively oil and gas and renewables. I recently met someone from Leeds who was bemoaning the fact there were no jobs and the Government needs to do something about attracting industry to Leeds, and I said, ‘Why don’t you come to Aberdeen?’ he said ‘Why should I go there?” I have 100 vacancies and I cannot fill them. These are engineers. “I would far rather offer these jobs to British people rather than Romanians, Poles or people from elsewhere. There is a problem recruiting Brits.” The issue was how to attract people to the North East of Scotland because for the next few years there is going to be work. It was suggested a recruitment campaign in Manchester or Leeds might help.
Robin Watson posed the question of how long the transition might be for an oil and gas reliant energy supply to a non-fossil supply. There are increasing opportunities around the world and he pointed out there is sufficient shale gas in the US basin to supply the world for the next 65 years. “My proposition is renewables is going to take longer, but we’re in it together. If we get the right political leadership, everybody can win a lot better. “I do see our roles as an organisation from a citizenship perspective is keeping jobs in the UK and getting young people onto the apprenticeship and degree courses. We take over 100 graduates and apprentices a year and support them.” In conclusion, there was a genuine feeling that
more can be done between the two North Easts, although collaboration in oil and gas is already alive and kicking and will continue, but there is still a lot the renewables industry must learn in terms of its supply chain, building on existing linkages and learning from 40 years of the oil and gas sector in the North Sea. Attracting more UK people into the oil and gas industry would also, in the long run, be of major benefit to the renewables sector. And there needs to be a clear longer-term energy strategy that lasts more than a single political cycle. n With thanks to the team at Malmaison in Aberdeen for their service and splendid supper.
A meeting of minds shapes the future for offshore and marine technologies The offshore and marine sector is one of the fastest growing industries in the UK. Over the next few decades, the North Sea will be the focus of many global businesses, presenting vast opportunities for the specialist and supply chain businesses both in the North East of England and Scotland. As the inward investment team responsible for attracting and retaining businesses into NewcastleGateshead, we were delighted to play a part in bringing together key business influencers who are at the forefront of the many fantastic developments that are vital to the future growth of the offshore and marine industries. The debate was very productive in identifying areas for collaboration. Being situated in such close proximity to the North Sea and each other, there is huge scope for the two areas to easily trade between sites and accommodate satellite offices. The well-established supply chains in North East England and Scotland are very similar in their specialist capabilities in oil and gas, marine and offshore renewables, manufacturing and service equipment provision. As the industry grows, and demand for resources in both areas increases, these similarities allow for joint-working opportunities across the businesses, creating the capacity to fulfil large-scale projects, often at competitive operating costs and in turn increasing the attractiveness to global companies looking to invest in the UK. The key issue around the shortage of qualified and skilled people was widely recognised and the need to retain the expertise of qualified specialists and encourage fresh talent into the industry is seen as vital. A highly skilled labour pool exists in both areas and sharing this expertise will improve the global competitiveness of the two areas. Overall, the debate acknowledged that although some collaborative working is already happening, much more can be done. There is huge scope for the two areas to work together and combine the fantastic skills and resources to demonstrate a global competitive advantage and attract overseas investment to the benefit of both the businesses, supply chains and economies of North East England and Scotland. Catherine Walker, Inward Investment Director at NewcastleGateshead Initiative.
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DEALS IN MOTION
F1 racing enthusiast and powerful force for Scottish business, Jim McColl, shared the secrets of success at an event in Glasgow recently. Kenny Kemp charts the deals that mark the engineering championâ€™s rapid rise to the top BUSINESS QUARTER | SPRING 13
From a business point of view, there is much to admire about Jim McColl, arguably the most formidable Scottish business figure of the early 21st Century. He is the saviour of a stack of engineering treasures and involved in a matrix of essential businesses that make the industrial world tick. His professional life requires a hefty text book – that would surely be a best-seller on the business shelves at those international airport bookshops – however, he has an inspirational business story that every student learning about enterprise should know about. While McColl – a lover of F1 racing – might choose to live in the sunnier climes of Monte Carlo (and, more practically, to ensure a ring-side seat for the Monaco Grand Prix), he is also a strong advocate of Scotland having the self confidence to go for independence. This kind of give-it-a-go message – that people must embrace their own destiny – is deeply embedded in Jim’s business ethos. Speaking at a gathering of the Power Lunch Club in Glasgow, at HSBC’s offices, he explained more about the formula that has brought him and his private equity business, Clyde Blowers Capital, massive plaudits. The success of Clyde Blowers Capital, based in East Kilbride’s Peel Park, but with offices in Beijing and now Zurich, is down to McColl’s positive vision, his incisive analysis of potential targets, and the calibre of the investment and operations teams that work alongside him. Today Clyde Blowers Capital acts as a private equity group focused on the industrial sector. The last five years have witnessed a reversal in fortunes for many private equity firms after the credit-fuelled boom of the early century. There is a stark division between the US and European private equity model. The big name American companies – such as Fortress, Blackstone and KKR – have had IPOs, and moved into financial asset management, while the UK’s famous names, such as Terra Firma, run by Guy Hands, Candover, Apax and Permira, Cinven have struggled to find investors resulting in less money to buy firms. McColl doesn’t like making excuses about the recession, and Clyde Blowers Capital certainly hasn’t suffered. “In 2009 I said to the board of one of our portfolio of companies: ‘I don’t want to read anything in your business plan about the
economic downturn or the banking crisis, because your market share is so small that the market could halve in size and you’d still have a great growth opportunity. So please focus on growth’,” he told the gathering. “Over that year, orders in that firm increased by 68% where most rivals were down 15% or so. And it was largely due to a reinvigorated state of mind among the management.” In many ways, McColl has created a private equity model that has been able to buck the trend, much of this is about its operational engineering expertise, coupled with sound investment management. While McColl is CBC’s founder and chairman, a vital element of this enduring success story has been a loyal team with a range of business expertise. CBC’s structure includes the ‘operating partners’, such as Bill Thomson, who has been a right-hand figure to McColl in Clyde Blowers since 1992; Alex Stewart, who joined in 1995 from Ernst & Young; Graham Lee, who joined in 1996 and became chief finance officer of Clyde Bergemann Power Group; and Keith Mitchell, also a senior executive with Clyde Bergemann. Typically, these partners have in-depth knowledge of their sectors. For example, Bill Thomson was chief executive of CleanCut technologies and was chairman of InterBulk Group, two integral parts of the Clyde Blowers portfolio. InterBulk Group is now listed on the London Stock Market, with McColl a non-executive director. The CBC team also includes Keith Gibson, who was head of group corporate finance at Royal Bank of Scotland, leading the Scottish bank’s charge into China (now sadly unravelled), before joining CBC in 2007. Keith was an adviser on the acquisition of Weir Pumps, which Clyde Blowers bought for £48m, and has been instrumental in raising the CBC funds that have given the business its investment firepower. So what is Clyde Blowers Capital all
about? According to McColl, the continuing ambition is to be a leading mid-market investor in industrial businesses in power, oil and gas, metals and minerals, petro-chemicals and water. “There are three criteria for us making an acquisition,” he explains, “Firstly, it has to be in high-end engineering - which is what we understand. It also has to be mission critical, we like this kind of equipment. These are the essential technologies and services. We see recurring revenue streams from this. If it breaks down, you have to get it going, you have no other choice. But far better still to ensure it doesn’t break down in the first place. For that you need a long-term service contract, which is something we like to have,” he says “So we like things such as pumps and valves, which are at the heart of major engineering processes. Then it has to have a global market demand,” he says. Once the deal is done, CBC has the expertise to work with the companies to create value. “Our operations team will work with the existing management to ensure our investment is bedded in, working well so we can achieve sustainable improvement with enhanced performance. This leads to increased profitability.” McColl left school at 16 and spent six years as an engineering apprentice with Weir Pumps at Cathcart, then went to Strathclyde University to take a BSc degree in Technology and Business Studies. After this, he returned to Weir Pumps and took three more years to gain an MBA at Strathclyde Business School, attending evening lectures. Education has been a perpetual spur and he took an MSc in international finance at Glasgow University, before joining Coopers & Lybrand as a consultant, gaining practical industrial experience in ‘corporate care’. It was after this that he turned around Hunting Oilfield Services, an underperforming energy services business in Aberdeen. He recommended >>
I don’t want to read anything in your business plan about the economic downturn or the banking crisis
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ENTREPRENEUR bringing in Dennis Proctor, who is now chief executive of Hunting plc, valued at over £1bn on the London Stock Exchange, to run the oil services division. This gave McColl the capital to jump into the major league in 1992, when he bought a 29.9% stake in a struggling East Kilbride boiler-cleaning firm called Clyde Blowers. Its turnover was £4m a year and it was making a loss, but he put £1m into a management buy-in. McColl used his skills to improve the processes, reduce costs, and ensure profits. He worked closely with Bill Thomson, Alex Stewart and Graham Lees as they set about transforming the business. With the help of the banks, McColl increased his stake in Clyde Blowers to 70%, bought out six of his eight global competitors and ended up with a 55% share of the global market. With China building dozens of coal-fired power stations to meet demand from the booming economy, Clyde Blowers’ improved technology was ideal for power stations to ensure that soot, ash and dust was kept to a minimum. The market capital was £45m in 1996. Later, he moved into bulk and industrial materials and fly-ash handling, adding InterBulk, CleanCut and Clyde Bergemann Power Group. But there was an inherent problem with small cap Scottish firms, and they decided to go back into private hands. In 1998, speaking to me for a Scotsman article, he said: “It’s very complex and rightly so. It’s a huge decision and you don’t want companies jumping in and out of the stock market. But in the current climate we are a small company in the engineering sector and we are seriously under-valued. Indeed. We are grossly under-valued.” David McCorquodale, partner with KPMG, said in the same article that smaller Scottish companies had been starved of public equity and there was a case of serious undervaluation in some areas, especially engineering. This was a seminal moment for McColl, he needed a new kind of business model away from the vagaries of a fickle stock market. “It was a blow to the ego, but I got over it. But it was clear that the market did not understand industrial companies. Clyde Blowers was in the unloved power industry and split into different parts,” he said. The private equity model became more defined over the following years. In May 2007, McColl
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was feted as the white-knight who saved the business where he started as an apprentice. Weir Pumps in Cathcart in Glasgow was a struggling division of the larger Weir Group plc, now an industrial power and gas player in its own right. Weir Pumps was acquired and renamed Clyde Pumps. At Cathcart, 550 jobs were saved. He raised the money through his first fund. He was smart enough not to call it CBC Fund I, which might have put people off, so it was CBC Fund II. “By the time of Fund II we had a track record. For Clyde Blowers Capital there was a return on our investment, plus we were paid 2% for managing the fund,” he says. Now there were other targets on the CBC horizon. McColl always retained very good relations with merger and acquisition teams inside businesses he admired. He was scouring for other industrial pump opportunities to build scale and he explained he has always been the kind of business person to say he was ’in the neighbourhood and could drop by’ and meet competitors or customers. He was in New York for one of his regular coffee sessions and dropped into Textron and asked if its Union Pumps division was for sale. The coffee chat went well but he was told it wasn’t for sale. Textron was a Fortune 500 firm, known around the world for its recognised brands such as Bell helicopters, Cessna aircraft,
Ransome and Jacobsen grass cutters, Kautex car systems, Lycoming engines, E-Z-GO, the golf cart makers, Jacobsen golf course equipment makers, Greenlee tools, and Textron Systems. Its head of mergers and acquisitions was Jack Curran, a well-known business figure in the US, who enjoyed McColl’s visits. “Look Jim, you are wasting your time. If we were going to sell, we’d sell the entire fluid and power division,” he said. That was the come-on that Jim needed. He went off and set about raising the funds to make the biggest acquisition of his life thus far. On 11 September 2008, three days before the Lehman Brothers collapse, Clyde Blowers agreed to pay £369m for Textron’s fluid and power division. Potentially, this was a great deal with four separate businesses, including Union Pumps, plus David Brown Gear Systems, based in Huddersfield – and the famous DB initial from the Aston Martin marque – and employing over 1,000 people in 11 countries, with the David Brown Hydraulics system, based in Poole, with another 119 employees and Maag Pumps, based in Oberglatt in Switzerland, which employs 275 people in seven countries. “When we agree a price we stick with it,” says McColl. “We will do our due diligence thoroughly beforehand and then give a price for the business.” >>
Fueling your business ambitions For ambitious businesses, which want to make the most of growth opportunities, funding can be crucial in taking the next step. But in these turbulent economic times, is accessing finance as straightforward as it should be? SMEs are the backbone of the UK economy, accounting for 99% of all UK organisations and employing over 13 million people. Yet, in the current climate, it isn’t always easy to run a business, and it can be even harder to develop and grow – whether you are looking to take on more staff, move to larger premises, or begin to export overseas. Despite these challenges, a recent Business Barometer Report (Jan 13) from office solutions company Business Environment shows an encouraging boost in the confidence of UK SMEs, with 70% believing their sector will continue to grow in the coming quarter, and 37% expecting their business to grow. In order to make the most of these growth opportunities, however, most SMEs will require funding. There has been a considerable amount of media noise around the lack of available bank funding to businesses, with reports that lending to SMEs in particular is falling – forcing them to look elsewhere for much-needed capital. SO WHAT CAN YOU DO? More often than not, financial support offered to businesses is concentrated around start-ups, with a surprising gap in the help available to those which have reached a certain level of success and are looking to take the next step. Despite this uncertainty, many UK SMEs continue to show an impressive level of resilience and ambition. A focus on exceptional customer service is of increasing importance, with smaller
Graham Silcock, Regional Director for Scotland businesses perfectly placed to keep one step ahead of trends by diversifying product offerings, while making the most of the marketing opportunities offered by social media. If finance is the only option, consider your sales process. A big order will reassure financiers that your business is a growing concern and can open up options like asset finance and supply chain management. Invoice Finance can also be of significant benefit to cash flow, releasing money tied up in unpaid invoices and giving you the confidence to make decisions, while improving supplier relationships. THE RIGHT RELATIONSHIP Central to funding your business is, of course, the relationship you have with a banking partner and at Santander we are committed to helping SMEs achieve their goals. We have never stopped lending
to our business customers; we are lending now, and will continue to lend in the future. In 2012, we increased funding to SMEs by 18%, supporting more than 5,000 SMEs with £3.4bn of new lending. We are also excited about what our involvement in the Government’s Funding for Lending scheme will mean for our business customers, allowing us to build on the real difference we can make to their future success. We care about each business we work with and take the time to get to know our customers, making sure we understand individual needs so we are able to find the right financing solutions. Ultimately, our goal is the same as yours – to fulfil your business aspirations. HERE FOR YOU At Santander UK, we believe lending is simply part of being there for our customers. Seamill Hydro is just one company that has been able to fuel their ambitions with funding from Santander. Sylvester Sweeney, co-owner said “We are extremely dedicated to our business and want to safeguard it for the future generations of our family. We are proud of our achievements to date in transforming the hotel, but realise there is much more that can to be done. Working with Santander has been a very positive experience for us and we hope to continue our working relationship with them in the future.”
TAKE FIVE Consider these tips before making a funding application: 1. Honesty is the best policy: Don’t hide anything from your bank when approaching them for finance 2. Keep an open mind: You might have big plans, but don’t be too tied to one specific growth strategy 3. Be prepared: Due diligence in your accounts and paperwork, and a realistic business plan, will allow your bank to make an accurate assessment of your business 4. Take it slow: Don’t try to run before you can walk. Organic growth is usually more sustainable 5. Tell us more: Keep your bank informed about any changes, good or bad – the more they know, the better
If you would like to find out how we could help you achieve your own business ambitions, please call your local relationship team on 0141 275 5924. You can also see how we work with our customers at www.youtube.com/santanderukcb, we look forward to working with you.
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ENTREPRENEUR With the deal in a highly advanced stage – and at a point of no return, one of the investors, who had put £50m on the table, saw the worsening financial position, got cold feet and dropped out. It might have scuppered the deal because finding an extra £50m at short notice was virtually impossible in the worsening climate. Yet McColl is a man of his word: his handshake really matters. He could have gone back to Textron to renegotiate the price. ”I said, ‘I’m not doing this’. One of the advantages of our approach was it was personal. It was me. We had agreed a price. Too often I’ve seen a deal agreed, then the due diligence team go in and they start chipping away at the offer price,” he told the PLC club members. He returned to see Jack at Textron and explained he had lost an investor – but didn’t want to lose the deal. They agreed to a £50m six-year loan note from Textron, which was paid back in under three years. Union Pumps, a producer of highly engineered centrifugal and reciprocating pumps, employed 730 at 10 locations in six countries, including the UK, the US, Canada and France. Following the acquisition, it was integrated with Weir Pumps to create ClydeUnion Pumps, which became a global centre of excellence. “I had to talk regularly to the whole workforce because they’d heard it all before,” he says. “You have to show that you really mean what you say because building value requires a motivated and productive workforce. “You can’t put it on a spread sheet but that’s hugely important.” This had been a very close call as liquidity dried up. The deal was funded by a consortium of Bank of Scotland, Barclays, HSBC and RBS, with the equity provided by Clyde Blowers Capital Fund II, a £250m fund. McColl said he was delighted to sign a deal of this magnitude, especially in the economic climate. “We are talking a total value of US$1bn. It is a very substantial deal for a British company... a great boost for British business.” That figure included additional working capital, bonding facilities, the integration with Union Pumps into the Weir Pumps business and payment of up to US$645m to Textron. The success of David Brown Gear Systems has become a shining example of how the CBC
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You have to show that you really mean what you say because building value requires a motivated and productive workforce operational team can turn business around. “Some would have said that David Brown was clapped out, but for me it’s manna from heaven. It takes years to build a brand like that, and you can use this brand leverage to re-establish and grow the business globally.” CBC is all about creating value. It had created ClydeUnion Pumps, a major global pump business: an attractive combine for the bigger players and throughout 2010 there were a number of approaches for the company. “I would have liked to hang on to it for a bit longer but we were operating our fund structure and our funds all have dates on the end of them. Besides, it was growing so fast it was outpacing the fund.” In 2011, SPX Corporation, a New York listed company, stepped in to buy ClydeUnion Pumps, for £500m, plus an earn-out payment due this year based on last-year’s performance, up to £750m. The pump business – still in the iconic building at Cathcart, remains based in Glasgow and employing 2,000 people around the world is reported to be doing well. This was a great success for CBC Fund II and only enhanced the reputation for the CBC Fund III, originally a £350m fund but extended to £420m, which closed in January 2012 and was over-subscribed. The rate of return on investment has beaten industry benchmarks, which has encouraged institutional investors to take a stake. “We were growing when everyone else was thinking of postponing fund raising. But we had established a good model and we delivered. The difference was that we were focusing on what we needed to do to grow, whereas other private equity firms were being affected by the market sentiment into laying off and tightening up. Too many people were scared off by the economy and what they read in the media. Yet if you do proper analysis of your potential investments, you can see the
value.” Acquistions from Fund III included the purchase of Moventas in Finland, one of the world’s leading gear manufacturers for the paper and mining industries and, in January this year, CBC announced the acquisition of Parsons Peebles Generation, based in Rosyth. Anyone who walks around Edinburgh can still see the old Bruce Peebles transformers, once built in Pilton, still supplying electricity to the capital. Bruce Peebles, founded in 1898, never recovered from a major fire in 1999, and the acute lack of political support to help rebuild the Scottish factory. It became Parsons Peebles Generation which built up a major workshop for oil and gas motors and test facilities on the Fife coast. The transaction involved Dundas & Wilson, Deloitte and Calash, specialists in energy sector due diligence. Days later CBC bought Energy Services International, a jack-up rig manufacturer and repair business based in Houston, Texas, for £13m. McColl said it reminded him of Hunting Oilfield Services and he predicts a great future for this business, investing a further £25m, and using Aberdeen as a spring board. By the end of 2014 he hopes to raise CBC Fund IV, which will be £500m, looking at seven or eight more opportunities and with CBC ‘very operationally involved.” Already there is great interest from investors to take a stake in this. McColl obviously loves what he’s doing. He wants to remain in the hot seat for as long as possible – indeed as long as Warren Buffett at Berkshire Hathaway, a businessman he admires. With Buffett, reputedly the world’s second richest man, still active in business at 82, there’s plenty for the Scotsman to cast his eye over. Moreover, when Fund IV is up and running expect more engineering announcements from a man who knows how to use the whole toolbox in the investment workshop. McColl is a visionary Scot that every student of business should watch and learn. n
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Vacant lots on the up, Titan comes to market, hotel chain crosses the border, new digs for GDF, HQ move marks bread maker’s rise, and wait over for Old Town’s new vision >> Vacant lots on the up One in ten shops in Scotland is now vacant – a matter of increasing concern as high streets in many towns continue their battle for survival. A Scottish Retail Consortium/ Springboard survey for January 2013 makes tough reading. In January, shopper numbers in Scotland were down by 4.6% on a year ago, a sharp deterioration from the 6.2% rise in December 2012. Vacancy rates in Scotland increased to 10.2% from 9.9% in October 2012. Snow hit shopper numbers across the country during the second half of the month which had a noticeable impact on the figures. Footfall weakened in all three locations compared with a year earlier. Out-of-town locations reported the greatest fall (-7.2%) followed by shopping centres (-5.2%) and high street (-3.3%) locations. The national town centre vacancy rate in the UK was 10.9% in January 2013, down from 11.3% in October 2012. Fiona Moriarty, director of the Scottish Retail Consortium, said: “The mid-month snow was the main culprit for deterring Scottish shoppers in January, but our figures released last week suggest that this didn’t actually translate into a weak showing for sales. The signs are that people planned well ahead for the bad weather and condensed their shopping into fewer trips. It’s not so easy to find a chink of light in the Scottish vacancy rate, which has edged up again to the point where more than one in ten shops are now lying empty in our town centres. If the Scottish Government wants to stem the tide of further closures, it should act now to abate the rising costs of doing business on our high streets in Scotland. Unfortunately the Government failed to act on business rates this year which means that retailers will be hit by an additional £20m in tax. This comes on the back of a cut in Empty Property Rates Relief, while some larger supermarkets in Scotland are faced with a rates bill which is 28% higher than the same store south of the border.”
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>> Figures shed light on big site demand Occupier demand in the Scottish “big sheds” industrial market grew over the course of 2012, with Grade-A take-up twice as high in the second half of the year compared to January-June figures. Jones Lang LaSalle’s UK Big Box Industrial Logistics report shows overall take-up of units larger than 100,000 sq ft across the UK in 2012 was less than that recorded in 2011 due to a lower level of activity recorded in the first half of 2012. In Scotland, demand for larger industrial units is predicted to increase further, with the letting of Eurocentral’s 71,576 sq ft Apex unit to Stapletons Tyre Services an example of a market upturn. Despite a slowdown in Grade-A occupier demand in 2012, total availability fell across the UK. At the end of December this stood at 22.1 million sq ft, 15% lower than at the end of June 2012 (25.9 million sq ft). There was 8.3 million sq ft of new floorspace available at this time, including 332,000 sq ft of space speculatively under construction (the lowest levels recorded by Jones Lang LaSalle since 2005. Neil Cockburn, lead director, Jones Lang LaSalle, Glasgow, said: “An increased interest in the Big Box market is being driven by the UK and world economic outlook, which is getting significantly better. “The businesses we have seen showing an interest in these units are often US or Canadianowned, so global finances have a critical role to play. The diminishment of the ‘fiscal cliff’ scenario in the US will see increased activity from the large corporates and mean investors are more confident to move outside North America. Across the UK, retailers accounted for 36% of all Grade-A Big Box take-up (4.2 million sq ft), 8% down on 2011. Manufacturers increased their share of take-up from 13% in 2011 to 29% (3.5 million sq ft) in 2012.
Diane Wehrle, research director at Springboard, said: “The decline in footfall on the high street of -3.3% in January is the largest since 2010 with the severe weather undoubtedly deterring customers from venturing out to shop during a period when they were already stretched from Christmas. The greater decline in footfall in retail parks of -7.2% is a function of this, as shoppers were no doubt reluctant to drive in precarious conditions. What is unusual – particularly in the winter – is that the high street fared better than shopping centres which recorded a decline in footfall of -5.2%. One possible reason for this is the greater diversity of high streets which provide a wide ranging offer and a greater representation of independents. The national UK vacancy rate now stands at 10.9%, which is a slight reduction from 11.3% in October.
>> Titan comes to market The Titan building at Centralpoint, at Eurocentral, in Lanarkshire, is on the market and expected to attract attention from large distribution and manufacturing firms. It offers 117,000 sq feet of warehouse space, 5,500 of office space, 12m eaves, and a 48m yards. It also offers fast access to the M8, M73 and M74.
>> Showroom for sale A former showroom premises on Buckie High Street is for sale. Located on the east side of High Street at its junction with East Cathcart Street within the heart of the town centre, the showroom premises are 4,300 sq ft of a two storey traditional
stone building. James Morrison, surveyor at Shepherd’s Aberdeen office, said: “Due to its size and location, this property may be suitable for a number of alternative uses, such as residential conversion and, as such, we anticipate good levels of interest in the property.” Offers in excess of £250,000 are invited. Contact the agent on 01224 202 800.
>> Hotelier crosses border Roomzzz Aparthotel, a franchise hotel chain established in Leeds in 2006, has set its sights on two new sites in prime locations in Glasgow and Edinburgh. After a strong year of trading in 2012 which saw averages of 87% occupancies across all sites and a 16% increase on 2011, the two Scottish additions to the portfolio will bring Roomzzz locations to nine. Mark Walton Head of Roomzzz Aparthotel UK said: “Our approach is simple - we give our customers exactly what they require when they are travelling, our rates are transparent and our offering consistent and in line with expectations’.
>> Aberdeen heats up Aberdeen’s office market continues to sizzle with eight bids lodged by a closing date for a prime West End property, three of which exceeded £1.7m. The 4,000 sq ft three-storey detached townhouse at 18 Carden Place was owned by partners in legal firm Esslemont Cameron Gauld which merged last July with Ledingham Chalmers LLP. Property consultants FG Burnett, who handled the sale on behalf of the partners, said the price achieved was indicative of the high demand for office accommodation in Aberdeen’s sought after West End business district. FG Burnett associate, Dan Smith, said: “It is not often an entire townhouse in the West End comes on the market and the number of competing bids received and the price achieved reflected this. Meanwhile Shepherd Chartered Surveyors is offering office/retail premises in a prominent corner location in Aberdeen city centre to let.
>> New digs for GDF The first steps have been taken in the construction of a new Aberdeen office for North Sea operator GDF SUEZ E&P UK Ltd. A groundbreaking ceremony took place with developer Miller Cromdale at the North Esplanade West site. The Lord Provost of Aberdeen, George Adam, along with GDF SUEZ E&P UK Ltd managing director Jean-Claude Perdigues, and Miller Developments chief executive Phil Miller, made the ceremonial cut of the first sod to signal the start of building work on the five-storey office. GDF SUEZ E&P UK Ltd is taking a 15 year lease on the new building which will provide capacity for up to 200 people and will allow the company space to grow as it ramps up activity in the UK North Sea. Perdigues said: “We are rapidly becoming one of the leading operators in exploration and production in the UK Continental Shelf. We are focused on growing our business in the UK North Sea and committed to building on our Aberdeen presence since establishing our UK operations base in Union Plaza just three years ago. “This new facility will bring all of our teams under one roof and provide the ideal hub to drive forward our operations from Aberdeen.” Phil Miller added: “Miller Cromdale is delighted to mark the beginning of works on the site of GDF SUEZ E&P UK’s new office building.
“We have been working closely with GDF SUEZ E&P UK over the past few months and are looking forward to delivering this prestigious office development for them.” The company is operator of the Cygnus gas and Juliet gas fields in the Southern North Sea (SNS). Cygnus is the largest gas discovery in the SNS in the last 25 years and first gas is expected in late 2015. Juliet is a subsea tieback development with first gas due in late 2013. The company also has an exciting portfolio of discoveries and exploration projects in the Central North Sea and West of Shetland.
>> Bright outlook Edinburgh property investment and lettings specialist Cullen Property is predicting a bumper year for property investment due to much improved market conditions. Operations director Steve Coyle said “For the first time in a few years, the three main ingredients of successful property investment are coming together: purchasers with buying power are met by sellers with realistic expectations and, at long last, we’re able to secure funding at reasonable rates. “For the past year or so, the mortgage market has shown some signs of movement and since the beginning of this year, we’ve noticed a real influx of more buy-to-let mortgage products, giving buyers the chance to secure their property of choice.” In 2012, Cullen Property was the only Scottish exhibitor at the Property Investor Show in London, which led to the company winning a significant contract. “I believe our presence last year really helped open investors’ eyes to the potential of Edinburgh properties. A greater Scottish presence will help attract even more interest and it’s good to see more of our industry colleagues being represented with their own stands. Edinburgh has proved its reputation as a true micro climate for property investment over the years by continuously delivering higher than average rental yields. The city is second only to London - and property prices are certainly more competitive here than south of the border,” said Mr Coyle.
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COMMERCIAL PROPERTY >> Irish firm moves in Roadbridge, one of Ireland’s largest civil engineering contractors, has signed a threeyear lease on office space at Innovation Park, Bellshill, which is owned by Edinburgh-based Cosmopolitan Investments. This will be the first permanent base in Scotland for Roadbridge. The firm played a major role in the development of the Whitelee wind farm on Eaglesham Moor, south of Glasgow. The accommodation comprises 2,145 sq ft within Alexander Graham Bell House, one of three buildings which make up Innovation Park. The space was formerly occupied by Black Horse Personal Finance and this latest letting returns the building to full occupancy. Roadbridge, which is based in Ballysheedy, County Limerick, will be paying an initial rent of £15,000 per annum.
>> Bread maker rises BRE has announced the purchase of Unit 2, Halbeath Interchange Business Park in Dunfermline on behalf of Scottish Bakers. The self contained 2,682 sq ft modern office unit, spread over two floors and forming part of a wider development incorporating five stand alone buildings, was the preferred option for Scottish Bakers and will serve as the company’s new headquarters as it continues to grow its business. Alan Clarke, chief executive of Scottish Bakers, said: “We are very much looking forward to moving our operation to Halbeath Business Park and taking advantage of its locale. Business expansion is key for us over the coming months and I’m confident our new premises will be of great benefit in that regard as we move forward.”
>> Office market picks up
>> Apex snapped up The 187-bedroom Apex Hotel on Edinburgh’s Waterloo Place has been sold by BNP Paribas Real Estate to CBRE GI for £10m, reflecting a yield of 3.29%. At the same time Apex’s 179 bedroom hotel at 1 Seething Lane, London EC3, was bought for £18.65m by Standard Life’s annuity fund, reflecting a yield of 3.28%. Paul Henwood of BNP Paribas Real Estate said: “Working closely with Apex Hotels allowed us to successfully sell two income strip investments on their behalf. We look forward to continuing to work closely with the growing hotel chain in the future.” Allsop acted for Standard Life, while Clay Street acted for CBRE GI.
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The up-take of office space in Scotland increased in 2012 overall despite lower levels in the second half of the year, says leading property consultancy CBRE. CBRE’s Scottish Offices H2 2012 report shows that the overall trend of sustained demand for offices in Aberdeen remains prevalent as take-up for the year reached a record high of 830,404 sq ft. Demand largely stemmed from a persistent high oil price of between US$100 and US$110 throughout H2. The new UK Treasury measures to promote investment in new and existing fields has led to a significant increase in activity in the North Sea, resulting in a strengthening in demand in the Aberdeen office market. Companies are having to create superior working environments for staff which means there will continue to be demand for high quality, well located office buildings both in the city centre and out of town. Total available stock continues to diminish in Aberdeen, with less than 480,000 sq ft available – the lowest recorded level since 2000. Only 14% of this availability (70,576 sq ft) is prime ready to occupy, Grade A quality and many occupiers’ options are being limited
to pre-let opportunities. Some of the key city centre developments are finally expected to commence on site in 2013, as developers look to capitalise on the strength of the market. The first will be GDF Suez’s 40,000 sq ft pre-let HQ which has recently commenced on site in the North Dee Business Quarter. Whilst rental growth is anticipated, the issue will be the potential lack of ready-to-occupy Grade A city centre space to benchmark where the market is truly at. However increases in rents on secondary Grade B stock are being seen, given the lack of better quality space. Out of town rents are also significantly increasing. The announcement of the Supreme Court rejecting the final legal challenge against the Aberdeen Western Peripheral Route will have a positive impact on the city and will see this crucial road built. Proposed new out of town development sites such as Miller Developments’ new 160 acre D2 Business Park, adjacent to the key interchange at Dyce, will benefit from this decision. The second half of 2012 saw a significant increase in the volume of office market investments in Aberdeen, from £78.2m during the first half to £127.2m in H2, leading to a total for the year of £205.4m transacted. The second half saw the largest transaction of the year in Scotland as F&C REIT purchased the trio of 100,000 sq ft pre-let office HQ’s for £94m in Phase 1 Prime Four Business Park in Kingswells. Derren McRae, managing director of CBRE in Aberdeen, said: “We anticipate Aberdeen will continue to experience a high level of investor demand as a result of strong energy sector covenants and long lease commitments agreed on pre-let offices. Compared with other UK regional cities, the genuine prospect of rental growth in both prime and secondary assets is also proving attractive to investors.” In Glasgow take-up during the second half of the year reached 132,800 sq ft; this is just under half that which was taken during the first six months but it leads to a total for the year of 374,617 sq ft, an increase of 13% above 2011’s total. Demand in Glasgow has mainly come from the business and financial services sectors accounting for 28% and 29% of take up this year respectively. Considerable consolidation and structural change within the legal sector
has also resulted in some activity from this sector through lease re-gearing and extensions. In Glasgow total availability declined in the last six months of 2012. This shortage is putting pressure on occupiers looking to move into the best space in the best locations as there is now limited choice. Glasgow will be one of a very few areas outside of London and the South East where speculative development will start in 2013. Two schemes have already committed: One West Regent Street (Mountrgrange/PRUPIM) and 110 Queen Street (BAM Properties). It is anticipated that these will shortly be followed by St Vincent Plaza (Abstract Securities). Prime rents in Glasgow are holding up due to the reduced availability on the best quality space. Rents for compromised Grade A buildings are likely to witness increased pressure as landlords seek to secure occupiers. The introduction of 90% rates on empty buildings in Scotland will also have an impact. Investment volumes in the Glasgow office sector for 2012 totalled £90m, with the majority of this taking place in the second half of 2012 (£81m). This is down from the 2011 transaction figure of £134.6m which was boosted by the sale of 141 Bothwell Street to Pramerica (£72m/6.17% NIY). Audrey Dobson, senior director at CBRE in Glasgow, said: “Looking to 2013 Glasgow is not expected to see a big recovery in market conditions. However the current lack of quality office stock within both the Edinburgh and Aberdeen markets is a great opportunity for Glasgow to attract occupiers to the city.” Throughout 2012 Edinburgh saw demand being driven by occupiers from the banking and finance and consumer services and leisure sectors, accounting for 32% and 24% of all floorspace transacted, respectively. Both of these sectors saw strong levels of take-up through the year, however with the BlackRock letting dominating H1, the last half of 2012 was quieter, with take-up down 43% over the first half to 282,079 sq ft.
>> Wait over for Old Town’s new vision A new vision of one the Scotland’s most highly-anticipated development projects has been revealed, heralding the next stage of the transformation of Edinburgh’s former Caltongate site. Artisan Real Estate Investors, the international development consortium behind the redevelopment of the capital’s New Street/East Market Street area, has unveiled updated plans for the Old Town site at a public exhibition. The new proposals are the result of a 12-month consultation with local people, civic partners and heritage bodies and are set to create a vibrant mixed-use community combining open public spaces with new hotels, retail and leisure offerings, as well as homes and offices. Following the extensive consultation process, many facets of the area’s unique Old Town setting are set to be retained to preserve the character of the development. These include the retention of the Canongate Venture building and the façade of the Old Sailor’s Ark. In addition, the historic views of Calton Hill from the Royal Mile will be preserved and the Jeffrey Street arches are set to be opened up as small, individual ‘artisan’ units.
>> Eastern promise Developer SCOT Sheridan and its funding partner MEPC are gearing up for the second stage of a £14m development at Clyde Gateway East Business Park in Glasgow. The project is a joint development between SCOT Sheridan, UK business estate operator MEPC and urban regeneration agency Clyde Gateway. A planning application for the development of 75,000 sq ft of industrial and warehousing space at the Business Park will be submitted by SCOT Sheridan and MEPC within the next two weeks. Four units are planned at the second phase of development with flexible sizes available for prospective tenants ranging from 13,250 sq ft to 46,000 sq ft. Subject to final planning consent, SCOT Sheridan and MEPC hope to commence work on site in late spring or early summer. SCOT Sheridan and MEPC also announced the sale of a 16,250 sq ft building in the first, threeunit development phase at Clyde Gateway East Business Park, which was completed last year. Tool supply business P F Cusack (Tools Supplies) Ltd is setting up its first Scottish base at the development, purchasing the building plus secure yardage for £1.2m. Cusack joins oil and gas services company, Glacier Energy Services, which moved into the park in September.
ONLINE: More commercial property stories are available on BQ’s website www.bq-magazine.co.uk
>> New build boost Barratt Scotland is launching 17 new sites in Scotland over the next year. When complete, these developments will deliver 2,480 new homes and underpin hundreds of jobs in Scotland. New sites include five sites in and around Edinburgh - Fairmilehead where 144 new homes are planned, Burdiehouse where 112 homes will be built and Brunswick Road where 232 homes will be built. 140 homes will be built at Eskbank and 180 at Standhill Farm, Bathgate. 480 homes will be built on four new developments in Aberdeen: Den of Pitfodels, Evolution, Bridge of Don and Kings Court while at Inverurie, 600 new homes will be built. In West Scotland new developments are planned at Clydebank, Cumbernauld, Bellshill, Kilsyth, Coatbridge and Kilmarnock. The announcement follows a successful period of growth for the house builder, which has seen new homes sales up over 5% year on year. Douglas McLeod, regional director of Barratt Scotland said: “We are optimistic about 2013. Our existing sites are selling well and these seventeen new sites are all in excellent locations and we expect the homes to be sold quickly by buyers keen to move to a new home this year.”
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A TIGHT-KNIT PLAN Belinda Dickson, the fashion industry’s own cashmere queen, is about to begin an exciting new chapter in business, as she adapts to the clothing world’s changing dynamics. Valerie Darroch discovers more over lunch
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If anyone knows the importance of reinvention and moving with the times, it is surely Belinda Dickson, dubbed the ‘cashmere queen’ by fashionistas who have followed her daintilyshod steps in the business world since she first established her cashmere fashion company Belinda Robertson Ltd (under her former name) in 1992. Intelligent, focused, forthright and possessed of more than her fair share of charm as well as blonde good looks, Belinda has racked up air miles worthy of her own jet in a high profile career which began with her hauling cashmere samples to ‘trunk shows’ in a bid to get upmarket stores and design houses to stock her clothes. “I used to do the trunk shows myself, it was the only way to get your name and your goods out there. That’s how I got my first deal with Michael Kors,” she says. Belinda went on to work with an impressive array of internationally famous labels including acclaimed New York designer Kors as well as Nina Ricci and Dior before starting her own label. The former PE teacher and marketing executive worked hard for her first fashion break and played an important part in repositioning cashmere as a fashionable luxury item, rather than a reliable old classic for the twinset brigade. Her interest in the cashmere knitwear industry was sparked when she was working in a marketing role for a telecoms company in the Borders - an area which enjoyed a worldwide reputation as a centre of excellence for cashmere processing, weaving and knitting. Attracted by a new challenge and keen on fashion, Belinda was undaunted by the fact that she had no formal training as a designer and began to design her first collection with encouragement from a local manufacturer. His faith in her proved justified when her first collection was snapped up by Burlington Arcade in London’s Mayfair. It was an auspicious start: Burlington Arcade boasts a proud history as the world’s first shopping arcade, having opened its doors in 1819. It is regarded as an elegant forerunner to the malls of today which are reshaping consumers’ shopping habits. Belinda went on to open a shop in London’s exclusive Belgravia in 1998 but took a tough decision to close it in
2009 when the rent rocketed. Now, 21 years since establishing her business, the company has reached a new turning point and Belinda has decided to close the doors of her elegant boutique in Edinburgh’s Dundas Street for the last time. The shop has traded successfully for nine years and was her only
The only brake on us moving faster has been finding the right people with the right skills remaining branded store, although her products are still sold internationally through upmarket outlets as far afield as New York, Korea and Japan as well as closer to home in Skibo castle and other upmarket concessions. The closure is part of a strategic push into online retail, a move which will deliver cost efficiencies and allow Belinda to target new customer demographics. She will continue to supply existing concessions and will increase wholesale activities, particularly in the UK, and will also expand her Cashmere Barn discount outlet in East Lothian which has been very
successful.“This is a new chapter - we’re making a major move online,” she says. “We have had a successful web presence for some time, but it is time to up the ante and develop something much more significant. The fashion world is changing rapidly and the way people shop is changing. It’s so much more about convenience and speed and meeting rising consumers’ expectations on product, service and delivery.” Belinda will miss the personal touch she enjoyed with long-standing customers of her shop and is mulling over ways to recreate a personal experience in an online environment. New approaches are likely to focus on digital engagement strategies designed to build a dynamic community of brand advocates. “I’ve been planning this for a while, the only brake on us moving faster has been finding the right people with the right technology skills in the online space and a proper understanding of how digital developments are transforming fashion retailing,” she says. Deeply pragmatic, she understands that the creative side of fashion inevitably holds an allure for outsiders, but is adamant that success in the fiercely competitive business has as much to do with slick processes and digital tools as seductive designs and hemlines. “To succeed in the fashion business today you need to really understand business processes. It’s easier to find talented designers than to find people that understand the process inside out. You have to ensure that your entire process cycle from design to manufacture and shipment is smooth, reliable and fast,” she says. Retailers such as online fashion business ASOS, luxury retailer Matches.com and innovative Spanish-owned Zara are rewriting the rules, Belinda says. Zara’s ability to spot a hot outfit on a celebrity and get an affordable version of her dress into its stores within weeks, has left less nimble operators trailing in its wake. It has also given rise to a new term in the fashion business ‘speed chic.’ “Design houses have been geared up for more than a century to work towards the major seasonal launches - Spring/Summer and Autumn/Winter but now they’re under pressure to produce new lines all year round. It’s a faster more relentless pace and it’s not an easy adjustment at any level,” she says. >>
BUSINESS QUARTER |SPRING 13
BUSINESS QUARTER | SPRING 13
Adapting to this new reality is not an option, it is a necessity, both for established fashion businesses and for aspiring fashion designers and entrepreneurs, says Belinda. She has already expanded her own offering through her ‘Luxe Jersey’ range of less structured garments, which appeal to a youthful market and also her White Label collection, featuring more affordable designer knitwear in vibrant colours but with the same high quality finishes that have become her hallmark. She also sells discount products via Cashmere Barn, a pop-up outlet she set up in East Lothian. In fact, she says it has proved so popular with bargain-hunting cashmere fans, that she plans to expand it. Belinda, whose business idea was born in the Borders, has always supported Scottish cashmere manufacturers but says that it has become harder to stick exclusively to Scottish suppliers as they increasingly struggle to meet ever tighter turnaround times. Also, there has been an erosion in the skill base since the demise of Dawson International, the Hawick-based cashmere manufacturer (despite the fact that Chanel took over Dawson subsidiary Barrie Knitwear recently). “I’ve always supported Scottish businesses and there’s no doubt that the Borders has some of the finest cashmere specialists in the world but times are changing and the Chinese are upping their game and offering fast turnarounds and businesses can’t ignore that,” she says. Belinda argues that while having access to a competitive and high quality manufacturing supply chain is important, she believes the Scottish fashion industry (encouraged by economic development leaders) has historically placed too high an emphasis on manufacturing and not enough on building a brand. “That’s something the Americans have done so well at, creating valuable global fashion brands. It’s the brand they concentrate on, you don’t hear them talking about the manufacturing side in the same way,” she says. Her concern both for the current crop of up-and-coming Scottish designers, and for the generation that will follow in their footsteps, is that they emerge from fashion degrees with finely-honed design skills but negligible practical business knowledge or training.
She has devised an innovative plan to create a Scottish fashion hub to help young designers gain the skills, support and knowledge they need to build brands which can crack global markets. The plan is at a relatively early stage and Belinda and her colleague Blair Davidson are currently talking to a number of potential private and public sector investors and partners. She is aware that there are a number of existing state-backed initiatives to support Scottish fashion but convinced that a more holistic approach is needed: “With some notable exceptions, the Scottish fashion industry has not achieved an international reputation, yet the talent is here. “We need a Scottish fashion hub to help designers translate creative talent into commercial success.” She is sceptical of the value of state-funded catwalk shows which give designers one-off exposure without helping them further their long-term development in a structured way. “They’d be better off doing ‘trunk shows’ taking their designs directly to the buyers who have a real influence on what makes it into the shops,” she says. Her vision is of a hub where designers can benefit from shared access to specialists in key specialisms such as: accounting, web development, online retailing, HR, law, PR, marketing and social media. Her aim is for the hub concept to attract sufficient support and capital to get off the ground soon and says she is willing to play an advisory role in the project, working with appropriate partners and investors. She has participated in previous initiatives to support young designers but believes there has historically been a lack of joined-up thinking on how best to nurture designers. Belinda, who is a former a board member of Scottish Enterprise, is well aware of the importance of fashion and more broadly textiles to the Scottish economy. New research from Scottish Enterprise published in 2012 showed that Scottish textiles exports are worth £295m per annum and there is still high demand from overseas markets like Russia, China and Japan for luxury cashmere and Harris tweed. Belinda cuts a relaxed but stylish figure in her own understated cashmere range which fits with her action-packed lifestyle. Glasgow-
The Edinburgh Larder Bistro The Edinburgh Larder Bistro has emerged as a new and welcome addition to the capital’s culinary scene, offering an appealing selection of fresh seasonal and locally sourced food in a quiet yet convenient part of the city. Tucked discreetly away in a basement location on the corner of Alva Street and the west end of Prince’s St, the bistro has a tardis-like quality, opening from a small entrance into a spacious dining with a stylish raised glass-roofed conservatory area at the back, bordered by rugged stone walls. The restaurant was opened in autumn 2012 by directors Eleanor Cunningham and Joanne Hannah and followed the partners’ success with their existing business - the Edinburgh Larder licensed cafe on Blackfriars Street, just off the Royal Mile, which opened in 2009. The bistro’s menu is created in collaboration with head chef Finlay Nicol, a member of the Slow Food UK Chef Alliance and the emphasis is very much on sourcing the finest local produce. The result is eclectic taste pairings of delicately cooked meats and vegetables with unusual accompaniments which result in pleasant surprises for the palate. These include a delicious Jerusalem artichoke soup with heather honey walnuts and olive oil, and salt-baked East Lothian celeriac with kohlrabi, braised celery, sautéed potatoes and caboc cheese. Lunch with Belinda included a shallot and apple tart with homemade goat curd and rosemary and deliciously tender lightly-spiced rump of Borders lamb with braised white cabbage, fennel purée and potatoes, all served by attentive and cheerful waiting staff. The Edinburgh Larder also offers an interesting drinks menu which includes a choice of wines from small artisan vineyards, as well as locally produced beers and spirits such as Edinburgh Gin which is distilled with uniquely Scottish botanicals including pine heather and milk thistle. www.edinburghlarder.co.uk Edinburgh Larder Bistro, 1a Alva Street, Edinburgh, EH2 4PH Tel 0131 225 4599
raised, she and her husband (Alastair Dickson, partner and co-founder of top corporate law firm Dickson Minto) divide their time between a flat in London during the week and their family home in Elie on weekends. A keen sportswoman, Belinda is a devotee of the rather exhausting sounding practice of ‘skinning’ (walking uphill on skis covered in ‘skins’ made either of nylon or from mohair combed from angora goats).
Belinda knows a thing or two about goats albeit Mongolian cashmere ones. The ‘cashmere queen’ built her reputation on an ability to turn their fine hair into a successful luxury brand business. It seems fitting that a woman who enjoys a sporting pastime that requires strength, endurance and dogged determination now has her sights fixed on scaling new heights in the tough world of online retail. n
BUSINESS QUARTER |SPRING 13
LOGAN ON WINE
A SPANISH IMPOSITION Mark Logan is the chief operating officer of Skyscanner, in Edinburgh. He joined last year from Cisco, where he was the director of advanced services, responsible for managing programmes of up to US$200m in value. We asked him to enjoy a couple of bottles of wine from Hotel du Vin When your business ambition is to build Scotland’s first US$1bn web company, there isn’t a lot of spare time left for letting your hair down. So when BQ asked if I’d like to undertake its wine tasting duties this issue, I was rather reticent and felt it might be an imposition on my time. But when I was informed it would only be a five-minute walk from our new offices in Edinburgh, at the Hotel du Vin, I thought it might be an agreeable thing to undertake on a late Friday afternoon, particularly after an extensive week of travelling around to meet our customers. And it was a very enjoyable and relaxing experience with the hotel’s sommeliers displaying great knowledge about their wines. It was also a revelation to me that the hotel has an excellent testing room upstairs. First was the white wine: Stuart Fyfe, the head sommelier at Hotel du Vin, explained that K Naia is made from the grape Verdejo in an area called Rueda in the North West of Spain. Spain is one of Skyscanner’s most popular destinations, so it’s always interesting to find out more about its regions. “The wine is a great alternative to Sauvignon Blanc, it has fresh grassy flavours of lemon and lime, red apple and a hint of spice. The flavours in the wine are quite pronounced and this gives the wine its great strength.”
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Stuart said it was ideal as an aperitif, with a fresh Mediterranean-style salad or some muscles or oysters. I could just imagine arriving in Valladolid and sitting in main square enjoying a sunny lunch. K Naia comes from a top Spanish bodegas producer and has proved very popular in the UK at around £9 a bottle. I was glad I agreed with the expert’s assessment. K Naia was indeed similar to a Sauvignon Blanc, but with a highly citrus character. It was light and refreshing and not overly dry. I really liked this one. It was then onto the red. Chateau Bauduc is owned by an Englishman Gavin Quinney, who ran the sales force for a billion pound UK IT company. He moved to Bordeaux in 1999 and bought a chateau, they now produce a very good red, white and rose. “The red is made up of a blend of 80% Merlot with 20% Cabernet Sauvignon and is then aged in French oak barrels, the wine has a dark ripe fruit of black cherry and blackberry, good structure, supple tannins and is pretty full-bodied. The wine goes well with roast beef or a leg of lamb,” Stuart said. This was a nice choice and another great wine for around £9. Gavin obviously made a great career move. It is full-bodied and very
smooth in texture with a fruity blackcurrant aroma. Although coming in at 14% volume, the alcohol content is a little high for my liking. In all, it was a very interesting hour or so, I’m sure I’ll be back with some of my Skyscanner colleagues - I understand that one or two of them enjoy the odd glass or two of Chardonnay! n With thanks to Stuart and his team, Hotel du Vin & Bistro Edinburgh, 11 Bristo Place, Edinburgh, EH1 1EZ. Contact: 0131 247 4255 The wines provided were K Naia and Château Bauduc, both around £9 a bottle.
LOGAN ON WINE
BUSINESS QUARTER |SPRING 13
LA DOLCE VITA Martin Mutch enjoys a brief love affair with an Italian beauty with a seductive voice the Maserati GranTurismo Sport
BUSINESS QUARTER | SPRING 13
One of my earliest childhood memories is lying on the kitchen linoleum playing with my Dinky toy cars and imagining I was a racecar driver. One of those well-used and dented toys was a red Maserati. I didn’t appreciate what the brand represented at the age of eight, but 40 years later when I got a call from BQ asking if I’d like to test drive a Grandturismo Sport over a weekend, the Maserati brand certainly resonated. Excited was an understatement. So on a cold, grey February morning I headed to a photo shoot with the Maserati feeling a degree of nervous apprehension. In the shadow of Scotland’s engineering heritage, the Forth Bridge, our photographer did his magic while I got acquainted with my new Italian supermodel companion. As on any blind date the anticipation can ruin the reality, and to an extent this was the case here. It was blue not the red of my memories and posed in the cold, its static form was appealing but perhaps not truly charismatic. The Maserati is certainly head-spinningly attractive although my first impressions of this £105k tourer were also muted by comparisons to my own car, a Land Rover Discovery HSE. The Maserati was well appointed but lacked the keyless entry, touch screen control, heated windscreen and even heated seats – this Pininfarina designed beauty was perhaps aimed more at the Italian Riviera than the subzero East Lothian coast. Nonetheless as the Maserati was posed on the slipway at South Queensferry I had a flashback to the first time I saw Ursula Andress emerging from the sea in Dr No as Honey Ryder, my initial indifference was beginning to melt. >>
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Cocooned in wall-to-wall, sumptuous hide, the Maserati accommodated three adults and a child comfortably and we decided to drive by Murrayfield, which was hosting the Scotland v Italy rugby international that day. As we growled past the stadium among hordes of fans, our photographer jumped out to catch the car amid the waving Italian flags. Expecting to feel self-conscious sitting in a supercar posing as the crowds walked by, I realised what the Maserati brand is all about. Yes, it’s engineering heritage is rich, but it is a platform for its real raison d’etre – audience response. I’ve never been in a car that attracts so much attention and sheer admiration; no dark jealous glances at all. Passers-by pointed, clapped and even spontaneously cheered urging me to tap the throttle. The V8 4.7 litre has a voice that would have been applauded at the Verona opera in a duet with Pavarotti. Like Edinburgh itself, the GranTurismo blends its deep heritage with cutting edge modernity. It has four drive modes from what I could ascertain – normal (although Maserati normal is not normal), ICE (which I didn’t try despite some snow – life is too short) sport (see below) and traction OFF (if you fancy becoming a statistic!). Push the sport button and the suspension drops and the baffles open, as do your inhibitions.
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The Maserati inspires you to be an improved parent, husband and leader, to learn Italian, go to the gym and to start cooking
As we growled past the stadium, our photographer jumped out to catch the car amid the waving Italian flags
The Maserati seduces the driver into performing. Even at modest speeds the growl turns to a melancholic howl and as the pace surges, it begins to scream and cackle. As a teen, Led Zeppelin was the soundtrack to my life. The haunting tones of the Maserati could happily become the soundtrack of my thirties. Ok late forties! The sport button was never turned off over the weekend, and neither was I. I was intoxicated by the blend of Italian engineering excellence and the way it evokes the best from everyone it meets. My children, friends and Rocela colleagues found themselves jumping in for a blast and were soon screaming and laughing simultaneously as they were pushed into the plush leather seats with the force of acceleration hitting a ton and then breaking to zero in what felt like nine seconds with rock solid handling and only modest rubber smoke. In fact the only thing more exhilarating than the raw acceleration was the gob-smacking stopping ability of the brakes. A long run up the coast with my wife felt like a ménage a trois! She is no petrol head but was soon caressing the cockpits carbon fibre trim
and savoring the aroma from acres of fine leather. I’d tell you about the audio system or the sat nav, but I wouldn’t have a clue – the exhaust wail and engine roar is the only entertainment required – I had the windows down for three days to maximize the aural pleasure, despite snow flurries. The Maserati devoured the long straights and surged confidently out of the corners around Longniddry Bents, Gullane and North Berwick. Leaving the car outside Ducks at Kilspindie for a delightful lunch was a reminder that the Maserati brand evokes passion and admiration but never the kind of jealousy that can plague owners of marques such as Ferrari and Lamborghini. Returning to the Discovery after the Maserati felt like hugging my mother after a weekend locked in a Dorchester hotel suite with Bianca Balti! The ‘Disco’ is pragmatically a better car, but the Maserati makes you a better person. It inspires you to be an improved parent, husband and leader, to learn Italian, go to the gym and to start cooking. It infuses you with raw passion, romance and ambition. The Scotland squad defeated the Italians that weekend through stoic determination. If only
Scotland had the passion of the Italians, Scottish Independence might make sense and Scotland itself could take a global stage. Meanwhile I’ll be working out how to convince my wife that £105k is a small price to pay for a lifetime dose of unadulterated passion. n My thanks to BQ Magazine, Maserati UK, Graypaul Edinburgh and the Rocela crash test dummies. The car Martin drove was the Maserati GranTurismo Sport MC Auto Shift, OTR £90,390. Car supplied by Graypaul Maserati, Edinburgh, Fort Kinnaird, Edinburgh, EH15 3HR. Tel: 0131 6299173.
BUSINESS QUARTER |SPRING 13
ROLLING BACK THE YEARS Retro riding is on the rise thanks to a heady mix of classic mechanics, timeless fashion and rebellious poster boys like Steve McQueen. Josh Sims charts the new wave of old biking
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EQUIPMENT It costs well into six figures in any currency. And perhaps that is to be expected. The Brough Superior, after all, is not only a hand-built motorbike, but one with history: the company behind it was established in 1919, made its last motorbike at the outbreak of World War Two and, notoriously, this was the bike on which Lawrence of Arabia was killed in 1935 (swerving to avoid a pedestrian, an accident so celebrated it led to the introduction of the first motorcycle helmets). The difference is that this Brough is bespokemade now, an exact replica of the 1927 spec original, built at a rate of just five bikes a year by the original, recently re-launched company. Nor is Brough alone in being part of a growing retro bike scene. British bike brand Triumph, for example, has seen a resurgence thanks to the launch of its ‘modern classic’ line of 60s-style bikes, notably the Thruxton and Bonneville. Royal Enfield has launched an updated Bullet 500. Norton has also been revived. These are throw-backs to the post-war eras of classic biking, when, in the UK, so-called Ton-Up Boys raced up the A1 to eat egg sandwiches at the Ace Cafe, and in the US, Marlon Brando ensured bikers were forever associated with rebellion thanks to his role as Johnny in 1953’s ‘The Wild One’. They have also prompted a new wave of highprofile urban bikers, the likes of Brad Pitt, George Clooney and Ewan McGregor, for whom the style is a large part of the appeal. “The retro bike scene is a growing sub-culture that is part of the same non-conformist interest in vintage clothing,” reckons Brough’s new owner, Mark Upham. “It’s an appreciation not only for the very high >>
Those were the days when socalled Ton-Up Boys raced up the A1 to eat egg sandwiches at the Ace Cafe BUSINESS QUARTER |SPRING 13
EQUIPMENT standards of products made in the past, but for its original design, of lasting influence.” It is, of course, also an appreciation of cool one the brands understand. In 2009, Triumph, ahead of the curve, became one of the first classic bike brands to launch not a technical biking clothing range, but a t-shirt line. In part to celebrate the 50th birthday of the Bonneville, the shirts featured old ads for the motorcycle, as well as, inevitably, images of Triumph fan Steve McQueen. Triumph has collaborated with designer Paul Smith on a small collection too. That motorcycles with the styling of yesteryear but the tech of today might well find a ready market - akin to car industry’s embracing the past over recent years too, Ford with its relaunched Mustang, VW with the Beetle, BMW with the Mini, and so on - is an idea catching on beyond classic British makers too. David Angel is owner of the UK’s F2 Motorcycles, Europe’s biggest dealer of Ural motorcycles, a name unfamiliar next to brand giants the likes of Harley-Davidson, Ducati and Kawasaki, but arguably more characterful all the same. For one, the Ural comes not from the great biking nations of the US, Italy or even Japan, but from Russia and, as Angel points out, “there are still some people who would equate any bike out of Russia with poor quality, though that’s certainly not the case now”. For two, Ural motorbikes are the
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essence of pared-down, uncomplicated, elemental mechanics - its original manufacture was launched in 1942 in order to mobilise Soviet troops against German invasion, so a hardy machine capable of dealing with rough roads (which turned out to be a reverse engineered and beefed-up BMW) was essential. “And that has always been part of the Ural’s appeal, because it has always offered huge potential for tinkering and personal improvements,” Angel adds. And last, but certainly not least, the classic Ural bike - at around GBP12,000 - comes, wait for it, with a side-car. Angel, naturally, can sing the praises of the side-car: enough space for luggage, or camping equipment, or, if you must, a friend, but without sacrificing the flexibility and freedoms of the motorcycle to explore the back routes and backwoods. “It’s not about speed. It’s about having a great time getting there,” as he puts it. Indeed, it seems a loss that the side-car has largely disappeared from
the roads over the past half-century - a product, Angel explains, of the advent of the small, economical and affordable car during the early 1960s, which meant that, “unless you were passionate about side-cars, there
Not that riding a motorbike with side-car should be dismissed as beginner’s stuff. Rather, Angel assures that riding three wheels requires training and practice to counteract the asymmetric balance of weight. “You have to
Ural has always offered huge potential for tinkering and personal improvements...It’s not about speed. It’s about having a great time getting there wasn’t any reason to own one,” he says. “In fact, there still isn’t any reason to own one.” Apart, of course, from its history - Ural takes its name, for example, from the Russian mountain range near to which production was moved later during WW2 to avoid Luftwaffe bombing - its sheer retro charm - which ensures a dedicated owners’ club - and its stylishness among identikit macho super-bikes.
read the road ahead all the time,” he says, noting how the thrill of riding an old-style motorbike might well be most strongly felt less in the style stakes as the fact that these machines will not, unlike their more modern counterparts, ride themselves. “That’s what makes riding a Ural so exciting against other motorbikes. It’s a much more involving ride. You need to be in control.” n
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“Put most menswear on a table and it all somehow looks the same now,” says the flamboyant Angelo Galasso. “You have to open the jacket to see the label to know what you’re looking at. What I want to offer are clothes of distinction.” Blurring into the great morass of grey conservatism is one thing Galasso has never done. His may not be a name to rival fellow Italians Armani or Versace, but he has had his influence on menswear: Galasso is the car salesman turned investment banker, turned shirtmaker, who launched the Interno 8 brand in 1990, bringing with it not just the Gianni Agnelli-inspired watchcuff - a section cut out of the cuff to better accommodate a statement, and typically extra large watch - but a trend for towering collars, open necks and loud prints that defined the style of the premier league and, in many instances, still does that of TV presenters. In short, he rescued the humble shirt from wardrobe obscurity, creating a 100 shop international business in the process. “But,” Galasso adds of his decision to sell up, “I like to work with passion and just didn’t feel it anymore. “We’d built a new reputation for the shirt but I spent a lot of time on the shop-floor and could see that the the market was going towards something more haute couture.” And he isn’t kidding. Haute couture may sound like an exaggeration, but Galasso’s >>
BUSINESS QUARTER | SPRING 13
A STEP ABOVE THE NORM Driven by a passion for mens fashion with distinction, Angelo Galasso continues to challenge consumers to dare to be different, as Josh Sims reports
FASHION latest incarnation - as the front man of an eponymous brand, via launching Billionaire Couture with Flavio Briatore, with whom he has been through a protracted and “stressful” legal battle - comes close. It is not for the wallflower: lavish print and colour, crossed with a high Italian luxe creates the kind of menswear one does not forget, for good or ill. Everything, from fat ties to pointy shoes, is available in a more bespoke version should you wish to turn the volume right up. Shoes, in fact, are a good example, available as they are in crocodile and ostrich, but also stingray, python, goat, mink... Even jeans may weigh in at £5,000 a pair, thanks to gold rivets. “It’s about selling the right fashion for the right customer,” says Galasso, now 53, who admits his determination to stand out probably comes from his growing up in a big family - even as a teenager he was using local factories to alter his clothes, having brightly-coloured piping put on, for example, or jackets made of blanket material. “And there is a customer who wants something different, something bolder. Too many brands just use womenswear to sell menswear - they just put out a few suits as an afterthought. There isn’t really anything special out there for men.” Indeed, for those more comfortable with muted sobriety, Angelo Galasso’s clothes may prove a leap too far. After all, as he notes, most shoppers - and for that matter, most shop buyers - are “scared of buying anything too different because they’re used to buying the same thing over and over”. But for those bored of the same old, same old, his style is a breath of Neapolitan or Florentine air. For those who can look beyond the extravagant detailing - a jacket lined with tie silk, for example - it is, Galasso argues, actually all rather traditional: Savile Row on a psychedelic high. “Savile Row,” says Galasso, “because that’s where the most elegant men are. There, and in Naples.” Galasso concedes that, despite the rapid launch of womenswear and even childrenswear spin-offs, his new brand is niche - more a case of ‘build it and they will come’ than answering a clear need. But he hopes >>
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FASHION to, as he puts it, “catch the right moment” in a changing male sartorial psyche. “Whenever we open a new shop it’s a risk of course. But so far they have always shown that there’s a customer for what we make,” he argues. “I think so many men out there feel that designers rarely think about what they want, or understand that now the male personality is different, and that men want to look different, to dress more expressively - perhaps a little more flashily, but certainly differently, and to get complimented for doing so. You can’t overdo the flashiness, of course - you do it with one piece, not head to toe. Some people will still think it’s too much, and that’s fine.” Fine perhaps because Galasso - who thinks he could build his young business up into another 100 store chain - has something of a track record of going his own way and finding enough men to follow him. It was while he was working in finance and unable to find clothes he liked for himself that, despite a lack of training, he started to make his own. Soon colleagues were placing orders, enough that he decided to make it full time - with the novelty of having 14 women on motorbikes bombing around Rome taking client measurements at work. Soon after that, the unlikely combo of Jay-Z, Tony Blair and the King of Jordan started buying too. Similarly, his own label has attracted the custom of Paul McCartney, David Beckham, Michael Caine... “When Coca-Cola was launched its growth was all about word-of-mouth,” says Galasso, by way of analogy. “People just asked for it, until an agent turned up, started pushing it, and then suddenly everyone wanted it.” Similarly, now, he reckons, we style-conscious men are all undergoing what might be called - turning to another foodstuff - the mozzarella transformation. Think back, Galasso asks, just a decade, to a time when mozzarella could be bought almost anywhere in the UK. Now think of the kind of burrata mozzarella that can be bought today and which comes, coincidentally, from the southern Italian region where Galasso was born. It’s in another class. It’s the kind of difference men are seeing in their clothing choices. Just don’t drip the olive oil on any of it. n
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So many men out there feel that designers rarely think about what they want, or understand that now the male personality is different
Livingston business eyes UK expansion. A West Lothian refrigeration and air conditioning business has opened new 13,500 sq. ft. premises as it looks to expand across the UK, with support from Bank of Scotland.
The new warehouse facilities, in Livingston’s Bruceﬁeld Industrial Park, mark a major milestone for Cooling Solutions UK. Launched in 2005 by local businessmen Jason Mortimer and David Gillespie, the company, which provides sales, service and installation of refrigeration and air conditioning systems, employs over 20 people and is reporting annual growth of around 25 per cent as a result of new contract wins. To assist with expansion, Bank of Scotland has provided a new term loan. The company’s plans, which include creating 10 new jobs by the end of the year, are also being supported by a Scottish Enterprise Grant. David, Cooling Solutions UK’s Finance Director, said: “Now that we’ve moved into our excellent new warehouse facilities, we have the capacity to grow and take on even more contracts with a wider reach. The new facilities will allow us to build on last year’s sales growth in England, which was very successful.
(L-R) Steven Martin, David Gillespie and Jason Mortimer (Cooling Solutions UK) with Paul McWilliams (Bank of Scotland)
“We went through a fairly exhaustive process with a number of banks, looking for the right package to ﬁt into our plans. Ultimately, we needed a bank which understood what the business was about. Bank of Scotland delivered on its promises offering us exactly the support and guidance that we needed.” Paul McWilliams, Relationship Director for Bank of Scotland, added: “Cooling Solutions UK is a great example of a Scottish SME that is expanding, despite the economic downturn, and it’s all down to hard work and a focus on providing its customers with the highest level of service. “Bank of Scotland has a dedicated team of Relationship Managers with expertise in the manufacturing and engineering sectors, which means we can provide support and assistance to help SMEs like Cooling Solutions UK to ﬂourish and get the country’s economy moving again.” For further information on how lending from Bank of Scotland can support your business growth plans, please call 0131 522 2965 or visit us at lendingforscotland.com
Cooling Solutions UK
Funding for property expansion
“Bank of Scotland has a dedicated team of Relationship Managers with expertise in the manufacturing and engineering sectors, which means we can provide support and assistance to help SMEs like Cooling Solutions UK to ﬂourish and get the country’s economy moving again.” Paul McWilliams, Relationship Director, Bank of Scotland
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PAR FOR THE COURSE BUSINESS QUARTER | SPRING 13
Paul Atkinson is one of Scotland’s most successful serial angel investors. Yet he still managed to keep a strong foothold in the world of IT recruitment, where his knowledge and expertise made him the money to be an angel. He talks to Kenny Kemp They say money doesn’t grow on trees. Paul Atkinson, one of Scotland’s most successful business figures, might disagree. The quietlyspoken investor and entrepreneur reckons that hundreds of hectares of Scotland covered by fast-growing sitka spruce are an investment with strong roots. Atkinson is the co-founder and partner of Par Equity, one of Scotland’s 19 angel investment syndicates, but he has also been one of the outstanding figures in Scotland’s recruitment industry over the past 20 years, especially in the field of IT. He remains chairman of Head Resourcing, a business he set up in 2001, which was listed in the Sunday Times Fast Track companies, but spends the majority of his time at Par Equity, which operates from a converted mews house in Edinburgh’s New Town. So when he says he is interested in forests, you get the impression this is a serious opportunity. Par Equity has put £15m into a portfolio of twenty businesses, with a number of managed funds and partnerships where individual private investors each take a stake. For example, there are 87 investors in Par Equity’s Technology fund, and 18 in the forestry partnership. Timing hasn’t always been perfect because the £4.5m Par Innovation Fund was launched in July 2009 days before Lehman Brothers collapsed. Recently the Par Syndicate EIS Fund was launched to invest alongside the angel syndicate. “We have invested in 20 companies and the spread of interest is related to the knowledge base and skills of our investor group. We only invest in propositions we understand and where we understand the market and that understanding is often arrived at by working closely with our investor base," he says. The portfolio includes companies, such as
Ciqual, a mobile and smartphone software business offering customer insight; Covec, which is a technical textile and clothing business, in the south-east of England; miiCard, an online identification company; and PathXL, which is a digital pathology business in Northern Ireland, where Par Equity was lead investor in the company’s recent £1m funding round. “PathXL is taking pathology digital. At a basic level, digitizing slides allows much more efficient processing of tissues or other materials requiring visual study, whether for education, research or medical purposes. The hot space at the moment is enabling automated screening for cancer. A pathology job involves staring down a microscope for long periods and finding cancer cells is like finding a grain of sand on a football pitch. It’s a very skilled job but microscopy has in some ways remained rooted in centuries-old technology. Digital slides, when combined with a computer system with the right algorithms, can help the pathologist to make surer and quicker judgments” says Atkinson. "Our investment horizon is not just Scotland, although it is restricted at the moment to the UK, which is partly because tax breaks from EIS (Enterprise Investment Scheme) are restricted to UK companies and partly because, as handson investors, we want our companies to be within relatively easy reach" he says. Ask Scotland’s angel community what is the hardest part of being a discretionary investor – and they will tell you that getting a successful exit is a rare feat. So Par Equity is celebrating the sale of Simple Audio, its first exit. The Glasgow company has been bought by US-based hardware company Corsair in a multi-million deal. The company, created by Peter Murphy with a team of world-class
sound engineers in Glasgow, has developed what they call ‘the ultimate high definition digital sound system.” Andy Paul, president and chief executive, of Corsair, which makes audio technology for the computer gaming industry, said he has followed Simple Audio as a potential investment opportunity since 2010 and was impressed by their vision of digital music in the post-iPod era. He liked the Roomplayer system which simplifies the playing of digital music throughout the home. For Par Equity, and 42 of its 200 investors, the government-owned Scottish Co-Investment Fund, part of the Scottish Investment Bank, this is a major win. “I can’t tell you what it went for but it was a multi-million pound return and the investors are very happy. We first started investing in Simple Audio in 2010, so we’ve only been in for two and a half years. In real terms we probably weren’t expecting an exit at this point, as in recent years five years and over has been typical for an angel investment. We’re also seeing potential acquirer interest elsewhere in the portfolio, so may have other exits before long! “One of the most important things I have learned about angel investment is that you need to develop a portfolio, so that you are spreading the risk and one bad egg doesn’t ruin your whole investment. Deciding who the winners are going to be is very difficult. By 2008, when we started Par Equity, I had invested in 20 companies. Several had gone bust but I’ve got a better than 35% internal rate of return across the board.” The creation of Par Equity allowed Paul and Robert Higginson, who is an IT industry veteran and an angel investor on his own account, to pool their portfolios and add a permanent management process to look after >>
BUSINESS QUARTER |SPRING 13
ENTREPRENEUR the companies more effectively. They quickly found they needed the capability to raise external money from other individual investors interested. This required FSA clearance to cover the regulation of dealing with discretionary investors. Andrew Castell, a corporate financier and former insurance industry executive, joined a few months later to add the corporate finance and investment banking sheen on the team. The team was then joined by Paul Munn who brought a wide range of strategic, operational and transactional experience from his corporate background. Par Equity is regulated to run its managed funds. Angel investors are classed as professional clients and are expert enough to be self-advised about the risks involved. As part of Par’s investor sign-up process, angels need to prove they have the required skills and experience and also that they have at least 500,000 of investible assets which doesn’t include the house or pension fund. Like Scotland’s other angel groups, Par Equity has quite a number of companies making losses, a few walking wounded, and a few great success stories. “That’s the way it works, what you are trying to do is minimise the losses,” he says. “You get better at spotting problems earlier and you get the right people in. The technology companies we invest in are high risk – and high potential.” Par Equity’s model is to deploy management expertise and resources into the portfolio companies as well as capital. Business failures can be dressed up in various ways, says Paul, but generally it all comes down to the management and the decision-making. “You can very easily come too late to market, or too early to market. Mobiqa was early to market, which is why it took so long to realise its potential. “Fortunately, they had investors who were able to keep funding the business. It wasn’t huge amounts of money but a steady flow. Happily, our patience was rewarded.” One of the hardest decisions for angel investors is when to call time on a failing business. “We’ve pulled the plug on two Par Equity companies: one because the product wasn’t working as stated on the
BUSINESS QUARTER | SPRING 13
Physics is a good grounding for lots of things. It means understanding the basic principles of life and from these basic principles you can usually take it forward tin, and the failure of the team to deal with the engineering challenges. It was the right decision.” Par Equity is also running a property fund that is buying distressed buy-to-let assets, mostly in the central belt, from the banks. Par Equity has steered clear of bioscience and drug discovery which requires tens of millions for testing, but is interested in med-tech appliances, hardware and software devices for the healthcare industry. “We started buying forestry assets because our investors were interested in an asset-based, relatively low risk investment with tax planning benefits. On the risk profile, it is at the opposite end of the spectrum from providing venture capital to technology companies.” The Par Forestry Partnership, which is the first vehicle for investing in woodlands, has bought a forest at Stonehill, near Crawfordjohn, off the M74; also 450 acres of new land for planting 265,000 spruce trees Ravenscroft in Ayrshire; and another site at Longrigg, near Armadale, in West Lothian. “It’s a good investment because there are not enough trees being planted in Britain and the Forestry Commission doesn’t have the money to do all that needs to be done. Without investment, it isn’t going to happen. Scotland is a net exporter of wood pulp for paper manufacturing because the trees here are more suitable for pulping as they grow quickly in our lovely Scottish climate.” Paul Atkinson studied physics at university – not the normal subject for a recruitment boffin. “I suppose I have a bit of an odd mix of career," he says with a smile. “Physics is a good grounding for lots of things. It means understanding the basic principles of life. And from these basic principles you can usually take it forward." He was an engineer for a year working for Phillips but his first sales job was an applications specialist with Millipore
Corporation, now Merck Millipore employing 10,000 across 67 countries. Although he was selling technical and scientific capital equipment, he had to understand the applications before he could present a proposal or a costing. “It was a sales role but a heavily technological sales role,” he says. Later on, when Paul was advising on hiring sales people, this understanding of employing properly technically-conversant people was paramount. "Hiring sales people is probably the most difficult thing a company has to do. Sales people are normally the best at selling themselves, so it is quite easy to mislead or miscommunicate experience and ability. “It’s also hard to get the balance between someone who really understand the science, the market and the customer and have the drive and energy to take it forward. People with both sets of skills are difficult to find," he explains. Was he driven by the monthly sales bonus at the end of the month? "Well, money is important but it is not as important as success. Anyone who says that money is not important is probably kidding themselves or trying to sling a line. To me, success is more important. If you deliver to people what you’ve promised to deliver, then you get paid for it. “The money follows the success, rather than the other way around. Repeat business is always far easier than finding new customers. "It is a lot less costly hanging onto your existing customers then finding new ones. You are always looking for repeat business or long term business. It is difficult to build a business when you are signing one-off contracts." He had joined Millipore Corporation in South Manchester but his territory was West of England and Scotland. His customers included Motorola, National >>
BUSINESS QUARTER |SPRING 13
ENTREPRENEUR Semiconductors, Hughes Corporation in Silicon Glen right down to Plessey Semiconductors, in Plymouth on the south coast of Devon. His next role took him into selling hardware and software into the IT industry and he was working with Data Translations which sold data acquisition, image processing and an early kind of Ethernet and mini-networking equipment for the emerging personal computer. His territory was the North of England and Scotland - but the 'North' started in Birmingham! “This was when I had the first PC at home. It was a green screen, IBM Personal Computer XT, that ran from a floppy discs. My first job in IT was in the era of the floppy disc,” he says. “I was selling memory' cards for image processing for Digital’s PDP-11s. 4k of memory at the time was a hell of a lot of memory.” Digital sold the PDP-11 through the 1970s and 1980s and it became a standard minicomputer for general computing, scientific, educational and businesses. Its capabilities made it useful for banking and factory automation. For a club-level squash-player with regular matches, there was an arduous amount of travel and after nearly three years he felt jaded doing 60,000 miles a year in is company car. “I started looking round where there wasn't so much travel. And by accident at one of the computer exhibitions at Olympia I bumped into the new sales directors of Computer People,” he recalls. Computer People was then fairly small but is now part of the Adecco Group, one of the top three recruitment businesses in the world. “I joined Computer People in Manchester but one of my first clients was the Bank of Scotland at Sighthill in Edinburgh. I was hiring analysts, programmers and project managers, for them. It made sense when Computer People opened their Edinburgh office that they offered me the job as the first permanent recruiter in Edinburgh.” He moved up to Scotland in 1987 along with his friend Martin Mutch, who runs Rocela, the IT consulting business [Martin is also the guest car reviewer in this issue: See page 60]. Paul also sits on the board of Rocela. The modernising banks were looking for IT staff with cobol software programming knowledge for their IBM mainframes, the famous MVS
BUSINESS QUARTER | SPRING 13
– Multiple Virtual storage system, and MVS/ XA. The adage that no-one ever got fired for buying IBM was at its height. “The industry was very different to what it is now. There was a big shortage of these kinds of skills in the UK – and in Scotland. Yet the same kind of skills are still required today. There is still a lot of IBM Cobol applications around requiring support and expertise.” Within a year of arriving in Scotland, Atkinson was running major advertising campaigns recruiting IT people for Bank of Scotland, Standard Life, Royal Bank of Scotland, British Telecom in Glasgow, and General Accident in Perth. “These were big advertising campaigns at the time, requiring full page, full colour adverts in the broadsheet newspapers and in the computing magazines. I guess I got the reputation for being the guy who could fix big recruitment problems. If you wanted to hire 50 cobol programmers, I was the guy to go to. A lot of the recruitment then was advertising driven with full-page colour adverts, branded by the client.” Today all of this is on the internet. “I was headhunted to set up the Scottish office for business called Trident Computer Services
in 1990. I ran this as the regional director working with clients such as General Accident and IBM. This business was ultimately bought out by a business which these days is known as Parity” While he gained valuable experience running a bigger show, he didn’t enjoy the new company’s approach. This was when his first entrepreneurial leap was made with two others, placing IT guys in posts in the Middle East, in Abu Dhabi, Dubai, Bahrain and Qatar, but it all went badly awry. This bumpy learning experience was never lost on Paul Atkinson. “We got the clients but we didn’t translate it into business fast enough and we quickly ran out of money. I was the only one who put hard physical cash into the business and without doing enough homework. I should have asked for a lot more information on my partners and also engaged with decent lawyers to check things and draw up the right investment agreements. I was young and business-naïve at the time and didn’t ask the right questions. If I had, I wouldn’t have invested.” These were the early scars that have helped make Par Equity “Today you are spending thousands on legal fees to ensure that the diligence is being done properly. It is very different now.” In 1994, he became a headhunter for the Royal Bank of Scotland, working with a number of contacts, including Patrick Philips, who is now a Par Equity investor. He hired over 100 people in that year alone. But the dotcom boom was gathering pace with IBM looking over its shoulder at Microsoft and the other challengers and hired Paul Atkinson as a consultant looking at how to change the method of recruiting. IBM was moving headlong into providing sevices rather than simply shifting computer hardware and software. They needed some help with the best approach to bringing the right kind of talent onto client projects. As part of this project Paul also spent some time investigating the approach used in IBM US. “IBM had a CV processing centre in Charlotte, North Carolina, that was processing 500,000 CVs a year. They had a huge scanner scanning them, then a bank of humans checking for all the mistakes in the scanning. They called it ‘verification’ but it was soul-destroying job.
Thank goodness, no-one does that these days.” Atkinson’s American sojourn made him think about creating his own IT recruitment business. He was introduced to Gordon Adam by Jan McCartney, who became Martin Mutch’s wife. Jan had joined Career Care, which is now Bright Purple Resources, while Gordon Adam was running the IT business for Search Recruitment. Paul and Gordon hit it off and set up Direct Resources together, as 50-50 partners, in Carmondean Centre in Livingston. Perhaps not the most illustrious address but the growing clamour for good IT professionals meant they soon moved into bustling Queen Street in Edinburgh and then 21 Charlotte Square in Edinburgh which is next door to the building that is now being lavishly refurbished as the headquarters of Scoban. At last, Paul was working for his own satisfaction primarily with financial companies clients, such as Direct Line, the red telephone insurance and banking phenomenon that upset the staid car and home insurance market, helping to fuel growth. “We were the biggest IT recruitment advertiser by some way. In the mid nineties we were spending over £1m a year on recruitment in the newspapers. We ran recruitment roadshows in lots of different cities across the UK and Ireland and even went to Australia to bring Oracle developers back for ScottishPower in Cathcart, Glasgow.” The nearest and strongest competitor was Melville Craig, but they were more of a generalist, according to Paul. Then, in 1999, Direct Resources was approached by Mastech Systems Corporation, listed on NASDAQ. They offered to buy the business for £3.4m, which was nine times earnings. This was a nice deal, but more was to come very quickly. With recruitment starting to migrate online, a spin-out business called Recruitment Scotland. com had been set up in 1997 by four partners, including Gordon and Paul. It was also going extremely well and was sold a year in 2000 after the Mastech deal for another £9m, this time to TMP Worldwide, the owner of Monster.com, and also purchaser of Melville Craig. Paul Atkinson was now a rather rich young man, as were other recruiting experts in Scotland. It appeared, for a time, it was the
We were the biggest IT recruitment advertiser by some way. In the mid nineties we were spending over £1m a year on recruitment in the newspapers
fastest way to make a pile of money. It was then that Paul began his involvement in angel investment. His first investment was in Learning IT, run by Duncan McLeod. This was a fast-growing IT training business and looked a certain winner. It was sold to the Baxi Partnership, an employee-owned business, for a good return, although classroom IT training later faded in popularity as more was delivered online. The second investment was in Mobile Active, which ran out of money, but led directly to the formation of Mobiqa, set up by Ronnie Forbes in 2002. Paul was sailing off the West Coast of Scotland with Malcolm McPherson, the leading Scottish lawyer with HBJ Gateley, when he was introduced to Gordon Galloway, well-kent as one of Scotland’s leading and most successful angel investors. As a result, Gordon, Paul, Mike Rutterford and Eric Young, both of Archangels, all backed Mobiqa. Mobiqa developed barcodes for mobile phones, and with angel syndicate backing was also able to attract match-funding from the Scottish Co-Investment Fund. When Mobiqa was sold in 2010 to NCR it provided a sizeable return for the Co-investment fund. “The Scottish Co-Investment Fund has been a big boon for the whole angel industry. I talk
to the Scottish Investment Bank people several times a month, we’re always speaking about deals and what is going on. It’s an excellent thing for Scotland. It increases the firepower for the industry and encourages people to invest more.” There have been some tough lessons along the way. “I was a bit naïve with some of my early investments. With others, I made a substantial investment in an engineering business that went badly wrong. We all lost quite a lot of money.” This was all part of the development of Scotland’s angel community. In 2001, Paul still hadn’t finished with the recruitment business bug and set up another business, Head Resourcing, which had a turnover of £46m in 2011 and works with many of Scotland’s leading Financial Services companies. This business started life as Active Executive, then a rebranding exercise came up with Corarus, which is Latin for ‘keeping rare company’. As a down-to-earth Yorkshireman, raised on a farm, at Finningley, near Doncaster, he decided he wanted a name that was simple and described what the business did. He found it in his sports bag. He was using a Head racquet for squash. So, bingo, the business became Head Resourcing. In 2004, he was able to buy back his old business, Direct Resources, which was then supplying a lot of IT contractors to banks and other financial institutions. “It’s been a very good area for us to be in the last three years. When the world of full-time recruitment fell apart, there are still a lot of IT projects around. The increase in regulation has meant a boom in demand for IT expertise.” Atkinson stepped down as Head’s chief executive in 2008 with Gordon Adam taking over, but he remains the chairman. Head’s IT recruitment business, which at its peak had 500 working on contracts, is now run by Huw Martin, Lee Murray and Callum Lyle, while an international medical division, set up two years ago to place doctors, consultants and healthcare workers in posts overseas, is run by Anna Payne. “I think that many in the NHS are finding their working conditions changing for the worse and the thought of working abroad in locations such as Australia and New Zealand looks increasingly attractive,”he says. n
BUSINESS QUARTER |SPRING 13
BIT OF A CHAT
>> Alistair opts for egg hunt over party
with Jock Yuler >> Brian knows best Interesting to catch-up with entrepreneur Brian Williamson, a former member of the Entrepreneurial Exchange board and founder of Jumpstart, for an agreeable spot of lunch in the Mulroy in William Street, a gem of a dining place to cheer you up on a dreich Edinburgh day. Brian is a wonderful enthusiast with deep knowledge of what research and development actually mean. It seems you can even get R&D tax credits if you come up with a new type of jam, a unique pork pie filling or a computer game using new techniques. If you think you’ve got a smart idea, call Brian and his experts. His business is booming and he’s taking on more people, so he knows his bacon.
>> Taxing times indeed Speaking of tax matters, there seems to be no end of organisations that Scotland will have to invent if we vote for Independence next year. At a pre-budget briefing with the Johnston Carmichael experts in Melville Street another one emerged that few will have thought about. The Patent Box, is a highly specialist division of the HM Revenue and Customs, where companies can apply for lower rates of corporation tax for patented inventions and certain other innovations. The team of six is based in Maidstone in Kent and covers the whole of the UK. Looks like we will need 0.6 of a person to cover Scotland.
BUSINESS QUARTER | SPRING 13
Hearty congratulations to the Archangel Informal Investment Syndicate, who enjoyed a 20th anniversary bash at the splendid Dovecot Studios in Edinburgh’s Infirmary Street, in February, when Ray Perman spoke about the importance of the business angels to Scotland’s community. But where was softly-spoken board member Alistair Salvesen, founder of DawnFresh Seafoods? After all, it was his vision and deep pockets that helped turn the former Edinburgh corporation swimming baths into a wonderful home for the world-class weavers? He was out in South Georgia collecting exotic birds eggs: a fitting place for a Salvesen, a Scottish company that once used South Leith, the settlement on South Atlantic island, for their Antarctic whaling expedition, which ended in the 1960s. Many of the old corrugated iron shacks and whaling gear is still left for the birds to nest in.
>> Farewell to a true pioneer Very sad to see the passing of Gordon Baxter, one of Scotland’s truly greatest and pioneering entrepreneurs. He told me he wanted to find a cure for cancer – and ended up selling great soup and building a wonderful brand: still a worthwhile human achievement. It was a real travesty that he never received a knighthood for all the work that he did for Scotland, especially breaking into the overseas markets of America and Canada. He revealed to me he blotted his copybook in the 1960s when a senior Scottish civil servant asked him to take up a role to champion Scottish tourism. At the time
he was massively busy running his company from Fochabers, and politely declined. I’m sure his spirit will always be there, enjoying quiet summer mornings on the Spey.
>> Brady’s all booked up Laurence Brady’s latest book, Seven Pillars of Philanthropy, which he wrote about in the last BQ, is now available to download in e-book on Amazon for a £2.90. All proceeds go to the Sir Thomas Lipton Foundation, set up by Laurence. The book includes an in-depth interview with the colourful hedge fund manager Arpad Busson. Well worth a download, I’d say. Printed copies can be ordered too from the Sir Thomas Lipton Foundation website.
>> AND A PARTING SHOT
on language...“ I can do a Newcastle, Scouser and Stornoway accent with just six letters: Y.I - R.A. - I.I.” on numbers...“I’m rubbish at maths. Earlier on I tried to divide seven tubes of superglue by two, but got totally stuck.” - from Donnie Maroot’s Awful Joke Book, compiled by Donald MacLeod, head of actuarial at Scottish Friendly, for various charities. www.donniemaroot.co.uk £10.
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ISSUE TWENTY: WINTER 2013
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APRIL 4 Power Lunch Club, with guest speaker, Ian Craig, Managing Director of Lothian Buses PLC. HSBC Bank, Hobart House, Hanover Street, Edinburgh, EH2 1EL. 12-2PM. Contact: email@example.com 4 Tartan Day Scotland Conference – Making the Most of the Visitor Economy, with Dundee & Angus Chamber of Commerce, in partnership with Dundee City Council and VisitScotland. Speakers include John Swinney, Cabinet Secretary. 9am-4.30pm. Carnoustie Golf Hotel. 10 Networking over a wee dram, Edinburgh Chamber of Commerce. The Scotch Whisky Experience, 5.30-7.30pm. Members only. 16 Scottish Development International: Smart Exporter market awareness breakfast seminar, Marcliffe Hotel in Aberdeen, for companies interested opportunities in Australia’s oil & gas sector. For information and to register visit www.sdi.co.uk/events 16 Business Breakfast on cyber crime threats, ranked one of top four national risks in UK. Glasgow Chamber of Commerce and Glasgow City Council, Grill on the Corner, Bothwell Street, 8-10am. To book email: firstname.lastname@example.org 16 Scotpreneur, a social enterprise that aims to unlock Scotland’s enterprise potential through its 1001 Enterprising Scots campaign. Host - Iain Scott, Scotpreneur; Desmond Bernie, Icecream Architecture; Colin Munro, MiCity Apps; Jeremy Rucker, Smart City Dressing. 2pm - 4.30pm. Stirling CityLab, 14 King Street, Stirling, FK8 1AY. 18 18 A Celebration of Great World Brands, with Glasgow Chamber of Commerce. John Gemmell of Heineken UK discusses history and status of brands. Brekfast: 8-10am. Venue, tbc. 18 Power Lunch Club, with guest speaker Dr Olga Kozlova, Director of The Converge Challenge. HSBC Bank. First Floor 141 Bothwell Street Glasgow G2 7EQS. 12-2PM. Contact: email@example.com 18-19 Future Scotland: Future growth: Inspiration and Creation For A Nation. SCDI’s Forum of 300 influencers at RBS HQ Gogarburn, Edinburgh. Full agenda on ww.scdiforum.co.uk 24 Scottish Chamber Networking at the Races, Perth Racecourse, Perth, PH2 6BB. Races start at 12pm. Book online at www.dundeeandanguschamber.co.uk or 01738 551597. 25 April EDAS, Economic Development Association Scotland annual meeting. 1-3pm. Deputy First Minister & Cabinet Secretary for Infrastructure, Capital Investment and Cities, Nicola Sturgeon, joins for discussion in Edinburgh. Venue: tbc. Networking lunch included. Members: Free. www.edas.org.uk 25 Behind the Scenes... at Linn Products, with Glasgow Chamber of Commerce. 9-11am. Linn Products, Glasgow Road, Waterfoot, Glasgow, East Renfrew, G76 0EQ. Members and Non members welcome. 26 Glasgow Talks … Whisky, with Glasgow Chamber of Commerce. Gavin Hewitt, chair of the Scottish Whisky Association, at IET Glasgow, Teacher Building, 14 St Enoch Square, Glasgow, G1 4DB. 8-11am.
MAY 2 Power Lunch Club, with guest speaker Mandy Haeburn-Little, Executive Director for the Scottish Business Crime Centre. HSBC Bank, Hobart House, Hanover Street, Edinburgh, EH2 1EL. 12-2PM. Contact: firstname.lastname@example.org 8 SCDI Influencers’ Dinner Series with Scottish Cities Alliance, Inverness. Contact Claire Miller at SCDI. 8-9 Business Matters in Renfrewshire: Paisley Town Hall. Free to attend exhibition and seminars. Business conference on 8th May includes Nicola Sturgeon, Deputy First Minister, Douglas Alexander, Shadow Foreign Secretary, Walter Boettcher of Colliers International and Sit Tom Hunter. Register with www.renfrewshirechamber.com
BUSINESS QUARTER | SPRING 13
9 The Green Investment Bank Conference – Delivering a growing green economy, RBS Conference Centre, Gogarburn, Edinburgh. Keynote Speakers: Vince Cable MP, Secretary of State for Business, Innovation and Skills, HM Government and Michael Moore MP, Secretary of State for Scotland, HM Government. 9 RICS Scotland Awards, Balmoral Hotel, Edinburgh, Catriona Shearer, television presenter, hosts the chartered surveying awards for top projects in Scotland. 12:15 for 1pm. www.rics.org/uk/training-events/ Book on 0207 695 1600. 13 SCDI Influencers’ Dinner Series with Scottish Cities Alliance, Glasgow. Contact Claire Miller at SCDI. 14 Scottish Planning Policy and the New National Framework 3: Economic Growth and Recovery in a Low Carbon, Sustainable Scotland Speaker: Derek Mackay MSP, Minister for Local Government and Planning, Scottish Government. Edinburgh, venue to be confirmed. Find out more from www.mackayhannah.com. 15 Behind the Scenes… at Royal Mail, with Glasgow Chamber of Commerce. 8-10am. Breakfast and tour. Venue: Royal Mail Glasgow Distribution Centre, Turner Street Spingburn, Glasgow, G21 1AA. The largest in Scotland employing 1,000 people. 16 Power Lunch Club, with guest speaker Chris van der Kuyl, CEO of Brightsolid. HSBC Bank. First Floor 141 Bothwell Street Glasgow G2 7EQS. 12-2PM. Contact: email@example.com 17 Glasgow Talks… with Keith Cochrane, chief executive of Weir Group, with Glasgow Chamber of Commerce. 8-10am. 200 St Vincent Street, Glasgow, G2 5SG. 22 Glasgow Talks... with Martin Wolf and Anton Muscatelli, with Glasgow Chamber of Commerce. 8-10am, Radisson Blu, 301 Argyle Street, Glasgow, G2 8DL. 22 Doing Business with Historic Scotland and Visit Scotland, with Scottish Borders Chamber of Commerce. 9.45 – 12. Repeated 1.30 – 4.00pm. Shepherd’s Mill, Whinfield Road, Selkirk. www.borderchamber.com 22-23 All-Energy 2013, Aberdeen, the UK’s largest renewable energy event in Europe. For details: all-energy.co.uk 22 All-Energy Business Breakfast, Aberdeen Chamber of Commerce. 6.45-8.45, Aberdeen Exhibition and Conference Centre. Speakers: Iain Todd, Aberdeen Renewable Energy Group, Keith Anderson, Chief Corporate Officer, ScottishPower, Neil Kermode, Managing Director, The European Marine Energy Centre (EMEC); Adrian Loening, Chair, Electric Vehicle Association Scotland. 30 The Scotland Food & Drink Excellence Awards 2013, Edinburgh’s Assembly Rooms on 30 May. Awards deadline for categories is 29 March.
JUNE 6 Power Lunch Club, with guest speaker, John Swinney MSP, Cabinet Secretary for Finance, Employment and Sustainable Growth. HSBC Bank, Hobart House, Hanover Street, Edinburgh, EH2 1EL. 12-2PM. Contact: firstname.lastname@example.org 12 Glasgow Talks... with Brian Souter, chairman of Stagecoach Group, with Glasgow Chamber of Commerce. 12-2.30 at Blythswood Square Hotel, 11 Blythswood Square, Glasgow, G2 4AD. 19 SCDI Influencers’ Dinner Series with Scottish Cities Alliance, Perth. Contact Claire Miller at SCDI.
The diary is updated daily online at www.bq-magazine.co.uk Please check with contacts beforehand that arrangements have not changed. Events organisers are also asked to notify us at the above email address of any changes or cancellations as soon as they are known.
SUPPORTING CREATIVE BUSINESS THROUGHOUT SCOTLAND
Cultural Enterprise Office is Scotland’s specialist business support and development service for the creative industries, with a particular focus on micro-businesses. With 10 years’ experience our specialist services help clients integrate their creative aims with good business practice to build flourishing enterprises. To find out more, visit www.culturalenterpriseoffice.co.uk Pictured: Tom Marsh and Trent Jennings of Blue Marmalade, one of Scotland’s leading creative micro-businesses and a Cultural Enterprise Office client. Photo: Kirsten Murray, The Gate Worldwide Scotland
Supported by Creative Scotland, the national agency for the arts, screen and creative industries, supporting individuals and organisations throughout the country. For more information, visit www.creativescotland.com