Aehgw34business insider july august 2015 by amauteruasa

Crunch time for oil industry ‘Mindset change is needed’

Business needs to step up New CBI boss speaks out

The reinvention of Aberdeen City’s blueprint for the future

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WHY THE SKY IS THE LIMIT FOR LOGAN Vol 32 No.6

July/August 2015

£4.00

Air travel search engine boss on a global mission

PLUS WILL PENSION REFORMS DAMAGE THE ECONOMY IN THE LONG TERM?

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Agenda

BUSINESSES MUST PLAY THEIR PART TO DEVELOP YOUNG WORKFORCE Alasdair Northrop’s regular view on business

ast month I discussed the issue of youth unemployment and said it was clear a serious review of how and what we teach our children to make them fully equipped for the modern world was needed. After it was published Sir Ian Wood, who chaired the Commission for Developing Scotland’s Young Workforce last year, wrote to me pointing out a significant outcome from his report was agreement by the Scottish Government to a significant change in the curriculum in terms of far more parity between academic and vocational education in

It is essential that business owners and executives get in touch with their local schools to build links, particularly those who employ people with vocational skills” schools, with the solution being youngsters spending a fair bit of time on vocational subjects at college. Naturally I feel suitably admonished, although I still stand by my argument that we need to look at how we can encourage more students to study languages to enable us to grow our exports. Sir Ian recently gave a speech in which he said that when the commission spoke to employers a lot of vocational youngsters at interview seem to have no sense of being on a journey and have no clear aims and objectives. However, he also pointed out the commission found only about 30 per cent of employers offer work experience opportunities. He said the commission members met a significant number of employer groups right across the country and there were a lot of complaints about youngsters not being ready for work. It then asked these same employers how many youngsters they’d taken into work experience and how often colleagues had participated in schools and

education activities. The answer was not often. “Perhaps our most important message for employers from the report is that they have a huge amount to gain in enhancing youngsters’ employability, workplace experience and knowledge of career options,” he said. “People are the main part of all our businesses and what we’re talking about here is the process of preparing people for coming to work for us. “If employers collectively spend a little bit of time focusing on today’s and tomorrow’s employees, we’d have a huge positive boost to our education system.” It is essential that business owners and executives do their bit and get in touch with their local schools to build links, particularly those who employ people with vocational skills. Investors in People is already doing a great job in this sphere and they are keen to contact more businesses, hence them sponsoring our round table on youth unemployment last month. The Scottish oil and gas industry and its home in north-east Scotland come under the microscope in this month’s Insider with an overview of the sector, a round table on the subject and a regional review. It is clear the industry faces challenges with the continuing low price of oil and gas. But according to many people I spoke to the industry already knew its costs were too high and cutbacks were inevitable even before the price plunge. There is also talk of earlier than planned decommissioning in marginal areas of the North Sea and it will be interesting to see whether we see more companies making announcements in the wake of Fairfield Energy revealing plans to decommission its Dunlin Alpha platform. Of course, decommissioning is an inevitable part of the process and, with over 600 installations in the North Sea, it will provide employment for years to come. But if Scotland is to make the most of its resources it has the challenging task of keeping costs down balanced by ensuring its workforce is kept as safe as possible in a pretty difficult environment. ■

contact: editor@insider.co.uk

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July/August 2015 INSIDER 3

ISSUE: JULY/AUGUST 2015

contents COMMENT 3

Agenda: Alasdair Northrop on developing Scotland’s

37 43

Ian Ritchie on: Big data In My View: Hugh Aitken of CBI Scotland on the

young vocational workforce

entrepreneurism throughout the business community

REPORTS 14 19

The Big Profile: Mark Logan of Skyscanner Oil & gas: With the oil price and optimism low, the sector must adjust and recalibrate 25 Analysis 27 Insider’s exclusive tables

Round table – Oil & gas: Our panel of experts discuss what’s next for the country’s offshore industry

Intellectual property and intangible assets: The importance of protecting ideas, products and processes cannot be overestimated

Regional report – Aberdeen city and shire: The Granite City and surrounding area is getting geared up for growth

Architecture: With Scotland world famous for its architecture, we look at how the profession is performing

Business interiors: A well-designed workplace can help to increase productivity and staff retention

Health & safety: Small incidents can be a sign of

8 23

systemic failures within an organisation

International: Helpful advice for those aiming to crack China

Entertainment: Shows, restaurants and activities to fill your free time

4 INSIDER July/August 2015

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REGULARS 8 10

Briefing: Letters, news, reviews Scotland’s quoted companies: Regular update on listed Scotland

Burning question: Is there a danger that pension reform will damage the economy in the long term?

IT Matters – email: Email remains the

Property news: Insider’s regular round-up of

number one communications tool for business activity in the Scottish property market

Wealth management: Frank Shennan on investing in the embattled Eurozone

82 83 84 86

Appointments: Who’s on the move? Personnel files: HR and employment news Slainte!: Events, people, pictures Ten minute interview: David Welch of

19 57

Beatson Cancer Charity

EVENTS 2015 74

Young Enterprise Scotland Awards: The country’s best school-based businesses and entrepreneurs announced

76 78

Scottish Accountancy & Finance Awards: Review of this year’s event Deals & Dealmakers Awards: Nick Hewer of The Apprentice and Countdown is guest speaker

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July/August 2015 INSIDER 5

COMMENT

Fund enhancements create more flexibility to support Scotland’s ambitious businesses

SCOTTISH BUSINESS INSIDER One Central Quay Glasgow G3 8DA Switchboard: 07795 364732 Fax: 0141 309 3545 ISSN: 0952-1488 Publisher Allan Rennie Tel: 0141 309 3413

Kerry Sharp

Kerry Sharp Head of The Scottish Investment Bank

Over 250 ambitious companies in the Scottish Investment Bank (SIB) portfolio are creating a track record of success here in Scotland, giving a clear indication that the partnership model is working. Since 2003 we have seen transformation in Scotland’s risk capital market, with angel syndicates increasing from 2 to over 20. During this time SIB has invested alongside a variety of venture capitalists, corporate venturers, family offices and individuals from around the world. While the established principles of the co-investment model still play a vital role, it is also important to adapt to the changes we have seen. So we’re making things simpler to benefit both the investors we work with and the companies we invest in, by streamlining our four co-investment funds into just two; the Scottish Co investment Fund (SCF) which is widening its parameters and the Scottish Venture Fund (SVF) which is an

amalgamation of the previous Scottish Seed Fund, the Scottish Venture Fund and the Scottish Portfolio Fund. Investment now starts at £10,000 for both funds and up to £1.5million via the SCF and up to £2million via the SVF, in deal sizes from £20,000 up to £10m. Both funds continue to co-invest alongside private sector investors who source and bring the investment proposition to us. In the SCF, SIB defers its investment decision to the accredited investment partners. With SVF, the investment decisions are made by SIB following diligence on the deal alongside the private sector investor, with no requirement to establish accredited partnership status. This increased flexibility allows us to invest alongside a wider group of investors and across larger deal parameters opening up exciting opportunities for more investors, and importantly, more Scottish businesses from start up to expansion globally.

Advertising Senior advertising sales executive Eleanor Hunt Tel: 07788 168 576 E-mail: ehunt@insider.co.uk

Director – events & business Michele Aaen Tel 07769 935583 E-mail: maaen@insider.co.uk

Field sales executive Steve Georgiou Tel: 07414 091602 E-mail: s.georgiou@insider.co.uk

Editorial Editor Alasdair Northrop Tel: 0141 309 3339/07789 397550 E-mail: editor@insider.co.uk Sub-editor Tracy Taylor Tel: 01506 529558 E-mail: ttaylor@insider.co.uk

Events Senior events delivery executive Lisa Lynas Tel: 0141 309 3095 E-mail: l.lynas@insider.co.uk Events delivery executive Carrie McGill Tel: 0141 309 3423 E-mail: c.mcgill@insider.co.uk Events delivery executive Amanda Peebles Tel: 0141 309 1402 E-mail: a.peebles@insider.co.uk

Insider research Andrea Moulding Tel: 0141 309 3289 E-mail: a.moulding@insider.co.uk

Events sales manager David Hill Tel: 0141 309 4913 E-mail: david.hill@trinitymirror.com

Design & production Ewan Lauder, Yvonne Sondh, Graeme Henderson, Bill Sullivan Tel: 0141 309 3673

Key account manager – events Aileen Turnbull Tel: 0141 309 4909 E-mail: aileen.turnbull@ trinitymirror.com

Total Circulation 11,518 Average net circulation: 7,978 (July 1, 2013–June 30, 2014) Plus other bulk distribution: 3000 copies to selected UK first class rail lounges. 540 copies to selected UK airport lounges. 3200 downloads of the Insider App product (Android and Apple stores). Subscriptions 1yr: £32 2yr: £64 3yr: £92 Overseas yr: £58 (Airmail Europe) £65 (Airmail USA) Enquiries on subscriptions/back issues Tel: 0141 309 3693 E-mail: customerservices@insider.co.uk Enquiries on Top500 and SME300 databases Tel: 07795 364732 E-mail: sme300@insider.co.uk/top500@insider.co.uk © Insider Publications Ltd. No reproduction is permitted in whole or part without the express consent of Insider Publications Ltd

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Tel or invoice my company

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NEWS: BRIEFING

Letter to the editor

Culture change needed to tackle youth unemployment Dear Sir In the June edition of Business Insider you featured the subject of youth unemployment and education. I’m not sure whether you’ve given significant coverage in the past to the commission which I chaired, Developing Scotland’s Young Workforce, which was very germane to your editorial and to the round table discussion. Today in Scotland, we have almost 50,000 young people not in work and not in education waking up each morning wondering if their community has any need for them. The youth unemployment rate, at 18.8 per cent, is almost three times the allage unemployment rate of 6.4 per cent and double that of the best-performing European countries. Of the slightly more than 50 per cent of school leavers that don’t go to university, very few have relevant vocational qualifications from school. When we were working on the report the schools we visited always wanted to start with their academic achievements, measured by number of Higher passes and university entrants. Very few of the ‘other 50 per cent’ leave school with any qualifications and that’s consistent with comments from employers that a lot of vocational youngsters at interview seem to have no sense of being on a journey and no clear aims and objectives – they’re drifting. The truth is a very large number of our schools struggle to cater for vocational education. They don’t have the focus, the facilities nor the teaching resources. These are symptoms of a clear culture across Scotland and indeed across the UK – parents, teachers and the general public believe success means academic success. Fortunately, the Scottish Government’s new Senior Benchmarking Tool will measure a much wider range of school performance and attainment. The culture change is not just about providing a pathway and destination for the poorly catered for 50 per cent of our

8 INSIDER May 2015

youngsters, it’s also entirely consistent with the fast changing skills, technology and knowledge requirements of the modern world and thus highly relevant to Scotland’s long-term economic success and wellbeing. Right now, a lot of youngsters with degrees aren’t finding work, but youngsters with good general vocational training have a strong chance of being further developed and getting a really good job. There’s still far too little focus on employability skills in school – for example, equipping and preparing the young person for the world of work. There’s an urgent need to provide much more adequate work experience. Currently, the guidelines/obligatory work experience is generally one week in S4, but the sad fact is only about one in three youngsters get the benefit even of this. Only about 30 per cent of employers offer work experience opportunities. Indeed, only about a third of employers have any contact with education of any kind when, in reality, they have a huge amount to gain from improving the quality, knowledge and experience of young people in education – their future lifeblood. The commission’s recommendations are based on building bridges between schools, colleges, business and industry. A key outcome of the report is the opportunity for our vocational youngsters to attend college one or two days a week and pursue meaningful employment related qualification such as National Certificates, City & Guilds or do the first year of a three to four-year apprenticeship whilst still at school. We have a number of recommendations to try and ensure business and industry make a much greater contribution to the education process. A key proposal was setting up regional Invest In Youth groups across Scotland – to be led by the private sector and to comprise local employers, education, local authority and other community interests.

The other key task of the Invest In Youth regional groups will be to ensure employers in their region employ a lot more young people. They will work to increase the number of apprenticeships, with particular focus on SMEs taking on more youngsters, and our recommendations included some significant financial incentives for SMEs to do just that. There has been very gratifying progress since the report was published. First of all, at both the interim and final level, it got very strong support from all parties in the Scottish Parliament and was also warmly endorsed by virtually all sectors across Scotland’s education community. The teaching unions welcomed it, as did the business community, parents and young people. It has also hopefully seriously opened the debate on the importance of a culture change towards better parity of esteem between academic and vocational education and the need for more focus on modern technical skills.

Sir Ian Wood Chair, Commission for Developing Scotland’s Young Workforce

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NEWS: BRIEFING News and quotes compiled by Alasdair Northrop

AAB HQ construction under way

IN BRIEF

Work has started on accountancy firm Anderson Anderson Brown’s (AAB) new office complex, located on the Prime Four business park at Kingswells, west of Aberdeen. The 45,000 sq ft facility is being built to AAB’s specifications by park developer Drum Property Group. It is expected to be operational in June 2016 and will have capacity for over 400 staff. Managing partner Graeme Allan (pictured) says the firm, which was founded in 1990, has experienced substantial growth over the past few years and staff headcount has increased accordingly. “As a result, our current office accommodation at 9 Queens Road has become stretched to the point where we now require temporary offices at the back of the building to support our now 250 employees. And with another 20 trainees joining us in August we require a new HQ with enough room to support this accelerated growth,” he says. “We spent several months last year carefully considering the best place in Aberdeen for the firm’s next move, and the partners and I were, and still are, hugely excited to have entered into an agreement with Drum Property Group for a new office building at the Prime Four business park in Kingswells, Aberdeen.” Senior partner Mike Brown says the firm has been in great

New development programme

locations in Aberdeen, starting at the well-known Carden Church before moving to 9 Queens Road, one of the best of offices in the West End. “We have enjoyed our time here but the extraordinary growth we have achieved over the years continues apace and this will be marked as we enter our 25th year in business as we move to the new, landmark office headquarters,” he says. Hazel Jamieson, who was the first ever employee at AAB, and her team colleague Hollie, who, at 18, is the youngest AAB staff member, performed the groundbreaking at the site. Graeme Bone, group managing director of Drum Property Group, developer of Prime Four, says: “It is always a defining moment to see construction start, and we are delighted that the AAB building is under way. “AAB will be joining a vibrant and active community at Prime Four – with KingsWellies nursery now operational, following the hotel, health club, Starbucks, and other social and sporting activity

now being delivered at the Fourcourt plaza at the heart of park. There is a real buzz around Prime Four.” Anderson Anderson & Brown, OneSubsea and Statoil will join Premier Oil, Nexen, Apache and Transocean at Prime Four over the coming year. “Despite the challenging market conditions currently facing the energy sector we continue to experience strong interest in Prime Four and will announce further new tenants in the future,” says Bone. “Prime Four will continue to play a major role in generating hugely significant economic activity for the north-east of Scotland for many years to come.” The new, L-shaped, environmentally-friendly building features a stunning glass atrium as its centrepiece, and will be located close to Prime Four’s social and amenity plaza, the Fourcourt. ■ An artist’s impression of AAB’s new headquarters

Satellite company heads to Skypark

QUOTE UNQUOTE

Book review

“More needs to be done to improve competition so that the retail market works better for consumers.”

Title:The Art of Doing Twice the Work in Half the Time Writer: Jeff Sutherland Publisher: Random House Price: £9.99

Neil Clitheroe, chief executive of retail and generation at ScottishPower, following a Competition and Markets Authority report which found tariffs offered by the big six energy suppliers were around five per cent higher than they should be between 2009 and 2013.

A new ﬁve-year international development programme aimed at start-up and scaleup entrepreneurs has been launched. Three public agencies have teamed up with leading entrepreneurial teachers from the Massachusetts Institute of Technology (MIT) and Harvard Business School to run the Scotland CAN DO SCALE programme, the ﬁrst of its kind in Scotland. Experienced Scottish entrepreneurs and worldleading academics will also be invited to deliver parts of the programme. Highlands and Islands Enterprise, which has a successful, longstanding relationship with MIT, is leading the public sector involvement in SCALE, working closely with the Scottish Funding Council and Scottish Enterprise. An inaugural SCALE Entrepreneurship Summer Workshop took place last month. From January 2016 it will expand into a 12-month programme including multimedia learning, face-toface pitch training sessions, team formation activities and challenge events. ■

After leaving the air force, former US fighter pilot Jeff Sutherland became a doctor of biometrics and became interested in organisations. One of his many varied tasks included rescuing a floundering, expensive FBI IT project to enable it to bring together intelligence to try and stop terrorists in their tracks.

He used a management system he co-created called Scrum, which enabled teams to be far more efficient and focus on the things that needed to be done rather than getting bogged down by complexity. His book is a fascinating read with lots of examples of how Scrum works. Every manager should read it.

US-headquartered satellitepowered data company Spire has announced plans to open a European headquarters at Skypark, Glasgow. The company will create over 50 new jobs to support the establishment of a nanosatelilte design, development, manufacturing and data management facility in Scotland. The move demonstrates Scotland’s growing importance to the space industry worldwide and is being supported by £1.9m in grant funding from the Scottish Government and Scottish Enterprise. ■

Rating out of five: ) ) ) ) ) www.insider.co.uk

July/August 2015 INSIDER 9

SHARES: SCOTLAND’S QUOTED COMPANIES information provided by

Biggest riser Scotgold puts in a dazzling performance Alasdair Northrop’s regular digest of Scottish stock performance

HE FORTUNES of Scotland’s listed companies were virtually split down the middle with 24 suffering share price falls, 22 getting gains and five unchanged. Some 12 main market listed companies saw decreases in share prices while eight had increases and two were unchanged, while on AIM 14 were up, 12 down and three unchanged. Scotgold Resources was the biggest riser, with its shares shooting up by 81.82 per cent after chief executive Richard Gray bought more than two million shares in the gold and silver mining company for nearly £16,900. AIM-listed Scotgold also announced an estimated increase in reserves of gold and silver in its mine at Tyndrum in Argyll. It believes there are 198,000 ounces of gold and 851,000 ounces of silver in the mine. Gray took over as chief executive last year. He had most recently served as head of mining & expansion at Avocet Mining and has extensive international experience in both underground and open pit mine operations. Scotgold’s exploration team has been enhanced with the recruitment of a project geologist, and a structural prospectivity exercise has been started The company plans to employ some 55 people at the mine when it eventually opens and it is estimating enough gold and silver to keep it in work for eight years. The second highest riser was Frontier IP Group, which specialises in assisting universities, research institutions and companies in the commercialisation and exploitation of their intellectual property. Its shares have risen by 31.58 per cent after successfully raising £854,000 through the placing of 4.07 million shares at a price of 21p, which it will use for working capital to develop and grow its portfolio. A group of executives, including chief executive Neil Crabb, subscribed for shares. Broadcaster STV Group was the third biggest riser with a 21.92 per cent increase in its share price. 10 INSIDER July/August 2015

Biggest risers NAME

% CHANGE 1 MTH

SCOTGOLD RESOURCES FRONTIER IP GROUP STV GROUP HAVELOCK EUROPA OMEGA DIAGNOSTICS GROUP JOHN MENZIES CASTLE STREET INVESTMENTS SIGMA CAPITAL GROUP FIRSTGROUP PRODUCE INVESTMENTS

81.82 31.58 21.92 21.43 21.05 19.38 13.79 13.64 12.39 11.62

Biggest fallers NAME

% CHANGE 1 MTH

SEAENERGY MINOAN GROUP LANSDOWNE OIL & GAS BRAVEHEART INVESTMENT GROUP INDIGOVISION GROUP AGGREKO EXOVA GROUP WEIR GROUP, THE BOWLEVEN ELAND OIL & GAS

42.86 13.40 12.50 10.00 9.23 8.31 7.81 6.90 6.45 6.25

Scotgold Resources was the biggest riser, with its shares shooting up by 81.82 per cent after chief executive Richard Gray bought more than two million shares in the gold and silver mining company for nearly £16,900

The company told a recent AGM the business had continued to perform well and delivered a strong start to 2015. National advertising revenues were up nine per cent in Q1 and the Scottish advertising revenue market was down by 13 per cent due to campaign phasing. Digital revenues continued to perform strongly, up 33 per cent in Q1. The company has recently been awarded three licences to deliver locally focused television services in Aberdeen, Ayr and Dundee. The biggest faller was oil and gas company SeaEnergy, whose shares plunged by 42.86 per cent in spite of announcing it expected its results for 2015 to be broadly comparable to its performance in 2014, despite the serious downturn in oil and gas activity levels. For the six months ended June 30, 2015, SeaEnergy expected to report turnover of c. £2.7m (2014: £3.1m) and a loss from continuing operations. “As in previous years R2S activity levels are expected to be higher in the second half and the company expects to achieve operating performance before any non-recurring items broadly comparable with 2014,” it said. The company has been taking active measures to address the downturn in oil and gas activity levels including a decision to exit marine activities. “The company is in the early stages of discussions regarding the future of the ship management operation, which, if successful, would see that team and associated overheads transfer to a new owner,” it said. In addition, a programme of central overhead reduction is expected to result in central costs of c. £1.75m in 2015, and further reductions to £1.5m in 2016. As part of that, CEO John AlderseyWilliams has agreed to waive 25 per cent of his salary and pension entitlement and the other directors have agreed to waive 20 per cent of their salaries and pension entitlement or nonexecutive fees for the period from June 1 to December 31, 2015, which will result in a cost saving of £75,500. ■ www.insider.co.uk

SHARES: SCOTLAND’S QUOTED COMPANIES

Main Market LIST DATE ABERDEEN ASSET MANAGEMENT PLC AG BARR PLC AGGREKO PLC ALLIANCE TRUST PLC BRITISH POLYTHENE INDUSTRIES PLC CAIRN ENERGY PLC DEVRO PLC ENERGY ASSETS GROUP PLC EXOVA GROUP PLC FIRSTGROUP PLC J SMART & CO CONTRACTORS PLC JOHN MENZIES PLC JOHN WOOD GROUP PLC JOHNSTON PRESS PLC MACFARLANE GROUP PLC ROYAL BANK OF SCOTLAND GROUP PLC, THE SSE PLC STAGECOACH GROUP PLC STANDARD LIFE PLC STV GROUP PLC SUPERGLASS HOLDINGS PLC WEIR GROUP PLC, THE

28/03/1991 2/04/1970 29/09/1997 17/07/1947 2/04/1965 22/12/1988 30/06/1993 22/03/2012 11/04/2014 16/06/1995 25/03/1973 3/10/1962 5/06/2002 29/04/1988 20/06/1973 10/07/1968 18/06/1991 19/10/1998 10/07/2006 25/03/1973 12/07/2007 25/01/1946

MARKET* VALUE (£m) SECTOR 5563.49 707.62 3711.30 2730.19 182.60 993.62 500.80 150.58 451.25 1488.09 48.73 309.51 2480.50 164.11 53.27 23712.19 15780.15 2391.21 9377.41 177.63 5.64 3729.90

129.00 352.00 1535.00 304.00 201.00 1053.00 198.00 N.A N.A 366.00 90.00 384.00 403.00 738.00 19.00 414.00 1119.00 221.00 213.00 72.00 110.00 1037.00

SHARE PRICES 1 YEAR AGO LAST MONTH THIS MONTH % CHANGE THIS415.00 MONTH % CHANGE 454.00 434.00 4.38 636.00 630.00 608.00 3.49 1650.00 1601.00 1468.00 8.31 446.00 504.00 496.00 1.59 654.00 698.00 673.00 3.58 200.00 184.00 178.00 3.26 249.00 293.00 299.00 2.05 351.50 507.50 510.50 0.59 246.00 195.25 180.00 7.81 127.00 113.00 127.00 12.39 100.00 99.00 106.00 7.07 670.00 418.00 499.00 19.38 807.00 697.00 674.00 3.30 193.00 154.00 153.00 0.65 39.00 43.00 43.00 0.00 328.00 352.00 369.00 4.83 1567.00 1661.00 1612.00 2.95 376.00 399.00 420.00 5.26 457.00 481.00 476.00 1.04 358.00 365.00 445.00 21.92 41.00 4.00 4.00 0.00 2619.00 1898.00 1767.00 6.90

5 YEARS AGO

SHARE PRICES 1 YEAR AGO LAST MONTH THIS MONTH % CHANGE

5 YEARS AGO

ASSET MANAGERS SOFT DRINKS BUSINESS SUPPORT SERVICES INVESTMENT TRUSTS CONTAINERS & PACKAGING EXPLORATION & PRODUCTION FOOD PRODUCTS BUSINESS SUPPORT SERVICES BUSINESS SUPPORT SERVICES TRAVEL & TOURISM REAL ESTATE HOLDINGS, DEVELOPMENTS BUSINESS SUPPORT SERVICES OIL EQUIPMENT & SERVICES PUBLISHING BUSINESS SUPPORT SERVICES BANKS ELECTRICITY TRAVEL & TOURISM LIFE INSURANCE BROADCAST & ENTERTAINMENT CONSTRUCTION & MATERIALS INDUSTRIAL MACHINERY

Alternative Investment Market LIST DATE BOWLEVEN PLC BRAVEHEART INVESTMENT GROUP PLC CALEDONIAN TRUST PLC CASTLE STREET INVESTMENTS CELTIC PLC CRANEWARE PLC ELAND OIL & GAS PLC FAROE PETROLEUM PLC FRONTIER IP GROUP PLC GOALS SOCCER CENTRES PLC HAVELOCK EUROPA PLC INDIGOVISION GROUP PLC INTERBULK GROUP PLC IOMART GROUP PLC JOHN SWAN & SONS PLC LANSDOWNE OIL & GAS PLC MINOAN GROUP PLC MURGITROYD GROUP PLC OMEGA DIAGNOSTICS GROUP PLC PARKMEAD GROUP PLC, THE PINNACLE TECHNOLOGY GROUP PLC PLEXUS HOLDINGS PLC PRODUCE INVESTMENTS PLC SCOTGOLD RESOURCES LTD SEAENERGY PLC SIGMA CAPITAL GROUP PLC SMART METERING SYSTEMS PLC SPACEANDPEOPLE PLC XCITE ENERGY LTD

7/12/2004 30/03/2007 29/09/1995 30/06/2010 22/12/2005 13/09/2007 3/09/2012 27/06/2003 31/01/2011 7/12/2004 1/10/1987 2/08/2000 31/12/2004 19/04/2000 24/09/2001 21/04/2006 18/10/2011 30/11/2001 18/03/2004 13/03/2000 1/12/2004 9/12/2005 18/10/2010 15/01/2008 14/11/1996 27/04/2000 8/07/2011 31/12/2004 13/11/2007

MARKET* VALUE (£m) SECTOR 91.63 2.50 16.50 22.43 70.55 176.42 105.86 238.58 6.52 126.87 6.55 17.94 21.64 262.34 7.04 9.48 16.30 49.54 24.60 113.77 4.07 195.28 38.44 6.82 6.48 46.06 306.29 15.23 99.95

EXPLORATION AND PRODUCTION EQUITY INVESTMENT INSTRUMENTS REAL ESTATE HOLDINGS, DEVELOPMENTS INDIVIDUAL AND FAMILY SOCIAL SERVICES RECREATIONAL SERVICES SOFTWARE OIL & GAS PRODUCERS EXPLORATION AND PRODUCTION SUPPORT SERVICES RECREATIONAL SERVICES FURNISHINGS COMPUTER SERVICES TRANSPORTATION SERVICES INTERNET SPECIALIST CONSUMER SERVICES EXPLORATION & PRODUCTION TRAVEL & LEISURE BUSINESS SUPPORT SERVICES MEDICAL SUPPLIES EXPLORATION & PRODUCTION COMPUTER SERVICES OIL EQUIPMENT & SERVICES FOOD PRODUCERS PRECIOUS METALS & MINERALS EXPLORATION AND PRODUCTION ASSET MANAGERS BUSINESS SUPPORT SERVICES MEDIA AGENCIES OIL & GAS PRODUCERS

129.00 23.00 N.A. N.A. 45.00 403.00 N.A. 118.00 N.A. 148.00 9.00 408.00 6.00 56.00 N.A. 4.00 N.A. 260.00 21.00 16.00 N.A. 62.00 N.A. 5.00 18.00 13.00 N.A. 55.00 63.00

39.00 11.00 115.00 42.00 75.00 543.00 111.00 124.00 38.00 223.00 24.00 470.00 5.00 223.00 663.00 15.00 14.38 608.00 19.00 229.00 7.00 289.00 255.00 0.00 38.00 67.00 378.50 68.00 67.00

31.00 10.00 140.00 29.00 77.00 665.00 80.00 82.00 19.00 213.00 14.00 260.00 4.00 236.00 1200.00 8.00 12.13 510.00 19.00 122.00 7.00 224.00 142.00 0.55 21.00 66.00 350.25 59.00 32.00

29.00 9.00 140.00 33.00 76.00 658.00 75.00 88.00 25.00 217.00 17.00 236.00 4.00 245.00 1150.00 7.00 10.50 563.00 23.00 115.00 7.00 221.00 158.50 1.00 12.00 75.00 358.50 63.00 33.00

6.45 10.00 0.00 13.79 1.30 1.05 6.25 7.32 31.58 1.88 21.43 9.23 0.00 3.81 4.17 12.50 13.40 10.39 21.05 5.74 0.00 1.34 11.62 81.82 42.86 13.64 2.36 6.78 3.13

*Figures to close of market Thursday, June 25, 2015. . www.insider.co.uk

July/August 2015 INSIDER 11

BURNING QUESTION

The burning question Q

Is there a danger that pension reform will damage the economy in the long term?

MAYBE

NO Simon Wigglesworth chartered ﬁnancial planner, Cornerstone Asset Management

MAYBE

Richard Slater partner and head of pension and investment practice, Scotland, Deloitte

Michael Angus chartered ﬁnancial planner, wealth advisory team, Grant Thornton

It has barely been two months since pension freedoms were introduced and already 60,000 people have withdrawn more than £1bn, which is now feeding into the economy and no doubt swelling HMRC coﬀers. The Chancellor thinks this is a sign pension reform has been a success. However, longer term spending and pension fund migration will eventually wane as individuals realise the true consequence of stripping out their pensions and revert to relying on the state for support.

Pensions are simply deferred pay. In no other area is there prescription on how individuals dispose of their earnings. Increasing the basic state pension alongside these changes should provide a safety net for those who opt for the ‘consume now’ route. There will be examples of frivolous spending, but that occurs throughout life. Flexibility should be embraced and may help enrich people’s lives at ages when they can enjoy the fruits of their labours.

The reforms will doubtless lead to more people cashing in some or all of their pensions and it is crucial they seek advice or guidance beforehand. While this will lead to increased spending and an acceleration of the tax take on the pension funds, there could be issues to the economy in the future should these individuals run out of money and be solely reliant on the state for their retirement.

MAYBE

YES

Zane Hunter partner, French Duncan

Broadly, most future pension fund withdrawals will be taxable; corollaries being tax paid earlier and newly liberated funds likely being spent - Governmental win-win scenarios. Measures will be needed to restrict profligate pension liberators double-dipping the benefit system whilst decreasing pension tax revenues, post liberation, need to be factored into economic planning. Pension freedoms translate tax revenue into sensitive headline income tax rates; perhaps future chancellors will need to demonstrate increased fleetness of foot.

Caroline McIntyre director, pensions team Burness Paull

Using pension reform to generate increased tax revenues – such as pension freedoms or potentially restricting existing tax saving options such as salary sacrifice – can have short term benefits for the economy. The additional cost and management time for employers arising from pension reform are ongoing and are often a significant burden for employers. These issues are particularly acute in a sector such as oil & gas, which is already under significant pressure.

David Henderson adviser, Personal Money Management

People clever enough to save for a pension are rarely daft enough to squander it. The requirement to take advice is crucial though, as with freedom came complexity. There are now many more potential pitfalls and options when accessing pension money. Additionally, the government are putting in place safeguards to ensure those who do squander pension money are barred from additional beneﬁts.

If you would like to contribute to the Burning Question or suggest topics please e-mail editor@insider.co.uk. 12 INSIDER July/August 2015

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THE BIG PROFILE: MARK LOGAN, SKYSCANNER

14 INSIDER July/August 2015

THE BIG PROFILE: MARK LOGAN, SKYSCANNER

AIR TRAVEL SEARCH ENGINE COMPANY FLYING HIGH by ALASDAIR NORTHROP

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are there is quite extraordinary. You never come back from that experience the way you go out to it.” Last year he was named Director of the Year by the Institute of Directors Scotland, who commended in particular his ‘transformational leadership’. Logan has come a long way from his roots in Clydebank where. His father left school at 14 and worked in the shipyards but eventually put himself through university. “He had an absolute love of all things

You learn how to get things done with no people and no money. That experience is usually as valuable in a large business as it is in a small one engineering so he gave me a real interest in this subject from a very early age,” says Logan. “We were wiring circuits and doing all sorts of interesting stuff from childhood. “My mother, who was a primary school teacher, had a great love of literature so she instilled that in me too. The fusion of both, I think, equips you well for a job like this. Communication and engineering is what we are all about here.” Logan went to Glasgow University and studied electronic systems and micro processor engineering and while doing that he discovered he was really interested in software so he graduated with a focus on that. He then joined BT and worked

in its Glasgow research and development centre for three years. Then one day he saw a poorly typeset advert for a very small start-up company in Cumbernauld. “I was very attracted to the idea of joining this very early-stage start-up so we could build the really important stuff that would make a difference in the world,” he says. “We went on a really exciting journey.” Atlantech was founded when broadband to the home was still fantasy but the technology was starting to emerge. “We were one of the early-stage companies experimenting with that technology,” he says. “We were finding out how telecoms companies and network providers could manage a vast network of equipment. Prior to Atlantech if you bought software to manage your network or fault find it could manage maybe a couple of thousand devices and now we were talking about networks of tens of millions. “As far as I am aware Atlantech’s technology is still being used in certain applications. Clearly that was some time ago now and it has probably been updated a few times.” Logan stayed with Cisco as software development director for a couple of years then left to start Sumerian with Sibbald. Sumerian was a big data company before big data was a term. “We would go to customers like HBOS and RBS and other companies of that scale and securely take all their infrastructure data indicating how their systems were running and we would model those into end-to-end views of their major business applications.

▲

Mark Logan photos: Tony Nicoletti

HIEF operating officer of Skyscanner Mark Logan loves helping to grow companies. As a young man he swapped the comparative security of working with telecom giant BT to join fledgling software firm Atlantech which then had just five people. By the time it was sold to Cisco for £180m in 2000 it had 180 people. He then joined Atlantech CEO David Sibbald at start-up Sumerian, which grew to 90 employees before he departed. Now at Edinburgh-headquartered travel search engine company Skyscanner, employee numbers have soared from less than 100 to over 600 in offices around the world since he joined. Last year Skyscanner’s revenues rocketed 42 per cent to £93m, with a 77 per cent increase in mobile visitors globally. Its website, which is available in 30 languages, has over 35 million unique visitors and over 35 million people have downloaded its app. Skyscanner is undoubtedly one of the most successful business stories in Scotland in recent years. Logan and chief executive Gareth Williams are members of the new generation of executives heavily influenced by Silicon Valley and their management style reflects that. “I spent many months working in the Silicon Valley and that was when I started to strengthen my understanding of what it takes to be successful in a software organisation,” says Logan. “The level of ambition when you

July/August 2015 INSIDER 15

THE BIG PROFILE: MARK LOGAN, SKYSCANNER ▲

“We could then look at if there was an avian flu outbreak would the telecom capacity support people working at home. Or if there is a mortgage promotion is this application going to be able to handle the extra phone calls coming to the call centre? So we could do very powerful ‘what if ’ modelling and we did a lot of clever, interesting things, and the business continues today doing similar types of things.” Logan later rejoined Cisco in a different capacity and was very happy there but got to know Williams through the Scottish tech community. “We got talking and I was telling Gareth about some of the things I wish I had done differently. You make a lot of mistakes every time through a business and you learn more each time. I believe you can learn an awful lot from other people’s mistakes and Gareth was very much of that mind too. “Gareth has always had a very strong vision for Skyscanner. When it was a 30-person company he would tell people this could be a business worth £1bn and people probably thought he was dreaming. But that vision has driven the business to where we are now. We are careful never to be complacent about it though. “One thing Gareth is very good at, amongst many things, is knowing when he needs to bring in extra help to get through the next growth point. Businesses grow well then suddenly hit an inflection point where you are still putting the effort – people and money – into the business but the corresponding growth stops for a while. Those are points where the business has reached a certain size and what used to work for you now works against you. You have to get through those inflection points by changing almost everything, and that’s hard to accept and execute on. “So, in anticipation of those points, Gareth started to build a team that could help him take the business to the next stage of growth and that is when he asked me to join and help him do that.” Logan joined Skyscanner three years ago, essentially acting as second-in-command and focusing on running the business on a day-to-day basis while Williams predominantly focused on technical strategy and vision for the business.

16 INSIDER July/August 2015

We fund pretty much everything we do, including acquisitions and other activities, from our proﬁtability, which isn’t to say we wouldn’t consider in the future taking further investment Williams, who was born in Norwich, studied mathematics and computing at Manchester University after working as an IT trainer and spending ten years as an independent IT contractor. He was a very good skier and was regularly travelling to Europe to ski but found it very cumbersome to search different budget airlines and find flights that worked. Logan says Williams created a spreadsheet that could essentially talk to these airline websites and provide him in one page the options for flights. “It was a very simple thing at that stage but very powerful,” says Logan. “With a couple of close friends who were software people they started to develop the idea of this as a potential product. But there was no way to monetise that at the time. There was nobody in the market saying we need this. But Gareth had the vision that if he found it useful eventually other people would too.” Williams moved to Scotland in 2004 to marry his fiancé, Lisa, and set up the business in Edinburgh. He

and co-founders Barry Smith and Bonamy Grimes created a website and slowly started to gain users. The first month’s revenue was £45. “They funded the business by Gareth coding day and night and the other two founders working as contractors and sharing salaries between the three of them, which was quite a novel, effective way of doing it. You can imagine the belief required to make those sacrifices. “The term ‘metasearch’, which didn’t exist then, is now well established – it is a search engine that searches other search sites. Because it was a very early mover in what is a very complex search problem, Skyscanner was able to establish itself in people’s consciousness and largely grew through word of mouth because people liked the product.” Today Smith is a board member and Grimes is no longer involved in the business, though he remains a major shareholder. Logan says Skyscanner is almost unique among internet tech companies as most that have reached its scale and revenues have been funded to the tune of £100m or more. “Skyscanner has only had £2.5m of investment and that came in 2007 thanks to Scottish Equity Partners, who are still on our board and still are our major investor.” In 2013 US-based Sequoia Capital bought an undisclosed stake in Skyscanner which valued the Edinburgh business at £500m. Sequoia is a very famous Silicon Valley investor which put money into Google, Linkedin, Facebook, Cisco and Apple when they were very small companies. But Logan says Skyscanner did not want money from Sequoia – it wanted access to its expertise, experience and connections. “We didn’t take money into the business as part of that investment. Sequoia purchased existing shares from existing shareholders,” says Logan. Sequoia chairman Michael Moritz is now on Skyscanner’s board. “We fund pretty much everything we do, including acquisitions and other activities, from our profitability, which isn’t to say we wouldn’t consider in the future taking further investment,” says Logan. “But we generally run the business with an ethos that if you fund what you do from what www.insider.co.uk

THE BIG PROFILE: MARK LOGAN, SKYSCANNER you earn you tend to make better choices.” “There is a technology decision that was made a long time ago which has been very powerful. Again, this is an example of the vision Gareth brings. We built our own data platform and we directly connect to approximately 1000 partners. It’s harder to do but it’s better. The difference you almost always see with competitors is they don’t do that. They take inventory from third party pricing systems and those tend to be limited relative to the coverage Skyscanner can bring and also more expensive as there are fees to pay for accessing that data; we don’t have that problem.” Logan says the price customers pay is exactly the same price they would get if they went to the airline directly. “We don’t add any commission, which is something not everyone is aware of; people often think there must be a catch.” “The way we make our revenues is we receive a small referral fee from our partners downstream for bringing customers to them. Our philosophy is really very simple. We don’t favour any partners. It would be very tempting to favour those who pay us more but we just have an ethos that in the long term customers of our service need to be able to trust us and if they trust us they will continue to use us. “So we don’t do any fancy price manipulation or ranking based on favourites. We simply show the cheapest prices for the routes customers ask for. And if a customer clicks on one of the options we present that takes the customer through to our partner and the partner pays us a small referral fee. “That is a win-win because it is a lot cheaper for an airline to receive customers through Skyscanner than it is to advertise on television or go through legacy flight distribution systems. They are able to maintain the same price to the user and make more profit and also pay us a referral fee at the same time.” Over the years Skyscanner has made four acquisitions. “Going back several years we acquired a company called Zoombu,” says Logan. “It was very small and we were very small as well. It largely brought us travel talent. So our chief technology officer was one of the co-founders of that company. We tend to bring www.insider.co.uk

the people who lead the acquisitions into very senior positions because they are kindred spirits. They understand what it means to start a tech company and they fit very well into the leadership team. “More recently we have been a lot more active in acquisitions, although we are very careful with who we acquire. Our approach is that we never acquire to remove a competitor. We never acquire for market share. We only acquire for two things. One is the technology. And the other is the people. And if we don’t get both of those things right we don’t make the acquisition.” In 2013 it acquired Spanish-based hotels comparison metasearch engine Fogg. “We made the acquisition because there were some

We are very careful with who we acquire. We only acquire for two things. One is the technology. And the other is the people. And if we don’t get both of those things right we don’t make the acquisition really smart guys there,” says Logan. “Our chief product officer is one of Fogg’s co-founders. We acquired technology we believe is part of the next generation of search products and we are going to be building interesting services off that as we go through this year.” Gareth Williams, CEO, Skyscanner

Last year it bought Chinese metasearch engine Youbibi. “Our view was that we could not build a product that was compelling to Chinese consumers from Europe,” says Logan. “We really had to be there understanding the nuances of how people wanted to interact digitally and how they wanted to travel. So Youbibi was an acquisition which gave us a very strong team of software engineers.” Last October it bought Budapestbased mobile application developer Distinction. Logan says it was in recognition of the fact the world is very rapidly moving to mobile as the primary platform that people want to interact with. “More and more people want to carry out their business on their mobile phone because it is a much more powerful device. It has location awareness. It is private. It has a camera on it. You can take it with you. So people want to research their travel options and interact with their phone when they are on their trip.” Skyscanner now has nine offices. It has regional sales and marketing hubs in Miami, Edinburgh, Singapore and Beijing as well as software development centres at various locations including Barcelona, Sofia, Budapest, Shenzhen, Glasgow and Edinburgh. Edinburgh is the company’s largest office with over 300 people. Logan says there is a lot of camaraderie in the digital industry even amongst competitors. “Software engineering has become a collaboration in many respects. Linux was built by hundreds of thousands of engineers who never met but wanted to collaborate. “We are very active in the community doing that. We mentor companies and regularly meet up in tech talk forums. We host a lot of events to share ideas and we think that is for the absolute good of everybody in the short and medium term. “My hope is that at some point in the future some of our people leave Skyscanner and start their own businesses and create ten times the jobs we could ever create on our own. “Why? Because it is good for Skyscanner in the long term too, and we want to be here for the long term. And it is good for the Scottish and European tech sector.” ■ July/August 2015 INSIDER 17

COMMENT

The Granite City is still solid as a rock

Creating a Platform for Growth

This month’s edition of Insider has features on both Oil & Gas and the Aberdeen region. I have spent 20 years in Aberdeen working with Oil & Gas clients from around the world and you might think it’s difficult to mention one without the other. Both City and Shire have been at the heart of the UK Oil & Gas industry from its infancy through to its current status as a mature basin. The industry and the region are aware of the uncertainty around oil price and the long term sustainability of the North Sea. When the industry has to face up to big issues so does the region. We see how businesses are working hard to improve their costs base and work more efficiently, which is critical to achieve the Maximising Economic Recovery goals set out in the Wood Report. But this is a global industry and the problems are not simply confined just to Aberdeen and the North Sea. By some estimates the worldwide Oil & Gas industry has laid off at least 75,000 employees so far during this current downturn. Many of the businesses operating from the Aberdeen region already provide their products and services around the globe and see the North Sea as only a small part of their overall business. They have sought to export their expertise and compete on a global stage. The same goes for the Aberdeen region. Having established itself as global energy hub and centre of excellence, it needs

to compete globally for investment and, in particular, to continue to convince businesses to base themselves here rather than with competitors like Stavanger, Singapore or Perth (even if the weather is better elsewhere). This means both the industry and the region need to demonstrate their competitiveness on the global stage. Amongst the gloom of the headlines there are some signs of positive action from both:- City and Shire have entered into negotiations with the Chancellor for the £3 billion City Region deal which could go some way to deliver (long overdue) improvements to transport links and infrastructure; and there are improvements on broadband connectivity essential to showing the Aberdeen region can do business on an international scale. The Oil & Gas industry is also hard at work to collectively address current issues with its competitiveness – there is greater dialogue between the industry, the Treasury and government on setting a strategy to reduce the tax burden on the basin; the independent Oil & Gas Authority is up and running; industry body Oil & Gas UK is promoting greater cooperation among operators and service providers. Presenting businesses with an attractive place to invest in is vital to both the Aberdeen region and the UK Oil & Gas Industry. So, while you will find separate articles on Oil & Gas and on the Aberdeen Region, you will only get the full picture by reading them both.

Alasdair Freeman, Partner, Burness Paull

Alasdair Freeman

18 INSIDER June 2015

Stuart Preston

Director, Advisory, Scotland. Grant Thornton UK

Uncertainty in the oil and gas sector is now all too familiar. Disagreement on the level of future oil prices, contract renegotiation and price cutting are inevitable and this volatility is likely to remain for several years. There is a sense of negativity across the sector which is experiencing some of the most challenging economic conditions in recent history. A new report from the Scottish Government has suggested that North Sea oil revenues could drop to £500m next year and Sir Ian Wood has forecast that the price per barrel could stay at a less than favourable £41. Despite this negative economic forecast within the industry, it is important to look beyond the current issues and focus on opportunities for future growth. Consolidation, restructuring and in some cases insolvency is inevitable. However, a strong economy means an element of natural attrition, generating opportunities for in-organic growth and delivering enhanced shareholder wealth. Acquisition opportunities will be generated by movement within the sector and, for those with growth ambitions there are a number of key priorities to

create a platform for growth: Focus on core and profitable activities, and consider early exit from loss making activities Maintain operational efficiency by reducing costs and adopting performance improvement initiatives Maintain a robust and appropriate capital structure Manage stakeholder expectations, particularly where a restructure or refinance is required So where are the growth opportunities? Acquisition of distressed businesses or assets can generate substantial and potentially longer term returns. Investment opportunities internationally including the Middle East, Africa and South America should also be considered as part of a long term strategy for growth. For those without adequate funding there are new investors ready and willing to advance funds for the right prospect. Can the sector emerge bigger and stronger? Businesses that are agile and have appropriate foresight will create a robust platform to foster and support growth. It is those businesses that will inevitably succeed.

For more information go to: www.grant-thornton.co.uk

Email: alasdair.freeman@burnesspaull.com Tel: +44 (0)1224 618537 www.burnesspaull.com www.insider.co.uk

REVIEW: OIL & GAS in association with

CRISIS-HIT SECTOR NEEDS A STEP CHANGE by GRAEME SMITH

Commercial.

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“Our most recent survey reveals, however, that optimism in the industry in the UK is at its lowest level since the survey started in 2004. Firms of all sizes have re-evaluated their activities significantly as a result of the sustained and significant fall in the oil price since summer 2014. Two thirds of operators have cancelled projects, while contractors – faced with an increasingly challenging cost environment in the UK – are exploring opportunities around the globe.

We know that as an industry we have been part of the problem, now we need to be part of the solution Deirdre Michie, Oil & Gas UK (below)

“We also found evidence of many firms reducing their staff training budgets, with larger firms more likely to do so, which is more pronounced than that seen during the Great Recession. This short-term focus on reducing costs is understandable; however, this may damage its resilience over the medium term. “For the sector as a whole, there

remains clear benefits from reducing costs – even if, as the market suggests, the price of oil remains below $70 a barrel for the next two years – and finding the appropriate technological and economic solutions so that the sector can continue to deliver its economic contribution to the Scottish and UK economies.” Deirdre Michie is the new chief executive of Oil & Gas UK and, while under no illusion about the enormity of the task the industry faces, she says the prize is significant and worth the effort. However, she warns the UK offshore oil and gas industry must become sustainable at $60 dollars a barrel. “At $60 oil, 10 per cent of our production is struggling to make money and there is a shortage of capital and a shortage of investors willing to place their money here,” she says. “While demand for our products remains strong, critical for our transport and heating our homes and giving us a whole host of everyday products, our productivity as an industry has fallen – and fallen rapidly. “We know that as an industry we have been part of the problem, now we need to be part of the solution.

Very Smart People. Visit mms.co.uk July/August 2015 INSIDER 19

▲

VEN before the price of Brent crude plunged from $115 in June last year to under $50 in January the UK oil and gas industry was facing a crisis. Over the previous five years the production cost of a barrel of oil had risen faster than anywhere else on the globe, doubling to $30. Production efficiency was at a record low and declining and you had to go back to 1965 to find less exploration drilling. The focus on the importance of the sector and its key role in the UK economy and security of energy supply sharpened during the independence referendum debate and now the battle is under way on several fronts to sustain the industry as long as possible and produce every viable barrel. However, confidence within the industry is at a record low according to recent research. Grant Allan, deputy director of the Fraser of Allander Institute at the University of Strathclyde, says: “We know oil and gas is a vital industry for both Scotland and the UK, and, in particular, the north-east of Scotland, which demonstrated its resilience during the last sharp fall in the oil price through the Great Recession.

COMMENT Picture caption needed in here please to ďŹ ll space

THE ENERGY TO TRANSFORM

The OilďŹ eld Service sector (OFS) has been a signiďŹ cant growth story for the UK economy. An EY report into the industry â&#x20AC;&#x2DC;Review of the UK OilďŹ eld Services industryâ&#x20AC;&#x2122;, which looked at 2013 numbers, showed a strong preforming sector with a revenue of ÂŁ39bn â&#x20AC;&#x201C; approximately 2% of GDP 56% higher than 5 years ago. It also highlighted 250, 000 jobs in the supply chain and a ÂŁ2.7 bn contribution in tax receipts on proďŹ ts between 2009 and 2013. Over the past 12 months, the oil & gas crown has lost some of its shine following a dramatic fall in the oil price. The continuing uncertainty surrounding the future oil price has brought the industryâ&#x20AC;&#x2122;s underlying problems into greater focus, and resulted in a signiďŹ cant reduction in the capital expenditure budgets of oil companies both big and small. It is estimated that $120bn of projects have already been cancelled or deferred, with many more under active review. Although some commentators believe such cuts in investment will have an impact on oversupply in the short term, others are more pessimistic, not in the least because of the prospect of increased supply from Iran if sanctions are lifted. An under pressure industry gathered at the 2015 Oil & Gas UK Industry Conference - for which EY was the principal sponsor - to address the challenges and opportunities facing the industry, with a view to maximising economic recovery over the coming decades. The Conference was titled â&#x20AC;&#x2DC;MER UK: The Next 40 Yearsâ&#x20AC;&#x2122; and â&#x20AC;&#x2DC;future- prooďŹ ngâ&#x20AC;&#x2122; the sector in the UK by driving down costs, improving eďŹ&#x192;ciency and ensuring the sector is proďŹ table at $60 oil was the

Picture caption needed in here please to ďŹ ll space

key focus. It isnâ&#x20AC;&#x2122;t todayâ&#x20AC;&#x2122;s oil price that is deterring investment and growth; itâ&#x20AC;&#x2122;s the fundamental uncertainty over what will happen over the coming years. The cuts in capital expenditure and the general pressure on cost is having a signiďŹ cant impact on the OFS sector. We are seeing margin forecasts in the range of 10-30 per cent reductions. However, the impact will vary by sub-sector within OFS â&#x20AC;&#x201C; with capex and domestic focused companies being hit hardest. It is also dependent on whether the companies are asset dependent or people dependent. The former still have some backlog in the medium-term whilst the latter will be more focused on job losses. Itâ&#x20AC;&#x2122;s been hard to miss the job loss ďŹ gures â&#x20AC;&#x201C; which typically sit in the 5-15 per cent range. These are examples of going after the easy cost savings â&#x20AC;&#x201C; we are yet to see wholesale examples of transformation change across the sector. A key theme throughout our EY analysis to date, and one that will become more important, is the necessity of exports. To do this we need to keep focusing on how to create an anchor in the

Derek Leith, UK head of oil and gas taxation at EY

UK, as well as investing in business development activity overseas. In general, there are four key metamorphosis models that are being witnessed as the industry responds to the challenges it is facing. These are: t 3BUJPOBMJTBUJPO o JNQSPWJOH CBMBODF TIFFU reducing costs; t &YQBOTJPO o BDRVJSJOH DPNQFUJUPST FOUFSJOH OFX markets; t *OOPWBUJPO o JOWFTUJOH JO OFX UFDIOPMPHZ BOE t $PMMBCPSBUJPO o GPSNJOH BMMJBODFT UP SFEVDF DPTU In this period of uncertainty, the industry has been greatly reassured that its contribution, particularly that of the predominantly Scotland based supply chain, is valued and that the government is committed to maximising the economic beneďŹ t of the signiďŹ cant reserves that remain to be gained from the UK Continental Shelf (UKCS). We are no doubt in the ďŹ rst phase of what will be a signiďŹ cant shake-up of the industry. There is scope for improved discipline in cost control and project execution, the introduction of new technology, collaboration across the supply chain and new working methods. The introduction of a new regulator; a commitment to a simpler, lower rate tax system which will be competitive internationally; and the deployment of the skills, expertise, innovation and energy of the workforce will ensure that the oil industry will continue to prosper and leave the legacy of a supply chain rooted in Scotland and operating in every corner of the globe. Resilient companies with clear focus and strong leadership will seize the opportunity and transform their businesses.

REVIEW: OIL & GAS

COMMENT Jill Reid

▲

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“The Energy Bill will provide new regulatory powers for the OGA, including the ability to participate in meetings with operators, have access to data, provide dispute resolution and issue sanctions such as improvement notices and fines of up to £1m. These new powers will enable the OGA to work proactively with industry to facilitate action and encourage greater collaboration to maximise economic recovery. “Now, more than ever, is the time to remove behavioural barriers, set clearer expectations between organisations involved in the North Sea and secure leadership

Collaboration and clear communication are key

This crisis presents an opportunity for us to rebalance or recalibrate, and the industry in this situation is likely to be more receptive to things like new technology and smarter ways of working Neil Gordon, Subsea UK

commitment to cultural change. “I have high expectations of industry and am encouraged by what I see but there remains a lot to be done. The OGA will do everything we can but we don’t have all the answers. We need everyone to lead the change.” Ian Phillips, chief executive of the Oil & Gas Innovation Centre (OGIC), says: “Technology is going to play a key role in maximising economic recovery in the North Sea – both by enhancing recovery from existing fields and by accessing the as yet untapped reserves through exploration and production activity. “Innovation is now a strategic priority across the industry but to deliver real value we need to see a shift in how innovation is deployed. “Oil and gas has traditionally been slow to adopt new technologies and new methods of working. It’s an industry where no-one wants to be the first to trial innovation and where procurement processes can be a major stumbling block to deploying

When the Wood Review singled out commercial and legal negotiations as an area where greater collaboration could help Maximising Economic Recovery (MER) from the UKCS, many in the industry adopted a cynical view. They argue that it is unrealistic for fiercely competing companies to work together, but are horrified by the suggestion that if we fail to, the new regulator will step in. In this era of cost cutting, legal fees will continue to be a favourite topic and one area where we can work together to maximum effect. As an in house lawyer having recently moved into private practice, I would never defend unnecessary legal complexity nor excessive billing, but I do wonder if some of the negative comments made about lawyers flow from a lack of understanding of legal risk and how to mitigate it by effective negotiation and skilful drafting. If I am right, some of the fault must lie with lawyers themselves, who fail to explain it to clients, but equally some responsibility must surely lie with the clients, disinterested perhaps or just taking a view that talking to a lawyer is akin to burning money. As E&P lawyers our role is to identify legal risks and to mitigate those legal risks but we will not do this without even more open communication with our clients and with each other. The benefits of closer collaboration have already been well established by Sir Ian Wood and were again reiterated at the Oil & Gas UK conference last month. With increased transparency and communication, lawyers and clients will work even more closely together in managing legal risk in the UKCS. This collaboration is achievable and the incentive is clear. The alternative of enforced collaboration (whatever that may mean) has more serious consequences and opens up a host of legal questions, the threat of litigation and, potentially, spiralling legal fees. Jill Reid is a partner and head of the oil and gas practice with Maclay Murray & Spens LLP. Jill joined the firm earlier this year, from her role as general counsel and company secretary of Dana Petroleum Limited.

▲

“Over the last 20 years the price has averaged $62 per barrel and the forward curve is between $65 and $75. Therefore it is not unreasonable for the North Sea to set out its stall at being sustainable in a $60 world.” She says it will require a change in mindset and the industry has to avoid doing the same things in the same way and expecting different outcomes. Neil Gordon, chief executive of Subsea UK, echoes this message and says following this slump the industry cannot simply go back to what it was, as it has following previous cyclical dips. “This crisis presents an opportunity for us to rebalance or recalibrate, and the industry in this situation is likely to be more receptive to things like new technology and smarter ways of working. There is a real need for a step change in behaviour across the industry in how people work together. “The word collaboration is used a lot but I think we need to talk about co-operation, which for me means giving a lot more – you have to put something in for the greater good of the industry. The government has to co-operate with the industry and operators and contractors, and the supply chain needs to co-operate a lot more and a lot earlier to look at efficiencies throughout the operation. It is time for real change.” That change must involve everyone because the Oil and Gas Authority doesn’t have all the answers, according to chief executive Andy Samuel. “We have moved quickly to establish the Oil and Gas Authority (OGA) and welcomed the strong support of industry and government. We have recruited an experienced leadership team and are now beginning the next wave of recruitment to build capacity. “The £1.3bn package of measures announced in the 2015 Budget provided a welcome boost to the industry and was well received by investors. It is now essential the industry redoubles its efforts to create a more competitive cost base and increase efficiency. To help revitalise exploration, we’re moving ahead with a £20m government-funded seismic project to acquire new high-quality 2D data from the Rockall and MidNorth Sea High, which will be made freely available.

Partner and head of the Oil & Gas practice with Maclay Murray & Spens LLP Tel: 01224 356 161 Email: Jill.Reid@mms.co.uk www.mms.co.uk

July/August June 2015 INSIDER 21

REVIEW: OIL & GAS ▲

new technology in the field. “However, in the current climate there is a financial imperative to explore new ways of working, spanning processes, technologies and collaboration across industry. We hope this will accelerate the speed at which near to market technologies can be deployed in the field and OGIC’s work to fast-track R&D in conjunction with Scotland’s worldclass academic resource is part of this process.” Jill Reid, partner and head of the oil and gas team in Aberdeen for Maclay Murray & Spens, wonders whether existing and potential investors in the North Sea will be prepared to buy into the collaboration proposals, although she points out joint ventures in which co-venturers contribute a share of the cost and the operator conducts the business on behalf of the whole joint venture is already very well entrenched into the UK Continental Shelf (UKCS). “It is just going to be developed a little bit further and what is interesting for me is how, in a low oil price, you marry up the two ideas that on the one side you have closer collaboration as stated by the Oil & Gas Authority while on the other there is pressure on individual oil companies from their boards to maximise returns to investors. “I think potentially we are going to go through an interim period when you might see some litigation as companies revisit their contracts or terminate them and these actions are met with some resistance. “Looking ahead, I think things

Now, more than ever, is the time to remove behavioural barriers, set clearer expectations between organisations involved in the North Sea and secure leadership commitment to cultural change Andy Samuel, Oil & Gas Authority (below)

will settle because in the UKCS we are accustomed to this spirit of collaboration. The amount of litigation that has taken place is not significant because there is almost this unwritten code that people collaborate and work on an ethical and fair basis. What is proposed is nothing brand new. What is new, however, is how rigorously it will be

Oil & gas companies: Total figures 2015 Exploration companies Latest

% change

Turnover

£8,626.13m

£9,735.22m

-11.4

Profit

£141.52m

£1,275.27m

-88.9

9,100

3,741

143.3

£15,552

£340,890

95.4

% change

Employees* Profit per emp

Service providers Latest

Turnover

£20,214.47m

£18,529.12m

9.1

Profit

£1,680.61m

£1,301.15m

29.2

Employees*

88,779

80,440

10.4

Profit per emp

£18,930

£16,175

*Employee ﬁgures do not include contractors

enforced by the OGA. We are going to have to work on how individual companies advise their respective boards and particular shareholders about the impact this is going to have. “There are many companies looking to invest in the UK for the first time because it is seen, from the regulatory point of view, to be a safe and known area. I hope they will also readily accept the expectation of even greater co-operation and collaboration in the UKCS.” Bill Fowler, partner, corporate, with Maclay Murray & Spens, says that over the past few months the industry has been taking stock of the potential impact of a number of significant developments including the Wood Review, the Infrastructure Act and the new Oil & Gas Authority. “People have been trying to get their heads around a whole host of factors and what they might actually mean and I don’t think there is a conclusion yet,” he says. He believes in recent months the industry has been sharply focused on internal cost reduction, a process which is ongoing, and until it is complete companies may not concentrate on the longer term strategic view. “The challenge for people is making sure they still have a great resource and the expertise in the business when activity levels kick back off again.” He says companies are also starting to look at decommissioning more seriously. “I suspect the wave which has been forecast for the last five or so years may now be about to come through. You will then have the conflict between the oil companies wanting to decommission inefficient fields in the current cost environment and the UK Government’s MER UK [Maximising Economic Recovery in the UK strategy].” Nigel Jenkins, chief executive of Decom North Sea, says despite challenging times, decommissioning is a developing sector which presents new opportunities and key to that is the chance to develop cost effective solutions through collaboration and innovation. “Crucially, and more pertinent than ever, this all needs to take place

Responsive. Very Smart People. Visit mms.co.uk 22 INSIDER July/August 2015

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REVIEW: OIL & GAS ▲

within the context of MER UK. Just 10 major decommissioning projects in the UKCS have taken place over the past 20 years. However, an estimated 5,500 wells, 400 facilities and 10,000km of pipelines are forecast to be decommissioned over the next 35 years. “We are set to experience an exponential increase of decommissioning activity, on a previously unseen scale, so at the beginning of this market, collaboration and knowledge sharing really are the fundamental keys to achieving the cost efficiencies and benefits we’re aiming for. “Decommissioning used to be seen as the beginning of the end. Now it’s seen as the beginning.” Alan Kennedy, Aberdeen-based oilfield services UK lead partner with KPMG, says: “Cost control and reduction measures have been the priority for industry since Q4 of 2014 following the collapse in the price of crude. The operators’ reaction to the shift in commodity price has rippled out through the supply chain. However, basic cost-cutting itself is not going to solve the challenges faced by the industry, particularly in a mature basin like the UKCS. “For the North Sea this is a watershed moment and all those with a stake in the industry are grappling with significant strategic issues as well as their operational concerns, spanning people, infrastructure, working methods and technology. There is no silver bullet solution to these but there is an opportunity now to take a serious look at how the industry works and how things could be done differently.” Ewan MacKinnon, investment director for Maven Capital Partners UK, says: “We have looked at a lot of studies over the last few months and if you actually correlate the price of oil to the price it has cost to take it out of the ground it is pretty much linear. As the oil price has increased so has cost base so no-one has made any more money during these times – efficiency has just got worse. Everything had to be bespoke and gold plated and even before the oil price dropped the economics were

As the oil price has increased so has cost base so no-one has made any more money during these times – efﬁciency has just got worse Ewan MacKinnon, Maven Capital Partners UK (below)

unsustainable. “Following the Wood Review and reports from Oil & Gas UK everyone is saying ‘we need to do things differently, we need to work together, everything cannot be bespoke because it is just not sustainable’. People are certainly saying they are going to adjust but whether that happens, who knows? “However, we are still seeing opportunities and we typically invest in owner-managed SMEs which are a bit more fleet of foot and can react and change more quickly.” According to Graham Cunning, Campbell Dallas corporate finance partner, most felt 2014 oil prices were unsustainable and the real surprise was the speed and ferocity of the fall. “Boards have clearly looked hard at costs, focusing on reviewing capex spend and any operating cost savings. The rest of 2015 is expected to remain challenging but having held discussions with key industry

Agile. 24 INSIDER July/August 2015

decision makers I know there is a buoyant, determined mood. “There is an opportunity for stronger corporates to seek opportunities to accelerate any acquisition programmes as some producers struggle to cope with the new world order; while consolidation may be necessary to take out costs and realise the benefits of economies of scale. “Many are already making unsolicited approaches to select targets. Larger corporates will seek to divest non-core divisions to free up capital, which will also prompt deal activity. Inevitably there will be an element of forced M&A for corporates with high gearing on their balance sheets. “UK private equity houses are continually scouring the country for investment opportunities in growth firms with international ambitions, and oil and gas companies with operations overseas fit the bill.” Colin Welsh, chief executive officer, Simmons & Company International, says the oilfield services M&A market has been turned on its head and the days of business owners expecting a queue of potential buyers prepared to pay seven or eight times historic EBITDA are gone. “The slump in the price of crude and uncertainty over future price mean determining future earnings in the industry is very difficult and this has spooked a lot of potential buyers, resulting in a dramatic slowdown in M&A activity compared to recent years. “Our advisory teams are busier than ever but the difference today is that the lead-in times for deals completing are much, much longer in order to afford businesses the best opportunities to achieve their goals. “Despite the challenges in the oil and gas industry, there is no doubt this is a time of significant opportunity. If you are at, or near, the bottom it is a good time to invest. “It is certainly not a time for complacency but it is also true that strong businesses with good management teams are holding their own and, in many cases, actually managing to grow.” ■

Very Smart People. Visit mms.co.uk www.insider.co.uk

REVIEW: OIL & GAS

TOUGH TIMES AFFECTING FINANCES by GRAEME SMITH

EVEN of the top 10 exploration companies have experienced a drop in turnover and five of those also suffered a profits drop. Total Upstream UK’s turnover fell by only 0.35 per cent to £1.726bn but profits were up £198.9m to £602m, lifting them to the top of the chart, swapping places with Chevron North Sea. Chevron’s turnover was down 20.3 per cent to £1.17bn and profits fell from £879.4m to £621.7m. Turnover for TAQA Bratani, in third, was down 2.7 per cent and profits fell £204.1m to £233.9m. Dana Petroleum moved up one place to fourth although its turnover of £1.004bn was eight per cent down and profits halved to £145m. Enquest moved up one place on last year to fifth with a 5.2 per cent increase in turnover to £613.2m helping profits increase by £15.41m. Maersk Oil North Sea UK recorded a 47.2 per cent rise in turnover resulting in an 8.5 per cent increase in profit to £189.5m. First Oil is the only other company in the top 10 to increase turnover, which was up by 46.9 per cent, but in contrast it went into a loss of £17.62m for the year to April 2014 from a profit of £14m the previous year. The top three offshore service providers retain their positions with John Wood Group increasing turnover by 8.4 per cent to £4.644bn and profits rising £8.3m to £258.7m.

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Subsea 7 is in second place and although turnover rose by 11.4 per cent it is still less than a third of the Wood Group’s at £1.44bn. Subsea 7 profits were up £16.2m to £123.8. Although turnover for thirdplaced Technip UK was up only 2.6 per cent to £1.068bn, profits rose from £83.1m to £188.2m.

Seven of the top 10 exploration companies have experienced a drop in turnover and ﬁve of those also suffered a proﬁts drop The highest riser in the chart was GE Oil & Gas UK, which rose from 87th to eighth with an 87.3 per cent rise in turnover to £494m and a profit of £28.4m compared to a loss of £67.1m the previous year. Petrofac Scotland rose 13 places to 10th with a 33 per cent turnover rise to £1.04bn and profits up £13.8m to £18.2m. Aberdeen-based Craig Group also climbed from 18th to 15th thanks to a 21 per cent turnover increase to £177.7m and a profit rise of £3.3m to £20.5m. Douglas Craig, chairman and managing director of Craig Group, says: “This is a positive endorsement of the success of our strategy which has seen ongoing investment in our people and assets to deliver quality, cost-effective services with a focus

on safety. As a family-owned Scottish company with a maritime heritage stretching over 80 years, we are immensely proud of our continued growth at home and abroad.” Bluewater Scotland rose from 100 to 17 by turning a £53.8m loss into a £10.7m profit with a 92.4 per cent turnover rise to £284.2m. DOF Subsea UK was another high climber moving up 35 places to 28 with a 28 per cent turnover rise to £75.8m and a rise in profits from £2.2m to £17.7m. All but six of the top 50 are based in the north-east of Scotland. The highest positioned of those is FMC Technologies of Dunfermline, which designs and manufactures subsea systems. An 18.6 per cent increase in turnover to £337.5m and a profits increase of more than £10m lifted it to ninth, three higher than last year. The Glasgow-based Howco Group (14th), which provides metal and processing services, achieved a 28.7 per cent increase in turnover to £232.7m and increased its profits by £3.3m to £29.2m. Tubular solutions company Vallourec Oil & Gas UK of Bellshill fell five places to 19, while engineering software development company Petroleum Experts of Edinburgh is unmoved from last year at 31. Technical consultancy TUV Sud of East Kilbride climbed 30 places to 42nd and Briggs Commercial of Burntisland moved up from 71 to 49. ■

Very Smart People. Visit mms.co.uk July/August 2015 INSIDER 25

COMMENT

FUTUREď&#x161;şPROOFING THE OIL AND GAS INDUSTRY

The last twelve months have been tumultuous for the oil and gas industry. The recent drop in oil price from $110 to a low of $45 a barrel, before rallying at $60, has brutally exposed a substantial escalation in cost base across UK oil and gas operations and impacted business conďŹ dence across the North Sea basin. As operators react to this new low oil price environment â&#x20AC;&#x201C; and the challenge to be â&#x20AC;&#x2DC;ďŹ t at $50â&#x20AC;&#x2122; â&#x20AC;&#x201C; weâ&#x20AC;&#x2122;ve seen a shift in the type and size of transaction activity taking place across the UK continental shelf (UKCS). To date, there has only been a handful of deals in oďŹ&#x20AC;shore Europe, totalling ÂŁ769m â&#x20AC;&#x201C; 80% down on the same period last year. Itâ&#x20AC;&#x2122;s becoming increasingly less likely that weâ&#x20AC;&#x2122;ll see a replay of the consolidation that shaped the super majors in the late 1990s: the Shell â&#x20AC;&#x201C; BG merger announced in April may well be the exception. New entrants are more likely to emerge and there is still the possibility that further assets may yet come on to the market. There have been pockets of activity in oilďŹ eld services although this is widely anticipated to accelerate as key market players look to capture new technologies and cost synergies. There a number of reasons why deals arenâ&#x20AC;&#x2122;t happening: valuations are perhaps deemed tricky with the market still uncertain as to the oil price ďŹ&#x201A;oor; and with operators re-evaluating their own strategy, there may be a reluctance to add to their growing â&#x20AC;&#x2DC;to doâ&#x20AC;&#x2122; list. Jonathan Shelley, Corporate Finance partner within PwCâ&#x20AC;&#x2122;s Aberdeen centre of excellence for

Jonathan Shelley, PwC Corporate Finance Partner

Oil & Gas, commented: â&#x20AC;&#x153;The decline in oil price has presented almost unprecedented challenges and opportunities for our clients across the sector. Letâ&#x20AC;&#x2122;s not kid ourselves - itâ&#x20AC;&#x2122;s tough out there - but times of rapid change are typically times when big winners and big losers emerge. â&#x20AC;&#x153;As the sector adapts to oil price conditions there will be a need to refocus both strategy and market approach accordingly. Businesses will need to be ďŹ&#x201A;exible and nimble in order to respond to and realise opportunities as they arise.â&#x20AC;? When shocks do arise, whether itâ&#x20AC;&#x2122;s a rapid fall in oil price or an operational issue with potential ďŹ nancial or reputational repercussions, itâ&#x20AC;&#x2122;s vital that ďŹ rms can rely on a resilient operating model rather than sheer luck. In our view, there are four key areas that could help them build risk resilience and get on the front foot: t %FWFMPQJOH BO PQFSBUJOH NPEFM UIBU EFMJWFST on strategy but is both ďŹ&#x201A;exible and reactive when changes occur;

Contact: Jon Shelley & KPOBUIBO H TIFMMFZ!VL QXD DPN 5 #SVDF $PMMJOT & #SVDF K DPMMJOT!VL QXD DPN 5

t *OWFTUJOH JO TDFOBSJP QMBOOJOH UIBU XJMM IFMQ take the pain out of future challenges and disruptions; t #FJOH DPOmEFOU UIBU UIF PSHBOJTBUJPO DBO respond quickly and eďŹ&#x20AC;ectively to a crisis regardless of which aspect of the business in aďŹ&#x20AC;ected; and t &OTVSJOH DMFBS HPWFSOBODF BOE B SJTL management strategy to understand and manage uncertainty. Bruce Collins, partner within PwCâ&#x20AC;&#x2122;s oil and gas assurance team, says: â&#x20AC;&#x153;In the oil and gas industry the need to respond to process and safety challenges has been routinely tested, but the current oil price decline demonstrated that business continuity can also be eďŹ&#x20AC;ected by demands for rapid cost reduction and ďŹ nancial shocks. â&#x20AC;&#x153;At a time when costs are under pressure risk becomes more pressing and signiďŹ cant. Building resilience must be top of the agenda - we simply canâ&#x20AC;&#x2122;t aďŹ&#x20AC;ord to rely on luck to survive.â&#x20AC;?

#SVDF $PMMJOT PwC Partner

REPORT: OIL AND GAS TABLES Offshore exploration companies RANK 15 14

COMPANY

LOCATION

YEAR END

CURRENT T/OVER £M % CHANGE

PREVIOUS T/OVER £M

CURRENT PROFIT £M PREVIOUS PROFIT £M

EMPLOYEES % CHANGE

PROFIT PER EMP £ % CHANGE

PARENT NATIONALITY

(2)

Total Upstream UK Ltd

Aberdeen

Dec-13

1,726.00 -0.35

1,732.00

602.00 403.13

672 2.28

895,833 46.00

2* (1)

Chevron North Sea Ltd

Aberdeen

Dec-13

1,169.80 -20.28

1,467.30

621.70 879.40

n/a n/a

USA

3* (4)

TAQA Bratani Ltd

Westhill

Dec-13

1,110.52 -2.69

1,141.22

233.89 437.95

503 27.34

464,990 -58.06

UAE

Dana Petroleum Ltd

Aberdeen

Dec-13

1,004.22 -8.01

1,091.66

144.96 288.33

384 22.68

377,500 -59.02

KorRep

5* (6)

Enquest Plc

Aberdeen

Dec-14

613.20 5.20

582.90

216.10 200.69

356 45.31

607,022 -25.90

Sco

6* (8)

Maersk Oil North Sea UK Ltd

Aberdeen

Dec-13

568.10 47.19

385.97

189.46 174.59

689 26.89

274,978 -14.48

Den

Faroe Petroleum Plc

Aberdeen

Dec-13

129.38 -18.52

158.79

10.02 -28.99

40 0.00

250,500 n/a

Sco

8* (3)

Apache North Sea Ltd

Aberdeen

Dec-14

841.04 -29.28

1,189.30

-176.45 69.46

4,950 1314.29

n/a n/a

USA

9* (9)

Talisman Sinopec Energy (UK) Ltd

Aberdeen

Dec-13

861.48 -35.11

1,327.60

-1,265.07 -104.55

983 54.08

n/a n/a

Can/Ch

10 (11)

First Oil Plc

Aberdeen

Apr-14

138.12 46.89

94.03

-17.62 14.03

11 10.00

n/a n/a

Sco

11 (7)

CNR International (UK) Ltd

Aberdeen

Dec-13

430.75 -17.97

525.12

-156.16 80.75

362 5.23

n/a n/a

Can

12 (13)

Pathfinder Energy Services Ltd

Aberdeen

Dec-13

13.56 -40.29

22.71

-0.92 -1.18

60 -48.72

n/a n/a

USA

13* (15)

Verus Petroleum

Aberdeen

Dec-13

19.96 20.10

16.62

-19.91 -27.48

16 23.08

n/a n/a

Can

14* (16)

Bowleven Plc

Edinburgh

Jun-14

0.00 -11.08

0.00

-7.99 -2.70

72 n/a

n/a n/a

Sco

15* (17)

Cairn Energy PLC

Edinburgh

Dec-14

0.00 -1,098.90

0.00

-231.34 n/a

n/a n/a

Sco

EMPLOYEES % CHANGE

PROFIT PER EMP £ % CHANGE

PARENT NATIONALITY

(5)

(10)

*See notes on p33

Offshore service providers COMPANY ACTIVITY

1* (1)

John Wood Group Plc Energy related services

Aberdeen

Dec-14

4,644.15 8.40

4,284.45

258.66 250.36

31,940 6.93

8,098 -3.39

Sco

2* (2)

Subsea 7 Offshore services

Aberdeen

Dec-13

1,440.81 11.40

1,293.42

123.79 107.60

1,809 7.87

68,430 6.65

Lux

Technip UK Ltd Offshore engineering; construction

Aberdeen

Dec-13

1,067.98 2.59

1,041.05

188.24 83.14

908 19.63

207,313 89.26

4* (5)

Aker Solutions Offshore services

Aberdeen

Dec-13

588.54 16.85

503.68

48.50 32.80

1,848 10.00

26,245 34.42

Nor

(4)

National Oilwell Varco UK Ltd Offshore equipment manufacturer

Aberdeen

Dec-13

490.60 3.30

474.92

93.87 140.58

1,820 3.88

51,577 -35.72

USA

(6)

M-I Drilling Fluids UK Ltd Oil rig drilling services

Aberdeen

Dec-13

419.55 5.62

397.21

114.70 37.07

1,612 1.26

71,154 205.58

USA

(3)

LOCATION

YEAR END

CURRENT T/OVER £M % CHANGE

PREVIOUS T/OVER £M

CURRENT PROFIT £M PREVIOUS PROFIT £M

*See notes on p33

www.insider.co.uk

July/August 2015 INSIDER 27

▲

RANK 15 14

REPORT: OIL AND GAS TABLES RANK 15 14

COMPANY ACTIVITY

LOCATION

YEAR END

CURRENT T/OVER £M % CHANGE

PREVIOUS T/OVER £M

(8)

Halliburton Manufacturing & Services Offshore services and equipment

Dyce

Dec-13

655.09 11.72

586.38

(87)

GE Oil & Gas UK Ltd Oil and gas engineering

Bridge of Don

Dec-13

494.01 87.32

(12)

FMC Technologies Ltd Subsea systems design/manufacture

Dunfermline

Dec-13

10* (23)

Petrofac Scotland Facilities manageme; survival training

Aberdeen

11 (17)

Bibby Offshore Ltd Offshore core services

12 (9)

CURRENT PROFIT £M PREVIOUS PROFIT £M

EMPLOYEES % CHANGE

PROFIT PER EMP £ % CHANGE

PARENT NATIONALITY

26.34 42.52

2,272 9.18

11,593 -43.26

USA

263.72

28.35 -67.11

1,924 54.79

14,735 n/a

USA

337.45 18.59

284.56

28.98 18.79

1,234 7.12

23,485 43.98

USA

Dec-13

1,040.39 32.91

782.79

18.17 4.35

1,968 3.25

9,233 304.60

Westhill

Dec-13

243.36 17.01

207.99

36.84 16.31

254 35.11

145,039 67.18

Oceaneering International Services Services/equipment to energy industry

Aberdeen

Dec-13

259.98 9.28

237.90

27.21 28.90

1,957 16.91

13,904 -19.46

USA

13* (16)

Dril-Quip (Europe) Ltd Oilfield equipment manufacture

Dyce

Dec-14

167.40 11.38

150.30

48.00 31.62

460 -10.33

104,348 69.29

USA

14 (15)

Howco Group Plc Metal & processing services

Glasgow

Mar-14

232.65 28.71

180.75

29.20 25.92

502 9.61

46,534 -17.78

Sco

15 (18)

Craig Group Ltd Shipping; energy services

Aberdeen

Apr-14

177.66 21.05

146.76

20.53 17.26

1,096 3.20

18,732 15.26

Sco

16* (10)

Dolphin Drilling Ltd Oil & gas drilling contractor

Aberdeen

Dec-13

377.00 -3.74

391.64

8.84 18.46

277 9.49

31,913 -56.26

Nor

17* (100)

Bluewater Scotland Operation of offshore facilities

Aberdeen

Dec-13

284.24 92.37

147.76

10.65 -53.75

n/a n/a

NL Ant

18 (20)

Bilfinger Salamis UK Ltd Multi-discipline offshore services

Aberdeen

Dec-14

180.09 1.90

176.74

13.79 13.12

1,834 3.73

7,519 1.32

Ger

19 (14)

Vallourec Oil & Gas UK Ltd Offshore tubular goods

Bellshill

Dec-13

138.36 -19.81

172.53

16.43 26.41

266 4.72

61,767 -40.59

20 (25)

Hydrasun Ltd O&G fluid transfer; process controls

Aberdeen

Mar-14

120.89 15.46

104.70

16.99 15.60

643 11.25

26,423 -2.10

Sco

21 (33)

CAN (Holdings) Ltd Offshore services provider

Aberdeen

Dec-13

89.06 22.15

72.91

18.47 15.38

586 6.93

31,519 12.30

22* (22)

KCA Deutag Scotland Offshore support services

Aberdeen

Dec-13

186.52 -22.11

239.46

7.22 7.38

399 7.84

18,095 -9.28

Cayman

23 (32)

Ferguson Group Ltd Offshore containers/modules rent/sale

Kintore

Dec-13

64.77 12.41

57.62

20.81 16.22

193 10.92

107,824 15.67

Aus

24 (35)

Integrated Subsea Services Ltd ROV and survey services

Aberdeen

Dec-13

168.61 88.45

89.47

10.83 6.93

187 25.50

46,332 -0.38

Lux

25 (27)

Vroon Offshore UK Ltd Offshore rescue vessels

Aberdeen

Dec-14

108.63 -0.43

109.10

12.57 18.61

1,306 -0.46

9,625 -32.14

26 (40)

Grayloc Products Ltd Offshore connectors

Aberdeen

Dec-13

55.30 62.84

33.96

21.64 12.90

61 22.00

354,754 37.50

USA

27 (19)

Oil States Industries (UK) Ltd Connectors for oil industry

Aberdeen

Dec-13

81.98 -27.14

112.51

15.95 22.04

188 0.53

84,840 -28.02

USA

28 (63)

DOF Subsea UK Ltd ROV, survey, positioning services

Aberdeen

Dec-13

75.75 28.04

59.16

17.68 2.16

74 -26.00

238,919 1006.11

Nor

29 (29)

Fugro Survey Ltd Offshore surveying

Aberdeen

Dec-13

104.95 17.13

89.60

11.55 10.80

404 7.45

28,589 -0.47

30 (37)

Sodexo Remote Sites Scotland Ltd Offshore/onshore facilities management

Aberdeen

Aug-14

121.53 34.04

90.67

8.37 5.39

1,855 336.47

4,512 -64.42

31 (31)

Petroleum Experts Ltd Petroleum engineering software

Edinburgh

Sep-14

39.15 3.33

37.89

30.52 29.06

61 3.39

500,328 1.58

32 (34)

Archer (UK) Ltd Offshore personnel and equipment

Aberdeen

Dec-13

144.26 37.14

105.19

5.04 5.88

127 3.25

39,685 -16.99

Berm

33 (38)

Smith International (North Sea) Ltd Offshore equipment supply

Aberdeen

Dec-13

77.04 -1.43

78.16

7.52 5.18

302 -11.18

24,901 63.45

NL Ant

34* (46)

Solstad Offshore UK Ltd Ship owner; offshore chartering

Aberdeen

Dec-13

33.19 18.24

28.07

47.08 10.35

11 0.00

4,280,000 354.88

Nor

35 (65)

Farstad Shipping Ltd Offshore vessel owners/manager

Aberdeen

Dec-13

57.15 10.07

51.92

8.31 2.26

22 4.76

377,727 250.99

Nor

*See notes on p33

28 INSIDER July/August 2015

www.insider.co.uk

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REPORT: OIL AND GAS TABLES RANK 15 14

COMPANY ACTIVITY

LOCATION

YEAR END

CURRENT T/OVER £M % CHANGE

PREVIOUS T/OVER £M

36 (41)

Peterson UK Ltd Offshore logistics services

Aberdeen

Dec-13

165.68 8.28

153.01

37 (39)

Saltire Energy Ltd Drilling equipment supplier

Aberdeen

Jun-14

36.31 10.06

38 (24)

CHC Scotia Ltd Helicopter operation, engineering

Aberdeen

Apr-14

39 (42)

Balmoral Group Holdings Ltd Offshore/ environmental equipment

Aberdeen

40 (43)

PD&MS Energy (Aberdeen) Ltd Offshore services provider

41 (51)

CURRENT PROFIT £M PREVIOUS PROFIT £M

EMPLOYEES % CHANGE

PROFIT PER EMP £ % CHANGE

PARENT NATIONALITY

3.22 2.62

495 12.50

6,505 9.24

32.99

17.69 17.19

64 23.08

276,406 -16.39

Sco

179.82 1.19

177.71

2.73 8.65

473 -2.27

5,772 -67.70

Can

Mar-14

79.06 25.11

63.19

4.56 4.03

395 7.34

11,544 5.42

Sco

Aberdeen

Jun-14

48.24 2.57

47.03

5.18 4.51

58 -3.33

89,310 18.82

Sco

Seatronics Ltd Marine survey equipment sale & rental

Bridge of Don

Dec-13

34.51 23.82

27.87

9.64 8.16

81 10.96

119,012 6.47

42 (72)

TUV Sud Ltd Technical consultants

East Kilbride

Dec-14

53.67 1.02

53.13

3.78 3.87

547 8.53

6,910 -10.01

Ger

43 (86)

Pipeline Technique Ltd Pipeline/riser welding contractor

Huntly

Dec-14

38.24 104.93

18.66

6.23 -1.99

139 26.36

44,820 n/a

44 (82)

Odfjell Drilling (UK) Ltd Drilling contractors

Aberdeen

Dec-13

68.90 19.64

57.59

3.20 0.72

107 18.89

29,907 273.84

Nor

45 (13)

Weatherford UK Ltd Oilfield personnel; equipment supply

Dyce

Dec-13

202.86 0.93

201.00

1.28 20.04

1,199 3.99

1,068 -93.86

Swi

46 (101)

RigNet UK Ltd Offshore services; communications

Westhill

Dec-13

33.34 61.06

20.70

7.30 6.30

51 142.86

143,137 -52.29

USA

47 (56)

Aquatic Engineering & Construction Offshore engineering

Aberdeen

Dec-13

26.50 6.04

24.99

8.66 9.34

126 21.15

68,730 -23.47

Cayman

48 (81)

ICR Integrity Ltd Offshore maintenance

Aberdeen

May-14

31.01 52.91

20.28

6.39 2.90

162 31.71

39,444 67.30

Sco

49 (71)

Briggs Commercial Ltd Offshore engineering; fabrication

Burntisland

Mar-14

50.28 18.58

42.40

2.76 1.71

585 12.93

4,718 42.93

Sco

50* New

Stena Drilling Ltd Drilling rig owners/managers

Aberdeen

Dec-13

38.38 15.15

33.33

4.14 1.78

120 0.84

34,500 130.65

Swe

*See notes below

The Insider Ranking is a computation between turnover and pre-tax profit (ie. first ranked by turnover, then by profit, the rankings combined, divided by two and weighted by turnover). Aker Solutions: The figures are a consolidation of Aker Offshore Partners, MHWirth UK, Frontica Advantage and AkerSubsea to more truly reflect Aker’s operations in Scotland. Employees are permanent only and there are many more contracted workers. Apache North Sea Ltd: Exchange rate used at December 2014 is US$1.6469 (previous year U$1.6488). Bluewater Scotland: To more truly reflect the group’s operations in Scotland figures are a consolidation of Bluewater’s four Scottish trading entities, including Pierce Production Company. Employees are outsourced. Bowleven Plc: Exchange rate used at June 2014 is US$1.7028 (US$1.5217 for previous year). Cairn Energy Plc: Exchange rate used at December 2014 is £1 = $1.6469 (US$1.6527 for previous year). Employees not disclosed. Chevron North Sea Ltd: Employees managed by the parent company. Dolphin Drilling Ltd: Exchange rate used at December 2013 is US$1.6488 (US$1.6161for previous year). Dril-Quip (Europe) Ltd: Exchange rate used at December 2014 is US$1.6469 (US$1.6033 for previous year). Enquest plc:Exchange rate used at December 2014 is US$1.6469 (previous year U$1.6490). John Wood Group Plc: Exchange rate used at December 2014 is US$1.6469 (previous year U$1.6488). KCA Deutag Scotland: Figures are a consolidation of KCA Deutag Drilling Ltd and KCA Deutag Technical Support Ltd to more truly reflect the company’s operations in Scotland. Maersk Oil North Sea UK Ltd: Exchange rate used at December 2013 is US$1.6488 (US$1.6161for previous year). Petrofac Scotland: The figures used are a consolidation of the trading entities of Petrofac’s operations in Scotland, ie. Petrofac Facilities Management Ltd and Petrofac Training Ltd. Solstad Offshore UK Ltd: 2013profit includes a £33.7m dividend received from subsidiaries. Stena Drilling Ltd: Exchange rate used at December 2013 is US$1.6488 (US$1.6161for previous year). Subsea 7: Merged with Halliburton Subsea Ltd (ex. Rockwater) to create Subsea 7 Ltd, sister company to Subsea 7 (UK Service Co) Ltd, which provides the employees and certain administrative services. Talisman Sinopec Energy (UK) Ltd: Exchange rate used at December 2013 is US$1.6488 (US$1.6161for previous year). TAQA Bratani Ltd: Exchange rate used at December 2013 is US$1.6488 (US$1.6161for previous year). Verus Petroleum: Previously Bridge Energy; taken over by Verus Petroleum.

Global exploration & production companies operating out of Scotland Rank 15

Company

Latest Employee No.

Previous Employee No.

% Change

Country of ownership

Shell UK

6500

0.0

BP Exploration

2400

2300

4.35

Netherlands UK

ConocoPhillips

1419

1735

-18.21

USA

Nexen Petroleum

1100

0.0

Canada

Marathon Oil (UK)

650

1000

-35.0

USA

BG Group Plc

405

430*

-5.81

Hess

390*

0.0

USA

Exxon Mobil

296**

240**

23.3

USA

All figures include core contractors. *Insider estimate. **Figure includes apprentices

www.insider.co.uk

July/August 2015 INSIDER 31

ROUND TABLE: OIL&GAS in association with

OIL AND GAS INDUSTRY MUST INNOVATE AND DIVERSIFY by ALASDAIR NORTHROP

PANEL MEMBERS Alasdair Northrop editor, Scottish Business Insider – chair Trevor Burgess managing director, Lime Rock Partners Greg Herrera partner, Energy Ventures Simon Munro regional director Scotland, Business Growth Fund Dr Paddy O’Brien CEO, Industry Technology Facilitator Laurence Ormerod chair, Lux Assure and CB Technology Michael O’Sullivan technology and development director, Enovate Ian Phillips CEO, Oil and Gas Innovation Centre Stephen Sheal director, FWB Park Brown Thanks to FWB Park Brown, Aberdeen, for providing the venue.

32 INSIDER July/August 2015

Does innovation and new technology have a signiﬁcant contribution to make in sustaining the UKCS as a viable oil ﬁeld province? Sheal: Yes, technology does have a part to play in that; however, just as important is making sure we have an oil and gas industry post North Sea production. I’ve always been impressed how a country such as France, with no offshore industry to speak of, has built such a vibrant and competitive oil and gas service and technology sector. In the north-east of Scotland we have a hub of highly successful oil and gas technology businesses that service not just the North Sea but key international markets too. The technology sector has done well to internationalise over the last twenty years, but perhaps we need to accelerate that effort and increase support for technology developers, especially in developing commercialisation and international marketing skills? Phillips: You focus on the UKCS [UK Continental Shelf] and I think that now is only half the story. More than half of the economic activity in oil industry companies, particularly in the north-east of Scotland, is international. This export activity is nothing to do with the oil production in the North Sea. Fairfield recently announced that Dunlin is going to be decommissioned because it’s very, very expensive to produce that oil. However, there’s an opportunity that goes with that. It is going to cost a lot of money to decommission that platform. So there’s a significant opportunity and innovation and new technology have huge potential there. Our industry has an almost frightening ability to not change, despite a self-perception it’s a very

Greg Herrera

innovative industry and it certainly is a risk taking industry. But new technology, doing something in a different way, actually meets an awful lot of resistance. Oil companies tend to contract with large players who are rewarded if they do the job properly. They’re not rewarded if they take a high risk on a technology and then the technology doesn’t deliver. The Westminster government has put big money into supporting innovation. In automotive there’s half a billion gone into a centre whose whole job is to figure out what the next version of engines looks like. In aerospace they’ve got £2.2bn over seven years to support innovation at that scale. So I think this is a direction worth exploring. Historically the oil industry in the UK has not looked for support for innovation. O’Brien: I know there’s been various studies done from time to time that potentially show we in the oil and gas industry are very slow to bring new technology. Nevertheless technology plays a really important role in our www.insider.co.uk

ROUND TABLE: OIL&GAS industry with all the things we’re doing today that we couldn’t do 20 years ago. So it’s an essential part of our industry and it needs to continue to step up to the plate to solve the problems we have. And I’m sure it is going to. Maybe it’s all about how we structure ourselves to support those innovators to do those things? Safety is really important, the question, though, is to what extent is safety killing innovation? Maybe as an industry we need to learn to innovate in a safe manner, and how do we do

hard to compete with all this low cost production from the Middle East. Compounding that is the new swing producer, US shale oil. This is a new phenomenon that’s been created by technology and innovation. There’s all this talk about Saudi putting shale out of business but it’s simply not going to happen. Shale’s a very robust business and it can be turned on or off very easily as the price varies from $40, $70, $80. This is a supply driven decline we’re in now, not a demand driven decline. We need innovation to

Ian Phillips

Michael O’Sullivan

www.insider.co.uk

The opportunity for the UK is from a governmental push to fund a big 3D seismic programme across a huge area. That could discover a lot more reserves which could then help generate the next level of exploration growth Greg Herrera, Energy Ventures

reduce cost, but not by five per cent. We’ve got to look for 20, 30, 40, 50 per cent reductions in cost. I don’t think anyone’s going to invest in new technologies that only bring ten per cent reduction in cost. In addition we need to look for innovations to reduce operational risk, because the UKCS is, relatively speaking, a high risk area. Also anything that accelerates learning, which reduces the number and

July/August 2015 INSIDER 33

▲

Photos: Newsline Media/Derek Ironside

that? Our subsea costs are going up and that’s because we’re engineering, checking, qualifying and verifying. So we need to be better at that. Burgess: Innovation and technology can play a role to prolong the life of the UKCS, maybe another 40 or 50 years, but it’s not going to be sufficient to sustain it as a viable oilfield unless we come up with some really novel technique to find new oil. And I think that’s improbable. We’ve just got to face the facts. UK production has halved since 2004, and cost is a large part of the problem, and this is what we’ve really got to look at. I think the cost for producing an average barrel of oil in the UK has gone up by 62 per cent from 2011 to 2014. And we can’t look at ourselves in isolation. We’ve got to look at the low cost areas like the Middle East. Saudi Arabia’s now got 200 rigs, no wonder they can maintain production. Abu Dhabi has announced they’re going to double their rig count to 112 by 2016. Plus Iraq is increasing production too. It’s going to be very

Laurence Ormerod

experience level of people that you need to accomplish goals. Munro: To me we’re in a very different situation this time around. Trevor talked about shale. The fact is much of the drop in price this time was supply driven and the US for a period of time overtook Saudi in terms of oil production. The shale phenomenon will not go away, it’s something we’re going to have to live with going forward. Which means that, while we might get up to $100 oil again one day, we can’t guarantee it. The North Sea is going to have to get used to working with a far lower cost base than in the past, and hopefully this time businesses will be the right size for the long term. The opportunity is far more around the commercial aspects of working in the North Sea. Most of the large oil companies are never going to be able to make money in the North Sea any more, just because of the way they’re set up. They need to move out, and some of the smaller players, the more aggressive medium-sized businesses, even companies that have not necessarily been directly involved in the oil and gas industry before, need to move into the North Sea to drive the next level of production. They’re the companies that’ll be more aggressive on the cost side, because they’ll have to be in order to make their model and the economics work. Recently the government brought in DRDs – decommissioning relief deeds – which allow acquirers to take advantage of the tax relief available around decommissioning when they make the acquisition rather than having to wait until the asset is actually being decommissioned, which might be 15 or 20 years later. That helps. But the larger oil companies have to change the way they think about selling the assets, because if they are intent on passing the entire decommissioning liability across on day one, and requiring a fully cash collateralised letter of credit, they’re going to be sitting with those assets for a long, long time. O’Sullivan: Unless the technology companies here diversify they’re dead. Enovate started by supplying the North Sea, the UK and the Norwegian sector. However, we’re now looking beyond the North Sea. Growth areas for our technology are west of Africa, the Gulf of Mexico, Brazil and Australia.

ROUND TABLE: OIL&GAS ▲

Success for me is where there is a strong technology services, innovation, centre of excellence for the industry here in Aberdeen, irrespective of whether there’s much production offshore. Safety can also be a mechanism for innovation. We’re in the well integrity and well intervention business, and there’s no doubt that post Macondo the regulators have basically challenged us to up the game when it comes to integrity and safety. So it’s a double-edged sword. It could stifle the innovation in certain areas, or it could be a promoter of innovation in other areas as well. Innovation and technology is going to be a significant contributor in the UK sector, particularly when we’re dealing with heavier fluids, fractured reservoirs and the deep water, harsh west of Shetlands environment. It’s going to have to play a part in that. However, I don’t think that’s going to be sufficient to grow the innovation sector in the north-east of Scotland; there has to be a global look. Ormerod: I think the answer’s yes, but it doesn’t make me excited with the opportunities given the resistance to adoption and the time it takes and the structural problems in the North Sea. I wouldn’t be putting a lot of emphasis on innovations for the UK sector right now, just because it would be so hard to get them through to market. So the international aspect is really important if you’re trying to do any innovation. For the UKCS, the key things for innovation are about sustaining asset life and then adding incremental reserves, so subsea and G&G [geological and geophysical] and things to find these smaller pockets. And then asset integrity and reservoir recovery from what’s there already. They’re niche innovations rather than rethinking the whole industry. I’m going to Houston more than I used to. And when I’m on conference calls there are more people in Houston and influencers aren’t based in Aberdeen so much anymore. And that’s a big challenge. I do think that’s a question mark over Aberdeen. If there isn’t that ‘pull’ from the local market, can it sustain itself as a technology leading centre? Herrera: The UK at some point must recognise security of supply. So ultimately technology will 34 INSIDER July/August 2015

environment and quality], which is now for many operators the largest single department whose job is to stifle any and everything in my view. The operators have said I need 30 per cent cost reduction rather than actually setting up a group to say okay, what could we do different this time? So it’s been an overwhelming focus exclusively on cost management versus any idea of adopting any new innovation. We have to remember the advent of 3D seismic, rotary steerable, and FPSO [floating production, storage and offloading units] are things which have really led to a significant material gain in the UK.

Dr Paddy O’Brien

Our smaller technology companies cannot base their business on just supplying the UK sector; they have to be global in outlook, capability and reach

Stephen Sheal, FWB Park Brown (above)

come to the fore to rescue this cost escalation. I heard a talk where they said operators in the UK lost £5.3bn in 2014 where the average oil price was north of $100. So you can only sustain that for a very short period of time. What we’ve seen over the last three years in this escalating oil price environment is significant cost escalation driven by the operators themselves. We’ve seen a ramp on an exponential curve on the increasing technical risk in terms of finding and exploring and operating smaller puddles. And we’ve seen post Macondo a disproportionate spend on HSE&Q [health, safety,

How do you feel about the future of the oil and gas industry in the north-east and Scotland? Munro: There are two elements to it. The first is continuing to internationalise with the service sector. I think there’s still an opportunity for Aberdeen in certain areas to be at the forefront of the service sector, subsea being one. However, when it comes to the future of the North Sea, I think if we don’t take advantage of a perfectly good crisis, and this time around make sure we keep the cost base down, and operate more efficiently, you’ve got to wonder about longevity. There’s a lot in the press at the moment about some multi-billion pound asset transactions that could happen over the course of the next year, and there are probably others behind the scenes that aren’t as public. I really hope some of those happen because part of this has got to be about getting some of the smaller, more aggressive, more cost-effective E&P [exploration and production] companies into the region who are more open minded about the way they do business going forward. And that will help to drive efficiency. O’Sullivan: I’m quite optimistic about the future, but not because of what’s happening a few miles offshore. If the companies focus, talk to the clients about what they really want, not about what we think they want, if we look beyond the North Sea into the other regions, I see no reason why we can’t be successful. We’ve got the workforce, we’ve got the experience, we’ve got the education sector to support it. We just have to get out there and look beyond the UK Continental Shelf. www.insider.co.uk

ROUND TABLE: OIL&GAS Ormerod: Well, I’m reasonably optimistic about the service sector, not too much about the long-term future for E&P. It’ll just bumble along in a slow decline and, at best, it might level out. I can’t see it reversing. I’d love to be wrong on that obviously. I feel the future won’t be quite the same for innovation. We’re really talking about raising the bar, things that have to make a material impact and how much it really costs in this conservative industry and the things we’ve said. It’ll need a much more professional approach. There’ll be fewer things but hopefully they’ll be bigger and better. We’re going to have to recognise innovation involves a lot of failure, and not stigmatise that. If we’re going to have innovative companies where it’s got to be international and competitive from the get-go they’re going to have to be really good. So I think it’s just going to be less of a cottage industry and a bit more of a structured approach if it’s going to succeed. Burgess: For long-term viability of business here we need companies to have reasons to set up headquarters in the area. It brings people and the support infrastructure develops around about. I don’t believe there’s any incentive these days for a large service company or a large oil company to set up here. The logistics are wrong. You can’t fly to Houston, it costs a fortune to get down to London and the employee cost base is higher than in other parts of the country. I’m hoping for a very interdependent network of small and mid-size asset owners and service providers. That’s the key to the future. Phillips: I am pretty optimistic about the role of technology in the oil industry in the widest sense, in the north-east of Scotland. But I absolutely agree the North Sea basin has gone way past middle age, it’s now in its tail end. There are a couple of bright spots, so there’s still some big discoveries west of Shetland, and the big oil companies will still have a presence here and there will still be a bit of a domestic business. But I think the reason the subsea industry is so good here is because 2000 of the first 3000 subsea wells of the world are in the North Sea. However, the next 3000 aren’t. So we must respond to that challenge, which means go international and do it in a big way. Scottish Enterprise proudly reported slightly more than half of the economic activity here was www.insider.co.uk

Simon Munro

Innovation and technology can play a role to prolong the life of the UKCS but it’s not going to be sufficient to sustain it as a viable oilfield unless we come up with some really novel technique to find new oil. And I think that’s improbable

Trevor Burgess, Lime Rock Partners (above)

now export. We need it to be 90 per cent otherwise we’re not going to be a viable industry. O’Brien: From a technology perspective, with the setup of this new Technology Leadership Board, I know some fairly senior people around the table completely understand if we don’t do something there’s going to be an issue. There’s an opportunity for an organisation like that to very clearly say what the technology challenges are and give

leadership and give co-ordination to a whole range of innovation. On the other side, equally, the operator viewpoint will be looking at the challenges they need to solve. But we need to be able to stimulate innovation and create opportunities for companies to innovate, and the government has to come in here. There is an opportunity both for the Scottish Government and the UK Government to play a significant role like they haven’t maybe done before. But hopefully there’s a realisation now that needs to happen, and there’s an opportunity for that to happen. Herrera: We are a cyclical industry. The industry does not learn and likely will not learn and will do exactly what it did for the last downturn, and the last downturn, and the last downturn. Right now it’s probably easier to go through acquisition by the drill-bit. And what then happens is integration hell for two years, which means where you were getting a decision out of one company, you can’t get any decision out of this amorphous blob which is in this fluid dynamic. The opportunity for the UK is from a governmental push to fund a big 3D seismic programme across a huge area. That could discover a lot more reserves which could then help generate the next level of exploration growth. They could introduce the tax incentives over and above that to enable that to happen. The thing the government can’t do is what they have done in the last 20 years, which is keep changing petroleum revenue tax. The UK is more fiscally unstable than Colombia right now. So for an operator to make an investment decision for 25 years the UK is a high-cost, volatile place to invest. And this business is now more global than it ever has been, so right now we’re shooting down the rankings in terms of competitiveness. Sheal: I continue to be optimistic about the UK as an oil and gas province. However, I can see it changing substantially, with increased consolidation of offshore operators. I expect to see private equity funds playing a bigger role, investing in small independent operators or investing in mid-sized operators as part of a consortium. With that change, our smaller technology companies cannot base their business on the UK market; they have to be global in outlook, capability and reach. ■ July/August 2015 INSIDER 35

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COMMENT: IAN RITCHIE

‘Big data’ is useful but caution is still needed when drawing conclusions

VER 30 years ago I worked on the commercialisation of a machine intelligence algorithm from the University of Edinburgh. I demonstrated this product to Bill Gates at the headquarters of Microsoft in Seattle and, this being 1983, Microsoft was in a single three-storey building. Our program took lots of attributes – the more the merrier – of measured behaviour, created a rule that fitted all the factors, and achieved a formula that could then be used to make future decisions. It was an intriguing product and Gates seemed impressed. “You’ll probably sell 1,500 of these,” he said. He was right, the program, Expert-Ease, sold about 1,500 copies. What we were missing, in 1983, was the internet, and its access to unlimited data. If you have lots of data you can potentially make conclusions based on that data that are very likely to be correct. And nowadays there actually are masses of data – IBM estimates that every day 2.5 quintillion bytes of data are created – that’s 1018. Welcome to the world of ‘big data’ – the current buzzword of the information industry, and fast becoming the most accepted way of reaching complex decisions based on evidence. ‘Big data’ has driven many initiatives, from the pioneering Tesco clubcard, which allowed the company to take decisions about what items to stock in what stores, to IBM’s $1bn Watson computer, which used facts retrieved from the internet to give successive correct answers and win the TV game show Jeopardy. The book Moneyball by Michael Lewis, later turned into a Brad Pitt movie, showed rigorously analysing lots of raw performance statistics allowed the Oakland Athletics baseball team to make dramatically better hiring and promotion decisions than their competitors, who were using traditional expert analysis based on human judgement. These days, pretty much every corporation is using ‘big data’ to make decisions – from trading billions of stocks per day, to buying online advertising based on keywords and induction. It’s www.insider.co.uk

turned out to be the only way to cope with the volume and speed of decisions that is required. Steven Levitt and Stephen Dubner caught this mood early with their book, Freakonomics, in which they famously correlated trends and argued crime rates fell in the US as a direct result of the Roe vs Wade decision legalising abortion. Their argument was the babies who were never wanted, and who as a result might have turned into criminals, were never born after abortion became available, and so couldn’t commit the crimes. Some argue this conclusion is too glib and it might have been other factors. For example, it might have been the removal of lead from petrol that resulted in personality changes that led to

[‘Big data’ has] turned out to be the only way to cope with the volume and speed of decisions that is required lower levels of criminal behaviour. In any case, it doesn’t explain similar falling crime rates in other developed economies over the same period. Some analysts have created other even more unbelievable correlations. The Spurious Correlations website quotes examples strongly linking divorce rates to margarine sales, or oil imports from Norway correlating with drivers killed by trains. My Expert-Ease programme had a basic flaw. Once you introduced lots of factors the rules that were created were often impossible to understand; where you can’t check and test the logic you have to doubt the efficacy of the system created. Even today, we need to be very careful drawing conclusions from ‘big data’. ■ Ian Ritchie is vice president, business, of the Royal Society of Edinburgh.

July/August 2015 INSIDER 37

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REPORT: INTELLECTUAL PROPERTY & INTANGIBLE ASSETS

PROTECT YOUR PRODUCTS, PROCESSES AND SERVICES By VICTORIA MASTERSON

www.marks-clerk.com www.insider.co.uk

helps companies develop new products, services and processes by linking them with academic expertise across Scotland’s 24 universities and research institutes. Interface connected Pulsetta with the Rowett Institute of Nutrition and Health, which has played a vital role in analysing the nutritional benefits of Pulsetta’s products. “The value of intellectual property (IP) rights is evident from figures provided by the Intellectual Property Office, which highlight the global trade in IP licences is worth over

UK SMEs using intellectual property rights report as much as 20 per cent higher growth, income and employment than those that don’t Dr Siobhán Jordan, Interface (below)

£600bn a year,” says Interface director Dr Siobhán Jordan. “UK SMEs using intellectual property rights report as much as 20 per cent higher growth, income and employment than those that don’t.” Interface helps businesses offset the cost of research and development projects through schemes including innovation vouchers – funding of up

to £5,000 to help micro, small and medium-sized businesses pay for specialist external support. Jordan says her team has recently supported the development of new standard legal templates for innovation vouchers that provide greater clarity on intellectual assets, and urges companies to explore in more detail how they can partner with academics to develop new products, processes or services. Campbell Newton, managing partner of patent and trade mark attorney Marks & Clerk’s Edinburgh office, says the food and drink sector is an area where it is seeing a lot of growth. “There are all these boutique distilleries opening up. There has been a lot of gin distilling taking place. There are all the micro breweries. Anyone can make beer and anyone can make whisky but what is behind all of these businesses is the brand and the investment they need to put in to build the brand and build the trademark. At the end of the day that is where the real value is in businesses like that. “ Newton says the other part of the business it is seeing growth is in on its valuation side.“We can do valuations of businesses particularly focusing on intellectual property. And that is now becoming quite attractive to potential investors and also to the banks because it allows a business to say ‘my

Leading you through the world of IP protection and enforcement July/August 2015 INSIDER 39

▲

LUTEN FREE bread and bakery products business Pulsetta started as a kitchen table experiment to create a bread that was free from all the major food intolerances. Founder and chief executive Dr Karsten Karcher is lactose intolerant and gluten sensitive and his wife, Anne Marie, has been a vegetarian since childhood. By using milled peas and lentils rather than traditional flours, they have created a range of bread, biscuit and snack products free from gluten, wheat, lactose, milk, egg, as well as artificial additives, preservatives, or colours. “We started the business by creating and filing a patent long before we began trading,” explains Dr Karcher. “We were granted a UK patent at the end of last year and have pending patents in Europe, the US, Canada and Australia. These protect the use of certain pulses in glutenfree, leavened breadstuffs. “In the food industry especially, it’s very easy for people to copy your ideas, so we felt it was important to secure a set of patents very early on to protect us.” The business also owns trademarks in Europe and the US for the use of the word Pulsetta, with another pending in Canada. One partner to help Pulsetta commercialise was Interface, which

REPORT: INTELLECTUAL PROPERTY & INTANGIBLE ASSETS

COMMENT Dr Mairi Rudkin

▲

Chartered Patent Attorney Marks & Clerk LLP Tel: 0141 221 5767 Email: mrudkin@marks-clerk.com

IP is worth X, I want to raise some capital or get a loan on the back of it’.” Newton says the real value in business these days is in knowledge, which is tied up in intellectual property, patents, trademarks and designs. “The position we are getting to now is IP should be on the agenda for every business at board level and be part of the strategic plan.” The intellectual property practice at law firm Maclay Murray & Spens covers the protection, commercialisation and other exploitation of all types of intellectual property rights, as well as IP dispute resolution. “In our practice, the focus of many businesses is on copyright – including software copyright – patent rights, database rights and trademarks,” explains Ross Nicol, IP and technology team partner at Maclay Murray & Spens. “That said, businesses also view know-how and confidential information as business critical. While these are less tangible forms of intellectual property, we work with businesses to find a solution that helps them best protect this, along with more traditional forms of IP.” The 12-strong IP team at law firm Brodies is top-ranked in the Chambers & Partners and Legal 500 independent directories and was named Scottish IP Firm of the Year for the second year running this year. Partner Gill Grassie makes the point companies are now regularly recording significant brand asset values on their balance sheets. “For example, Coca Cola is known as the top-ranked brand and is valued at $69bn, with IBM second on $60bn, Google in seventh place at $32bn and Apple coming in twentieth at $15bn,” she explains. “Failure to enforce IP rights can result in this value being swiftly eroded as infringers will be more inclined to copy a competitor that does not have a reputation for brand and IP enforcement.” Brands last forever, unlike most types of registered IP, Grassie adds. For example, the Aero chocolate bar recipe was protected by patent in 1935, when the name was also trademarked. “The patent protection ran out after 20 years or so – unlike the registered trade mark – which meant competitors could copy the recipe,” Grassie explains. “However, Aero had established its own distinctive brand so continues to rely on customers asking for its products 40 INSIDER July/August 2015

Patent protection isn’t just for the big boys

In the food industry especially, it’s very easy for people to copy your ideas, so we felt it was important to secure a set of patents very early on to protect us Dr Karsten Karcher, Pulsetta (above)

as opposed to similar products.” Scottish Enterprise has its own intellectual assets team and works closely with the UK Intellectual Property Office to help Scottish businesses identify, manage and protect their intellectual assets. This service has been used by companies including the makers of FitSip, a wrist-mounted hands-free hydration pouch which gives runners enough water to remain hydrated without the weight and hassle of bottles or belts. The company had only one trademark registered in the UK at the time of initial discussions, and needed help to identify what other IP protection may be needed. “Our review suggested an extension of their trade mark portfolio to cover wider geographical territories,” explains David Hughes, intellectual assets specialist for Scottish Enterprise. “Funding from us and the UK Intellectual Property Office allowed the company to hire a legal professional to provide a wider review of their IP and a legal overview of protection strategies. “As a result, the company widened its IP protection strategy by registering additional trademarks and designs.” ■

Looking at the headlines in the papers, it is easy to think that patents are the preserve of multinational tech companies with billions of dollars to spend on huge litigation battles. The reality of the situation is very different. They are also an important tool that, when used well, can prove vital to the growth of an SME. A lot of the small and medium-sized companies I work with not only use their patents to stop competitors entering their market space and protect revenue streams, but also use them to secure funding from investors. Others license their patents out to third parties to generate secondary sources of revenue or use them to claim tax relief through the UK Government’s Patent Box scheme. Patents can be obtained for new inventions in almost any industry – whether it’s engineering, biotechnology, pharmaceuticals, medical devices, software, telecoms, physics or another area. Many of the businesses I work with do not realise the potential they are sitting on, and so we often have to work together to put in place strategies for harvesting IP. There are some other considerations too. You also need to think through your marketing strategy. Patent protection is territorial and so must be independently obtained before different national or regional authorities. It can therefore be very expensive to file and maintain patents in a large number of countries, not least because for each patent an annual fee must be paid to keep it alive. You should be clear on your key markets and manufacturing bases and file there. Most importantly – to be novel your invention must contain at least one feature which has previously not been disclosed to the public. This means that it is absolutely essential that you do not publish details of your invention before you have filed your patent application.

www.insider.co.uk

Leading you through the world of IP protection and enforcement It may seem obvious, but when you have a good idea, you should safeguard it. So it’s vital you work with people who have the right experience and expertise to protect your intellectual property – and help you fully exploit its potential. At Marks & Clerk, we take time to understand your business – whatever your size, sector and location – and tailor our services to create the most effective intellectual property strategy for you. From the smallest inventive step to the biggest commercial leap, we’re here to ensure you get maximum value and benefit from your intellectual property. With 8 offices in the UK, including 3 in Scotland, and an impressive international network, we’re the obvious choice to meet your IP needs locally and globally. To find out how we can help protect your interests, email scotland@marks-clerk.com or visit our website.

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BUSINESS PROFILE

SHIRLAWS GROUP  THE VERY DEFINITION OF CUTTING EDGE BUSINESS AND EXECUTIVE COACHING Kai joined Shirlaws in 2010 after spending 2 years developing a management consulting and mentoring practice. Kai specialises in guiding business leaders and their teams to play a bigger game effectively and sustainably. She has a real passion for coaching people who are serious about change, and is familiar with the often lonely challenges facing the entrepreneur. She brings to Shirlaws a wealth of experience and a strong track record of building highly successful teams and implementing structures and systems to improve long term performance. Kai spent over 10 years as Managing Director of Search Consultancy, becoming part of the management buy-in/ buy-out team in February 2000. Whilst firmly establishing Search as the leading independent player in Scotland, the successful foot print was rolled out south of the border, opening locations in Manchester, Crawley, Leicester, Liverpool, Leeds, Birmingham and London, and increasing staff numbers from 170 to over 600. As a result, Search was recognised as one of the UK’s 100 fastest growing private companies in PricewaterhouseCoopers’‘Profit Track 100. The company turnover on exit (end 2007) was over £120m and NFI had grown at 20% year on year for the previous 5 years.

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IN MY VIEW: HUGH AITKEN, CBI SCOTLAND

We must harness the positivity which pervades Scottish business

RETURNED from the USA last November after five years in both Reno, Nevada, with Microsoft and Sunnyvale, California, with HP and am now a full five months into the CBI director Scotland position. I have had the pleasure of visiting well over 100 companies across the country and across the sectors during this timeframe and am delighted to say Scotland is well and truly ‘open for business’. The innovation, drive, change management and positive messaging I’ve come across has been outstanding and ranges across manufacturing, technology, food and drink, oil and gas – yes, oil and gas! – energy, media and so on. We need to package such messaging and get it out there for all to see, as it would go a long way to entice future inward investors to view Scotland in a new light. I’ve met manufacturing companies who are ‘reinventing’ themselves to run multiple production lines around multiple and highly varied products, ranging from printed circuit boards to pizza vending machines. I’ve met a guy who is into his third successful technology start-up and thriving accordingly. There are companies headquartered here with 70 to 85 per cent of their revenues being driven out of the USA Entrepreneurism is rife across the country and is on a very aggressive growth pattern over the next five to 10 years. There is a real buzz about the place that needs harnessed, packaged and publicised across the inward investment community, with a view to attracting even more interest and investments going forward. Are there barriers to being successful? Of course, and they range from infrastructure, skill sets and education to energy roadmaps, digitalisation and so on, but what country doesn’t have similar problems? The good thing is we are recognising the issues and, along with both Holyrood and Westminster, we are working them all with a sense of urgency, to help break them down and allow our companies to plan for the future. In the past companies have been crying out for more stability and I fully recognise the need for this, but just take a look at the lack of stability companies have had to deal with and will be facing over a five-

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year period – the UK general election; The Smith Report on devolution; the Scottish independence referendum; Scottish elections; and the EU referendum – and yet they not only survive, but in many cases are thriving. I believe we really need to take advantage of this situation and talk up the country in a big big way. One thing we also have in our favour is size, in that we are a relatively small region with ease of access across the country, and proximity to a devolved government who are likely to remain in power for the foreseeable future, plus a business community who come together regularly and can be very quickly focused on future agenda and positive messaging.

Entrepreneurism is rife across the country and is on a very aggressive growth pattern over the next ﬁve to 10 years Take energy as an example. Business needs to step up and articulate what our energy strategy should look like to take us forward into 2035, instead of hoping government will get it and pull the rabbit out of the hat. I have always said the government don’t know what they don’t know and if business doesn’t tell them, we have only ourselves to blame. We are a small enough community to pull together a 20-year energy strategy covering some if not all of the following areas, and present it to both Holyrood and Westminster – oil and gas; coal; renewables; onshore wind; offshore wind; fracking; and nuclear. We should be able to do the same with infrastructure; education; digital; skills and so on with a view to taking advantage of our size and turning this into a competitive weapon. All it would take is a little more leadership within the business community and we could have something really special going on here in Scotland, which would complement greatly what our current businesses have achieved to date. ■ Hugh Aitken CBE is regional director of CBI Scotland.

July/August 2015 INSIDER 43

BUSINESS PROFILE: INFINITY PARTNERSHIP

John Atkinson (left) and Simon Cowie.

TO INFINITY AND BEYOND AS FIRM PLAYS KEY ROLE IN SUPPORTING CLIENTS The landscape for Aberdeen and its North Sea oil and gas industry focal point has changed – and firms are having to change with it. Cost-cutting, strategic re-assessments and investment reviews are rarely out of the headlines as the city adjusts to the low oil price and its many consequences. However, Simon Cowie, managing director of award-winning accountancy practice Infinity Partnership, reckons there will still be opportunities for companies that bring new ways of thinking to the sector. He said: “Many businesses are reducing costs and looking to enhance customer service during these challenging times in the region. Others will rise to the top by offering something different – whether it’s innovation, new thinking or a niche specialism.” For Infinity Partnership, based in the west end of the city, the successful niche lies in the mergers and acquisitions arena. The company has completed more than 50 deals worth a combined value of more than £200m since being established in 2011. Those credentials are underlined by Simon’s recognition as Scotland’s Dealmaker of the Year at the Deals & Dealmakers Awards – twice, in 2009 and again in 2014. Beyond its M&A capabilities and achievements, Infinity Partnership is a leading accountancy, tax planning, corporate finance and business advisor,

with clients from Shetland to Southampton and a growing number in overseas locations such as the USA, Middle East and Australia. Simon said: “Infinity Partnership has primarily grown because of our reputation – largely through word-of-mouth recommendations. Yes, we’ve made a name in mergers and acquisitions, but there is much more to the business than the deals. Our customers trust us because of the quality of our services, our transparent billing processes and our long-standing commitment to customer satisfaction. “Our focus extends beyond the north-east of Scotland and we possess the capabilities and resources to support any client, anywhere in the UK or indeed overseas. That’s because, for us, it’s all about understanding the company and its shareholders, what it wants to achieve and how we can play our part in ensuring it reaches those goals. “We’re able to do this because, quite simply, we’ve a hugely talented and loyal team at Infinity. We’re committed to a comprehensive training and career development programme – one that benefits our people, and ultimately our clients.” Simon believes the Aberdeen and North Sea M&A market will be relatively quiet in the next six months in terms of the number of deals being completed, in particular in the SME sector where huge price differentials now exist in light of the region’s current economic climate.

For more information about Infinity Partnership call 01224 618460, email simon.cowie@infinity-partnership.com or visit www.infinity-partnership.com

Infinity was involved in its own deal earlier this year when the business merged with Aberdeen’s Accord Tax and Accountancy. Accord has moved from its city centre premises to the Albert Street offices of Infinity Partnership and recently rebranded as Infinity Taxation in order to provide a focus on this area. Simon added: “Accord has a strong reputation for its tax advisory and compliance specialisms, while we bring strong business advisory skills to the table. The merger was the ideal coming together, not only for us but also our clients. We want to deliver a first-class, proactive service that adds real value for our clients, who then won’t hesitate to recommend us.” Infinity Taxation is led by tax director John Atkinson, who has practised in Aberdeen for 30 years and held a number of positions including tax partner and partner in charge of the Aberdeen office of one of the accountancy majors. Infinity Partnership has won three awards this year. The firm was awarded the Dealmakers Rising Star (UK) honour as part of the 2015 International M&A Awards, Best in Tax Planning Team (Scotland) at the 2015 International Tax Awards and Corporate Finance Boutique of the Year (Scotland) at the 2015 M&A Today Global Awards. The company was also a finalist in the small accountancy of the year category at the 2015 Scottish Accountancy and Finance Awards.

REGIONAL REVIEW: ABERDEEN in association with

OIL CAPITAL AT A CROSSROADS

the last six months but not much – a few hundred. “As there was relatively full employment beforehand and a lot of vacancies, outstanding questions are how many of those vacancies have gone, how many have been replaced by people who are being made

The last time there was an oil price tightening issue we noticed a step change in the amount of business being done to export markets Robert Collier, Aberdeen Chamber of Commerce (below)

redundant going into what were vacant posts, and how many people are mobile and have gone to take a similar contract overseas? “There is bound to be an impact on the local economy and we are getting anecdotal information about reduced hotel occupancies and reduced passengers through the airport. Whether these are sufficient to have an economic impact it is very difficult to tell because it is all at the margin.

MMS Aberdeen. 66 Queen’s Road, Aberdeen AB15 4YE. T: 01224 356 130 www.insider.co.uk

Above: An artist’s impression of the proposed partpedestrianisation of Union Street

“If you are going from 93 per cent occupancy to 87 per cent occupancy it is probably not going to ruin your business, it is going to reduce your profit but you are still a profitable business. “One thing you can almost certainly confirm is the longer the period of time this is in place the more difficult it will become and the more impact it will have. We are in a situation where you have the cause but you haven’t had the effect yet.” The chamber has seen an increase in the numbers of people coming to its networking events. “It is logical when you think about it,” says Collier. “They want to make sales contacts or good contacts in case they need to be distributing their CV.” The chamber has also seen an increase in the number of export documents being issued. “The last time there was an oil price tightening issue we noticed a step change in the amount of business being done to export markets, which went from 40 per cent exports/60 per cent UKCS to 50/50. “We are keeping a very close eye. It could be with this downturn it changes to 60/40 in favour of exports. That is not a bad thing for Aberdeen

Very Smart People. Visit mms.co.uk July/August 2015 INSIDER 45

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HERE IS no doubt Aberdeen has reached another crossroads in its long and distinguished history. The plunge in the price of oil has inevitably focused minds on the future of the city whose prosperity heavily depends on the industry. Although it is not unused to volatility in the oil price, the dramatic change has been a stern reminder that the city will not always be able to rely on North Sea carbons for its living. In terms of impact on the city and shire it is not yet clear how deep the damage will be of the latest round of job cuts. Belinda Miller, who is head of economic development for Aberdeenshire Council, says a lot of people from the shire work in Aberdeen’s oil and gas industry. “We are very aware of the number of people being made redundant. And that will have a knock-on effect in the wider economy of particularly the travel to work area to Aberdeen.” Aberdeen & Grampian Chamber of Commerce chief executive Robert Collier says the monthly economic report produced by Mackay for its members shows there has been a slight increase in the unemployed in

by ALASDAIR NORTHROP

REGIONAL REVIEW: ABERDEEN ▲

Plc because it means all of the companies in the supply chain that are based here are predominantly exporters.” Graeme Allan, who is managing director of fast-growing accountancy firm Anderson Anderson & Brown, says there is no question the economy in Aberdeen and Aberdeenshire is experiencing its most difficult period for over ten years. “The confidence of the oil and gas sector extends well beyond oil and gas of course, as a considerable number of businesses interact in a significant way with the sector, whether they are supply chain, hospitality or professional services, to name but a few,” he says. “The region is well aware this is the time to face up to the challenges of the spiralling increases in the cost base and make a permanent change. “But it’s not all doom and gloom, there are still parts of the industry that are developing both in an innovative sense and a geographical one. Businesses working internationally will have to use their expertise beyond the North Sea to look for the opportunities.” Stuart Fitzsimmons, a banking & finance partner based in the Aberdeen office of Maclay Murray & Spens, says his firm’s practice covers a broad range of sectors. “Therefore, while we are very busy on oil and gas work, we have a number of active clients in sectors such as food and drink, financial services, real estate, renewable energy and infrastructure,” he says. “It is important not to underestimate the importance of these sectors, which continue to offer some great opportunities and momentum. “With a quick recovery in the oil price unlikely, the pressures facing the oil and gas sector are likely to continue for a while. This makes it even more important to ensure the necessary steps are taken so we can maintain our skills base and safeguard the north-east’s global position as a centre of excellence for the oil and gas industry.” Stephen Sheal, director of headhunter FWB Park Brown, says as a company it is involved in the business life of the city mostly from an oil and gas perspective but also

An artist’s impression of the new Aberdeen Exhibition and Conference Centre

On the oil and gas side, most of our clients have looked at their activities and decided they would pause when it comes to making signiﬁcant changes in management teams or investments for growth Stephen Sheal, FWB Park Brown (below)

from a non oil and gas point of view as well. “On the oil and gas side I think it is fair to say it has been a very testing and challenging six months,” he says. “Most of our clients have looked at their activities and decided they would pause when it comes to making significant changes in management teams or investments for growth. “Our business is probably a little bit unique because we are involved at high levels in all sectors in the Scottish economy. So the fact we are engaged in other types of search activity in everything from construction through to life sciences here in Aberdeen and Aberdeenshire is testament to that. Diversification

MMS Aberdeen. 66 Queen’s Road, Aberdeen AB15 4YE. T: 01224 356 130 46 INSIDER July/August 2015

is natural to us because that is the history of the firm.” Last February Aberdeen City Council organised an oil summit when it was clear the oil price was not going to recover quickly where it brought industry leaders together along with three tiers of government. The council leader, Councillor Jenny Laing brought UK, Scottish and local government together with academics and the unions to an event to discuss the best way forward for the industry. Laing used the summit to promote Aberdeen’s bid to raise £2.9bn under the UK Government’s city regional deal bid scheme. Aberdeen City and Aberdeenshire councils have combined forces to work together on the bid, which aims to catalyse growth and diversification for existing and new industry. The funding would be used over the next 20 years to improve regional competitiveness, connectivity, infrastructure, housing, employment and lifestyle, which it says are key elements in attracting and retaining the people it will continue to need to power and support the energy sector in the region. Laing and Aberdeenshire Council leader Jim Gifford say the industry and the region are now at a threshold

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REGIONAL REVIEW: ABERDEEN

COMMENT Stuart Fitzsimmons

www.insider.co.uk

seen in my working lifetime,” he says. “The only piece of significant public infrastructure expenditure we have seen in my lifetime is the western peripheral road, which thankfully is on site and being built. But I think most people will agree it is at least 20 years overdue. “It is appalling the lack of public investment in this area given what that public investment could have returned as opposed to, in my opinion, some of the less well justified investment there has been in other areas to very little return. We could do with better public transport, particularly between the city centre and the airport.” In addition to the city region bid, last month an ambitious masterplan designed to transform Aberdeen city centre into a modern vibrant location was approved by local councillors. No less than 49 recommendations were put forward in the masterplan, which is the result of nine months’ consultation with the public by private consultancy BDP. They include part-pedestrianisation of the city’s main artery, Union Street, and more residential accommodation in the city centre. The question on most Aberdonian lips is whether the council will actually be able to deliver the plans in the wake of the controversial Union Terrace Gardens project in which it turned down a proposal funded partly with a massive £50m contribution from oil tycoon Sir Ian Wood to create a huge open public space. Jennifer Young, chair of law firm Ledingham Chalmers, chaired a chamber breakfast just at the time the consultation on the city centre was under way and says there was certainly a strong view there was still a window of opportunity for Aberdeen. “But windows close and we just have to make sure we don’t allow this opportunity to be lost. “I would be very disappointed if we don’t see something fruitful and positive coming out of this particular exercise because I do think if we don’t take it now we may find it very difficult to get that opportunity again. “I am very supportive and enthused about this. No plan is going to be perfect – let’s be positive and have a good start. I think the process has been the right thing.” Jenny Laing of Aberdeen City Council emphasises it is a long-term

Creating positive energy in the North East THE downturn in the oil and gas industry creates challenges for the region, but there are strong indications that other sectors can successfully pick up some of the slack. The energy sector has undoubtedly powered the terrific economic performance in the North East of Scotland over the past ten years, but all the eggs were never solely in the oil and gas basket. Aberdeen and the wider region has a thriving food and drink sector as well as growing alternative energy and infrastructure activity, and businesses in these areas will have an opportunity to shine while the oil industry recovers. There are clear signs at the moment that some of these sectors have real positive momentum, and that in turn is a good indication of an entrepreneurial economy. As one industry experiences challenging times, other sectors benefit from an uptick in activity and receive increased market attention, as investors and business leaders go looking for new opportunities. The food and drink sector in particular has been very busy. At MMS our Food & Drink group in Aberdeen recently sponsored Taste of Grampian, the one-day food and drink festival at Inverurie, and it was very evident just how strong that sector is at the moment. The event was a real celebration of high quality local produce, including smoked salmon, prime beef, shortbread, ice cream, craft beers and some of the best drams in the world. It was also an excellent showcase for some of the region’s best entrepreneurial talent, from iconic global brands to recent start-ups. As market interest grows, the next 12 to 24 months will be an exciting period for food and drink businesses, whether investing in R&D for the next product line, internationalising and pursuing new markets, or seeking growth through acquisition. The renewable energy sector is also receiving increased attention from investors and dealmakers, while there are some significant infrastructure projects underway in the North East, which will spin off activity to various parts of the economy. So while the downturn in the oil price undoubtedly brings with it a challenging time for the region, there is still much for businesses to look forward to.

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and there is a significant risk the industry’s presence in the region could fragment prematurely and prejudice the extent to which remaining reserves in the North Sea are recovered. This is nationally significant as the energy sector recently accounted for 16.4 per cent of UK corporation tax. Laing said that right from the beginning it has had industry leaders along with the academics and business partners helping it shape up the deal proposal. One of the key issues for the bid is the city’s infrastructure. Laing says the council recognised its infrastructure has not kept pace with that over the years, particularly around housing, digital connectivity, and road, rail and air connectivity. She also points out Aberdeen is the lowest funded council in Scotland so there are challenges for it as a public sector body funding these projects. Proposals which may be put forward as part of the bid include improvements to the city’s harbour and a suburban railway system to link up individual parts of the city. It is also looking at setting up an enterprise zone to enable the two universities in the city to work more closely with businesses, and developing technology which can be sold and exported. John Strachan, property partner at Burness Paull, says he believes it is fair to say Aberdeen has fallen behind other UK cities in terms of the actual built environment and what it offers to people who live and work in the city. “I think these are all very positive developments – essential to ensure Aberdeen can consolidate its position and continue to attract the best talent,” he says. “One of the complaints there has been from the large oil companies over the years is they have to try and attract the talent to Aberdeen and the difficulty has been selling Aberdeen as a place to live when you have other opportunities in Canada, the US and all over the world. I have heard numerous HR directors of oil companies saying that. So I think these initiatives are long overdue.” Bill Duguid, managing director of commercial property firm Ryden, says if the bid succeeds in getting £2.9bn that would be fantastic. “Even if they get a significant proportion, that will be much more public investment in this area than we have

Banking & Finance partner Maclay Murray & Spens LLP Tel: 01224 356 145 Email: Stuart.Fitzsimmons @mms.co.uk www.mms.co.uk

July/August 2015 INSIDER 47

REGIONAL REVIEW: ABERDEEN ▲

plan. “Everything that is within it would not be in the gift of the council to deliver. It is very much a case of us working with the private sector in order to produce the vision the public have asked for,” she says. “From the beginning we set up a city centre regeneration board, which is now a working group where we had other public sector organisations sitting around the table along with business and academics to shape up the thinking behind that too.” Aberdeen City Council’s new head of economic development, Richard Sweetnam, says in terms of the deliverability already since the plan was published he has had two meetings on a couple of the intervention areas with developers. “You can already see it has stimulated the interest in the city,” he says. “When you look at the economic vision for the city of Aberdeen, the vibrancy of the city centre is crucial and we have a fantastic opportunity in terms of the masterplan.” Allan says the plan is an outstanding opportunity to both Aberdeen city and shire and represents the first major advancement for the city centre in several generations and for once seems to be supported by all parties. “This provides an opportunity to demonstrate Aberdeen is, and will continue to be, the European oil capital with the investment in infrastructure to support that,” he says. Duguid says Aberdeen needed some sort of plan. “It will not be everyone’s cup of tea and I am sure there will be people that are pro and people that are anti,” he says. “Certainly it is to be applauded and encouraged. They have at least taken some time and a bit of a consultation to go round and come up with a plan. “I think, as one of the politicians put it, plans are fine but it is delivery and implementation they will be judged on. I have seen various other plans, like Aberdeen beyond 2000, which have come and gone and not much in many of these have ever actually turned into developments. The proof of the pudding will be how much they can manage to deliver.”

A successful city regional deal bid could see improvements to the city’s harbour

The only piece of signiﬁcant public infrastructure expenditure we have seen in my lifetime is the western peripheral road, which thankfully is on site and being built. But I think most people will agree it is at least 20 years overdue.

Bill Duguid, Ryden (below)

Although the commercial property market is seeing a downturn there is still plenty of construction activity going on in the city. Work is under way on the £107m Marischal Square development, which is planned to include a 125-bedroom, four-star Marriott hotel as well as 175,000 sq ft of offices, retail, restaurants and civic space. Knight Property Group is also well under way with its redevelopment of the former Capitol cinema into 74,000 sq ft of speculative office complex. And nearby an even bigger development, the 132,000 sq ft Silver Fin speculative project by Titan Investors, is due to start soon. Duguid says while much of the rest of the UK went into recession in the

MMS Aberdeen. 66 Queen’s Road, Aberdeen AB15 4YE. T: 01224 356 130 48 INSIDER July/August 2015

wake of the credit crunch Aberdeen continued to thrive. “That meant there was probably a greater focus here by the institutions who saw this as the one shining brightest outside London,” he says. As a result, the institutions put money into new office developments including Silver Fin. “It coincided with a period in the market when companies needed to renew the facilities they had anyway as they were getting old but at the same time another factor in trying to attract the right sort of staff was offering people shiny bright new offices.” He says the downturn in Aberdeen has now probably placed it in commercial property terms into the same place as the other provincial cities have been in for the last four or five years. “I think you will see a situation where landlords who previously were able to dictate terms and give away little or no incentives for very long leases will have to as more property comes in,” he says. “Most of those speculative buildings are not going to be available before 2016 and some into 2017 so I guess you have to speculate as to what the situation will be in the oil industry come that time. If, for example, the price goes up to 70 or 80 dollars a barrel then we may be back to not the overheated conditions

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REGIONAL REVIEW: ABERDEEN we saw two or three years ago but certainly more of a balance between supply and demand. That remains to be seen.” If there is some recovery and the new offices are filled Duguid believes it will help revitalise the southern end of Union Street. Another major development in the planning stage is the proposed new £270m conference centre near the airport. One of the reasons for the move is that the exhibition centre has reached its capacity for the huge Offshore Europe exhibition which is held every other year. The council is currently in a period of consultation about the new centre. The masterplan went through in June and is now in a period of consultation. “It is an exciting project because not only is it the exhibition and conference centre itself, we are looking at having an energy centre and three hotels on that site and there will still be land left for other commercial development at later stages,” says Laing. “It is a big commitment by the council but we obviously see the importance of having that kind of facility, which would meet the demands of particularly Offshore Europe, which is very important to us and the economy of the north-east as a whole, but also allowing us to attract other conferences, providing flexibility within the facility itself to meet the needs of varying sizes of conferences and exhibitions.” The centre would also enable the city to hold large indoor concerts. Last month Elton John played to an audience of 15,000 in an outdoor concert. Sweetnam says it is also beginning to do the market testing about how the new space would be managed and operated. Miller says the big economic opportunities for Aberdeenshire are tourism and the food and drink industry, both of which are really on the up at the moment. It is currently in talks about working more collaboratively on tourism promotion. “At the moment it is a bit mixed,” she says. “You have destination

Work is under way on the city’s £107m Marischal Square development

One of the complaints there has been from the large oil companies over the years is they have to try and attract the talent to Aberdeen and the difﬁculty has been selling Aberdeen as a place to live when you have other opportunities in Canada, the US and all over the world John Strachan, Burness Paull (below)

marketing organisations for the city of Aberdeen, Royal Deeside and Banffshire and it is really bringing those marketing approaches together as one voice.” Miller says the food and drink industry has always been a success for the area, given its core big companies ranging from fish canning through to shortbread making. The council is working very closely

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with the industry on a new strategy for the food and drink industry for the Aberdeen, Aberdeenshire and Moray council areas. “That is founded on moving it from a very domestic market to beyond Scotland. It is about the opportunities that exist all over Europe and beyond. “On the innovation side there is a real opportunity through innovation and entrepreneurship around food and drink as well.” The fish industry remains important to the region and, indeed, Scotland, with Peterhead remaining the largest white fish port in Europe and Fraserburgh the largest prawn landing port in the UK. However, it is not without its challenges. Last month Young’s Seafood, which has a plant in Fraserburgh, lost a deal to supply smoked salmon to Sainsbury’s, which is likely to result in redundancies. “Outwith that issue we have just undertaken a fish processing study to look at the opportunities to grow fish processing,” says Miller. “We don’t want to lose that capacity.” ■

Very Smart People. Visit mms.co.uk June 2015 INSIDER 49

the Silver Darling seafood Restaurant A B E R D E E N The Silver Darling, named from the Scottish nickname for the herring, is owned and run by Frenchman Didier Dejean. His menus consist largely of local ďŹ sh with a French twist and Mediterranean and occasional Far East ďŹ&#x201A;ourishes. These menus are the reason why Chef Dejean has been shortlisted for restaurant chef of the year in 2003, and highly commended for restaurant chef and seafood restaurant chef of the year in 2008.

To make a reservation call 01224 576 229 or e-mail silverdarling@hotmail.co.uk

The Silver Darling Restaurant, Pocra Quay, North Pier, Aberdeen AB11 5DQ Closed lunchtime Saturday and all day Sunday. Private Functions available.

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SECTOR WITH DESIGNS ON SUCCESS by ALASDAIR NORTHROP

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fellows was Scotland’s former chief medical officer Sir Kenneth Calman, who gave a speech at its annual dinner last year. Baxter says most architects in Scotland work within small practices varying from a sole principle up to four or five architects. There

The new £80m Aker Solutions headquarters building at the Aberdeen International Business Park, designed by Keppie

The skills here are world quality and we have an industry we are not exploiting sufﬁciently, which we are not taking to the world sufﬁciently Neil Baxter Royal Incorporation of Architects in Scotland (below)

are something in excess of 950 architectural practices in Scotland of all different scales. Bigger firms are relatively unusual. “The majority tend to operate in their own areas, many of them working on fairly modest jobs,” says Baxter. “It might be the odd oneoff house. It might even be house extensions and working up from there into community skilled projects

and the larger scale projects at local level up to nationally procured work which tends to be government or quasi government.” Over the past few years the downturn has inevitably hit architects and for many of them the climate remains very difficult. “There are ever-diminishing fees and everincreasing competition and the architect is being squeezed,” says Baxter. “If you look at the reality of it there are a significant number of architects who are highly qualified professionals who actually operate for very modest remuneration – actually, on occasion, risible remuneration – and are delivering a job which is vitally important to society to a very high technical standard carrying a huge level of responsibility and reliability for their endeavours and contributing very significantly to society. “Nobody should go into architecture imagining that it is going to make them a fortune. “People tend to go into architecture because they are passionate about buildings and about environment July/August 2015 INSIDER 51

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COTLAND is world famous for its architecture, not just in the Old and New Towns of Edinburgh – both UNESCO world heritage sites – but also in Glasgow and Aberdeen and elsewhere in the country. Robert Adam, William Henry Playfair and Charles Rennie Mackintosh are among the many celebrated names of the past. But what about architecture in Scotland today? What sort of state is it in and what sort of work are Scottish architects doing? According to Neil Baxter, who is chief executive of the Royal Incorporation of Architects in Scotland (RIAS), there are some 3500 working architects in Scotland and of those something over 2500 are members of the organisation, which celebrates its centenary next year. Overall, the incorporation has around 4700 members and that consists of the chartered members currently practising, retired chartered members, students, international members and honorary fellows. One of its most recent honorary

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and about what buildings can contribute to enhance the quality of people’s lives. “We are hopefully moving towards a more equitable place in terms of even the lower end of the architectural marketplace where people are working on small-scale projects for numerous individual clients. “There are areas of Scotland where life is very tough. Certainly during the downturn people in even remote locations were finding smaller and smaller jobs became attractive to the central belt larger practices because obviously you will spread your net more widely if you are not bringing in enough income at local scale or under your normal style of work. You will go for lower level jobs and across a wider geography. “All that said, there are equally a number of very successful architects who run substantial practices that generate very significant income and the partners and directors within those practices do very nicely indeed thank you.” Baxter says when he took the helm of the incorporation back in 2008 the architectural scene was in pretty dire shape, but not as bad as it was in England. “The horrors in the south of England of that period were not directly reflected in Scotland,” he says. “Scotland never rises quite so far and it doesn’t fall quite so far. But with significant unemployment, numerous architects claiming benefits, any job that became available was snapped up. “We are now back in a situation where there is pressure on architectural recruitment the other way. People are advertising for qualified architects and chartered architects and not getting applicants and having to offer increased salaries. That does gradually lift up the overall income scales. “Usually of necessity more money needs to be charged for the service that is given. We are hopefully moving towards a more equitable place in terms of even the lower end of the architectural marketplace where people are working on small-scale projects for numerous individual clients.” Next year is not just the incorporation’s centenary but has also been designated by the Scottish 52 INSIDER July/August 2015

Keppie designed the £35m 170,000 sq ft St Vincent Plaza development in Glasgow

We have been able to maintain a high proﬁle and a reasonable quantum of high value work. We cannot be complacent but we are constantly striving to improve our commercial offer as the market changes and evolves Richard MacDonald, Keppie (below)

Government as the year of focusing on innovation and architecture and design. For Baxter the next big focus for the incorporation has to be the internationalisation of Scottish architectural practice. “I think we have an incredible opportunity,” he says. “The skills here are world quality and we have an industry which we are not exploiting

sufficiently, which we are not taking to the world sufficiently. “We are talking to government about it and Scottish Development International and Scottish Enterprise and so forth. We need to create the tools, the mechanisms, and we need to provide the quality of advice that effectively identifies the marketplaces where there are opportunities for Scottish architects. “I think there is the potential – it is almost the equivalent of you get your cars from Germany, you get your shoes from Nottingham and you get your architects from Scotland. I think we have sufficient – both historical and demonstrably in the present day – quality focused here that Scotland is sufficiently good to sell really effectively to the world.” One firm which has been very successful internationally is Keppie, which looked to expand overseas when the recession struck. Its commercial director Richard MacDonald, says the crisis affected funding streams for public and private sector projects in the UK. “So we dipped our toe fairly aggressively into the international market and carried out quite a lot of frontline projects in China, Dubai and Singapore,” he says. “That was an initiative we pursued to really try and ensure we could keep as many good people as we could. We had to lose people. I am pleased to say all the key senior people – directors and talented architects – have all remained through that process. We curtailed the number of agency people working for us on projects so we have maintained a very strong headcount in the business.” Keppie, which has offices in Glasgow, Edinburgh, Perth, Inverness, Manchester and Belfast, now employs just under 200 people and at least half of that number are architects. “We are probably Scotland’s largest architectural resource but the practice has had lots of challenges like everyone else. I think the main challenge at the moment is probably more so in the public sector rather than the private sector. “We have been able to maintain a high profile and a reasonable quantum of high value work. We cannot be complacent but we are constantly striving to improve our www.insider.co.uk

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54 INSIDER July/August 2015

IN FOCUS

History of the RIAS The Royal Incorporation of Architects in Scotland was founded at a dinner held in honour of Sir Robert Rowand Anderson – designer of the Scottish National Portrait Gallery and the McEwan Hall – in 1916. Anderson was due to receive the royal gold medal for architecture from the London-based Royal Institute of British Architects (RIBA) that year but he wasn’t well enough to travel to receive it so a dinner was organised in Edinburgh in his honour by, among others, Sir Robert Lorimer, Sir John Burnett and a number of other very distinguished architects of the era. Ironically, those attending the dinner discussed their views that RIBA was far too remote from Scotland, wasn’t serving the interests of Scottish architects and really they should set up their own show. Rowand Anderson died in 1921 and gifted the building where RIAS is now headquartered on the proviso the newly founded organisation would have a royal charter within 12 months. “The individuals involved had sufficient clout at court that the royal charter was granted within 12 months,” says RIAS chief executive Neil Baxter. The organisation survived some lean times during its long history. “It was very healthy during the 1920s and 1930s then fell away and by the 1970s it was a fairly quiet backwater organisation operating loosely alongside the RIBA,” says Baxter. “The organisation was relatively moribund and then in 1979 they appointed the quite brilliant Glasgow-born Charles McKean, who arrived having worked at RIBA. He picked the organisation up and gave it a good shake, worked with the membership over the next decade and established a lot of initiatives we benefit from to this day including RIAS insurance services. “So we have, effectively, our own insurance arm which is operated in tandem with Marsh and which is responsible still for the professional indemnity insurance of most architectural practices in Scotland – certainly over 50 per cent are issued through RIAS IS.” McKean also set up a technical advisory service for members. Another legacy from McKean is the RIAS architectural guides to Scottish buildings. “Charles started the publication of the guides in the 1980s, “ says Baxter. “ “There are 29 existing guides and I think we have five to go to complete the series. We are hoping to have everything delivered in three years.” When Baxter took over as chief executive in 2008 the RIAS headquarters building was in a “lamentable condition”. “ For the headquarters of the incorporation not to be in the best of condition seemed shocking so we have probably spent something close to £500,000 since 2008 on restoring and refurbishing this building.” One of Baxter’s tasks is to ensure the interests of architects are constantly before politicians. “We are an apolitical organisation and essentially we will talk to anyone, “ he says. “Our aim is to make sure architecture is high on the political agenda and I think we are achieving that. I would hope we continue to fight above our weight in terms of stressing the importance.”

in employment who have migrated to other parts of business such as project management, real estate or even other careers,” he says. “That has been a bigger problem because although there is still a throughput of graduates there is a skills gap of architects with four or five years of experience.” One of the founders of Keppie was Rennie Mackintosh, and that has a real benefit when it is competing for work internationally. “We think it is important to respect that heritage,” says MacDonald. “It is quite intriguing when we are working on international projects, in particular with the Chinese. They find that heritage and cultural element very, very interesting and we often put that element down. Everybody likes classical references to art or architecture. “It was a differentiator in some instances, especially when you are pitching against Skidmore Owings and Merrill of Chicago and their heritage. You are almost matching their credentials.” MacDonald says Keppie has a strong relationship with the Mackintosh School of Art and director David Ross has a number of roles there. “We sponsor a number of awards there and have been fortunate to attract some of the good first class students who have come out of Mackintosh in the last few years. They add real energy to the business and we do give these guys the opportunity to express themselves and we are pretty open mindedabout it. “Obviously it is my job to refine or fine tune some of the ideas but there is a real freedom of expression that is allowed.” Baxter is hoping to increase awareness of Scotland’s architects next year with a Festival of Architecture as part of Scotland’s Year of Innovation, Architecture and Design. “Architecture needs to be put into the limelight and we need to focus on what architecture has contributed and can contribute to Scottish society because it is not something people are sufficiently aware of,” he says. “Happily, our current cabinet secretary Fiona Hyslop is a great enthusiast and very much engaged and she absolutely insisted the word ‘architecture’ would be central in the www.insider.co.uk

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commercial offer as the market changes and evolves.” He says its Chinese experience really helped because it had to shift its thinking from being a central Scotland headquartered business to become an international architect. “We had to upskill and that involved a lot of investment in motion graphics packages and those sort of things. The experience we have gained internationally brings back to every project a real rigorous scrutiny to every design we make.” Some 75 per cent of Keppie’s turnover is in Scotland, though four years ago overseas projects accounted for 35 per cent. However, since the Chinese economy slowed down the firm has returned its focus closer to home. Its projects in recent times include a massive new £80m headquarters building at the new Aberdeen International Business Park near Aberdeen airport for oil and gas services provider Aker Solutions. Keppie designed the building inside and out, including a sports hall, nursery, medical facility and shop. It has also designed the £35m speculative 170,000 sq ft St Vincent Plaza development adjacent to the Hilton in Glasgow. Back in Aberdeen it is currently working on the city’s proposed new £333m exhibition and conference centre, which also includes two hotels. Aberdeen has been a key location for the company in recent times though MacDonald says it is now slowing down as a result of the oil price slump. Glasgow has also provided the firm with a lot of work. “There has been a lot of activity in Glasgow,” he says. “There are three new offices coming out of the ground. I am currently looking at two other schemes in the city centre so there is an appetite, I think, for developers and, in particular, London developers who find it difficult to develop in London at the moment. “The overseas investment in London is pricing the UK guys out of the marketplace. So Glasgow has seen a steady cycle of office schemes.” MacDonald says the architect profession has taken a real hit in the last five to seven years. “There are a lot of unemployed architects and a lot of good young architects who were

BUSINESS PROFILE

DESIGNING COMMERCIAL SPACE FOR BUSINESS SUCCESS Many challenges face today’s business leaders, with the main focus often being the need to increase productivity and manage overhead costs. The realisation that achieving such objectives can be significantly influenced by the design of their commercial space does not occur often, until they engage with Space Solutions. Space Solutions are committed to delivering exceptional solutions for their client’s. The office is more than just a place to come and work, it is a place to bring great people together to engage, inspire and succeed. Space Solutions expert team of workplace consultants are best engaged early to work with you in understanding your challenges, enabling them to translate your needs into a solution that exceeds your objectives. Through analysing our client projects we have identified that the average working environment is underutilised by 28%. That often translates to businesses paying for a 1/3 more space than they actually require. We have also researched that during the average working day desks are only occupied for only 55% of the time. This figure varies from industry to industry, for example some organisations such as a call centre will have a much higher rate of desk occupancy than a business requiring team work and collaboration which leads to a greater focus on meeting rooms and break out space. Space Solutions takes the time to understand the key drivers facing your business. These are often key events leading to change such as a lease activity, business growth, changing staff

numbers, business consolidation and advances in technology. We listen carefully to the challenges your business is facing, allowing us to generate the appropriate insights and from there solutions which will help to reduce such things as your occupational costs which is a measure beyond just the price per square foot. Aligning your commercial space with operational needs delivers effectiveness and efficiencies and it is these sorts of insights that help to explain how efficiency and effectiveness can be measured and improved. Investing in your commercial space should be exactly that, an investment. Through our

approach clients realise the long term benefits and returns from working with Space Solutions, but they also enjoy the final element of our great design which is working in an environment that aesthetically reflects your vision for your business. For many businesses, the impact that the workplace makes in terms of client engagement, recruitment and staff retention is just as important as the operational efficiencies that can be achieved. Through our multidisciplinary team of professionals Space Solutions prioritises what these drivers for change are and maps them to your strategic business needs. Over the last 17 years Space Solutions have worked with businesses from all sectors in Scotland and our National spread of offices throughout Scotland enables us to service our client needs locally. In addition to creating exceptional solutions for our client’s commercial space, we are also able to provide a turnkey solution in terms of delivery providing design consultancy, fit-out, refurbishment and relocation. Many businesses will not have the capacity to manage such projects and this is where Space Solutions continue to offer the complete client solution, providing our client’s with executive control while we assume operational responsibility. Changing the space you work in can have significant benefits to your business. If you would like to discuss how Space Solutions can help you to achieve your business goals then please call one of our offices to discuss further.

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REPORT: BUSINESS INTERIORS

ABLE TO ACCOMMODATE ALL OFFICE NEEDS by MAGGIE STANFIELD

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a lease break or changing the way they work, understanding the type of space and the size of premises they require is essential if they want to avoid adding unnecessary zeroes to the bottom line.” Additional costs incurred by moving to larger premises or taking up an expensive new lease can often be avoided. Space Solutions helped one Aberdeen client to assess its

Jim Scott of Scotwood Interiors at the Skyscanner oﬃce where the ﬁrm created a new reception area, meeting rooms and breakout areas

Larger companies have entire departments that manage ofﬁce space. Smaller operations don’t have those kinds of resources Eileen McGrath, Task Oﬃce Interiors (below)

revised needs with a growth from 75 to 100 employees: “After our appraisal the organisation moved into a new building that had the same floorspace as their old one but successfully accommodated the 33 per cent rise in numbers.” There are, says Muir, three main aspects to a space appraisal: “The first is to understand the utilisation rate for each individual desk, meeting room and break-out space and most

businesses are surprised to find that on average desks aren’t used for 55 per cent of the working day. This type of study identifies the size of the opportunity to work more efficiently and leads naturally into the next stage of the process. “The appraisal should then examine how a company works. A legal firm is likely to need meeting rooms for private discussions with clients, but a call centre has less need for privacy with the priority being on desk numbers. “The final part is working through possible solutions and agreeing what would work best in practice before then implementing the changes and evaluating them once in place.” Space Solutions believes its capacity to do virtually everything in house makes the whole experience easier for its clients. All of the compliance issues are managed as well as planning and purchasing demands. Smaller operators may suit companies who prefer to carry out the planning process separately. Scotwood Interiors in East Kilbride has clients as wide ranging as Skyscanner, the flight search operator, to the First Minister’s official residence at Bute House. July/August 2015 INSIDER 57

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OU KNOW the feeling, when you’re house-hunting and you walk into a place and say to yourself ‘ah yes, I can see us living here’? Well, wouldn’t it be nice if you could capture that same feeling when you come into your office? After all, you will probably spend most of your waking life there so you want the right kind of ambience. You also need space that meets your business needs and presents the kind of corporate image you want your clients to absorb. You will also want to ensure your premises meet all the statutory compliance standards, your IT system has reliable connectivity and your staff are happy in their daily environment. Whether your plans are large scale, involving new offices and a full turnkey fit-out, or are on a more modest level, there are plenty of companies vying to meet your needs. Space Solutions has five branches around Scotland and one in London. Its approach is bounded by its three main considerations: effectiveness, efficiency and aesthetics. Phil Muir, the company’s studio director, says: “Whether SMEs are expanding, contracting, coming to

REPORT: BUSINESS INTERIORS ▲

Proud winners of Lanarkshire’s Best Small Business Award 2015, this family company was established 50 years ago and has become one of Scotland’s leading specialists in office fit-outs, design and refurbishment. Director Douglas Kerr runs through an impressive list of clients and stresses his approach is about maintaining ongoing, sustainable relationships that bring repeat business. “We’re a one-stop shop when it comes to fulfilling the design plans, which are usually brought to us by building surveyors. We work regularly with these people who are the experts and whose designs will already have sorted out the regulatory controls such as building warrants and any planning consents. “We will then sit down with the client to discuss the specification, examining a wide range of options that might include single or double glazing, floor coverings and carpets, decorating, suspended ceilings, raised access flooring and how the premises are to be split up. “We need to be very aware of how people work – do they need separate offices, boardroom, breakout rooms or do they work in groups within an open-plan environment? Is the reception area one where they want to meet clients and have soft seating or is it something more functional they want? “Office furnishings need to be inkeeping with the brand and meet all of the health and safety requirements for staff. We have sustainable relationships with many different providers and we use in-house painters, decorators and joiners who have worked for us for many years.” Scotwood prides itself on having an excellent eye for detail and, as a result, the company has enjoyed commissions for important public buildings, including the Scottish Government at St Andrew’s House and the refitting of the First Minister’s en suite bathroom at Bute House. “We have a highly skilled multi-trade workforce who work closely with our carefully selected contractors right across every business sector you can think of,” says managing director Jim Scott. “Our standards are well known to them because we have been working with most for between 10 and 20 years now. There are a whole range of aspects to getting a premises right for its users and, of course,

58 INSIDER July/August 2015

AKP Interiors designedthe breakout/ canteen area in Clyde Space’s Hillington oﬃce

’Building pride’ is AKP’s ethos for encouraging its staff and subcontractors to work together to create quality working environments Jane Finnigan, AKP (below)

accommodating the different needs of various kinds of workforces.” Eileen McGrath owns and runs Task Office Interiors in Glasgow. With 27 years’ experience in the industry, she saw an opportunity to strike out on her own seven years ago. She manages a small company with big aspirations and a style of interfacing with her clients that make her operation very appealing. “The first thing I do is meet with the client and have a look at what their own ideas might be and what space they have available. It’s an audit of their needs that takes in the number of people, the scale of work surface each person requires and to plan out the space to make the best use of it as the business goes forward. “City centre office rental is expensive so utilising the available space in the most effective way is crucial. It’s also vital to constantly bear in mind health and safety, positioning of fire escapes, kitchens, toilets and common spaces.” A director of a small or mediumsized company is not necessarily conscious of all the compliance and other issues that need to be addressed. A young, growing, ambitious business in a position to seek larger premises and take on more staff will want and need to consider longer-term requirements as well as immediate needs. For McGrath, explaining those issues and responding to questions in sensible language is an important component in her success: “Larger

companies have entire departments that manage office space. Smaller operations don’t have those kinds of resources to hand. We are able to give them very practical, down-to-earth, honest advice about all aspects of how to make the best of the office environment. “Research shows clearly that productivity is adversely affected by a poor quality environment. Conversely, an attractive, pleasing setting improves how people work and operate. That, in turn, impacts upon your staff turnover and their loyalty to your company. “Some of this is common sense: the right kinds of desks and seating; colour and natural light and air quality; storage for stationery; copiers, computers; under floor cabling; phone systems and break-out space may be obvious to everyone, but there are other areas people don’t consider until I raise them.” Jane Finnigan is business development manager at AKP in East Kilbride. This company starts with, literally, the bricks and mortar because it offers building solutions, including structural changes as well as a full fit-out of the premises. “We start out by listening closely to what the client is asking for, with the input of our design team. We keep on listening throughout the entire project because that is essential. “‘Building pride’ is AKP’s ethos for encouraging its staff and subcontractors to work together to create quality working environments that meet the specific, and often specialist, needs of the client, their customers and staff. “Through organic expansion, the management team are working towards sustaining growth year on year by continuing to develop its partner framework, and cement relationships with our key staff and valued clients.” The office environment has changed dramatically in the last couple of decades. From a time when there were dozens of filing cabinets, cubbyholes to operate from and communications were all in person, we have moved to softer furnishings, an emphasis on brand and image, less paper, more computers and the ubiquitous email. The truly paperless office may still be a long way off, but the business interiors sector in Scotland is well ahead of the game. ■ www.insider.co.uk

BUSINESS PROFILE

TOO MUCH SPACE OR NOT ENOUGH? In the current climate moving premises, whether through expansion, downsizing or consolidation, is a common consideration for many local businesses. With over 35 years of experience in the supply and installation of workplace shelving and storage solutions across all industries, we help customers who need to expand or consolidate and know that many businesses do not need to look outside their own premises to find the increased space they desire. In recent months customers in the North East are more cost conscious than ever before and CSI is helping our Aberdeen clients to find new intelligent ways of utilising existing space and provide expert advice on materials handling and storage solutions. Our solutions team knows that within every workplace there is hidden potential. They will help you to find that extra space, make the environment safer and create a more efficient workflow. When our solutions team carry out workplace utilisation evaluations, we are never surprised to find that in many cases we uncover more than 50% of wasted office or warehousing space. Working with our clients, we carry out comprehensive space planning studies and recommend the actual working space needed and the right storage systems for optimising business needs. This allows our clients to utilise more of their current work space and in many cases our storage solutions save the costs associated with additional property commitments or unnecessary relocations.

CSI have recently managed rooftop consolidation for various local industries, taking their real estate from three or four large warehouses in different locations to one large hub in which they can accommodate most of their business. MORE STORAGE SOLUTIONS As the largest Dexion distributor in the UK we specialise in storage and handling solutions for all industrial environments. From the supply of a few bays of shelving in the office to the design and installation of a fully integrated warehouse and production facility. Based in Aberdeen for over 10 years, we have a clear commitment to the area and the local industries, with project teams, office and warehouse facilities allowing us to react quickly to our customer’s needs. We offer a wealth of experience in supporting oil and gas companies and are one of the leading UK providers of storage solutions and workplace products in this sector. Our work in the oil & gas sector dates back to the early 1990’s and we have clear understanding of the requirements, challenges and opportunities facing the industry.

We are client driven, and our considerable knowledge, skill and expertise allows us to create cost effective storage solutions for every work environment. SEMA Rack Safety Inspections Whether an existing installation or after a move, our SEMA (Storage Equipment Manufacturers Association) Approved Rack Inspectors are on hand to carry out legally required safety inspections. Regular rack inspections help to minimise the number and severity of warehouse accidents. Our rack inspections comply with all government legislation and industry guidelines and offer a comprehensive, cost effective and convenient way to keep your warehouse safe and compliant.

MORE RACKING SOLUTIONS Industrial shelving & racking Drive in, push back & narrow aisle racking Powered & live storage racking Cantilever racking MORE SHELVING SOLUTIONS Warehouse & oﬃce shelving Mobile shelving Stockroom shelving systems Archive mobile shelving MORE STORAGE SOLUTIONS Mezzanine ﬂoors Small parts storage systems MORE EXPERT SOLUTIONS Space planning Project management Supply chain, logistics & materials handling

To speak to one of our local team call us on 01224 912 762 or visit us at csigroup.info

REPORT: HEALTH & SAFETY

POOR PRACTICE CAN BE COSTLY by FRANCIS SHENNAN

MAGINE a condition that makes 1.2 million people ill and causes more than half a million new cases a year. Wouldn’t we see fundraising adverts on television about it? People running marathons with the name of the condition on their T-shirts? Well there is such a condition. It’s called work. The most recently published statistics from the Health & Safety Executive (HSE) for 2013-14 show 1.2 million people were suffering from a work-related illness with 535,000 of these new cases which started in 2013. The result was 28.2 million working days lost to work-related illness and workplace injury at an estimated cost of £14.2bn. In September, the Royal Society for the Prevention of Accidents (RoSPA) will hold its 21st annual Scottish Occupational Safety and Health Congress at the Glasgow Hilton Hotel. Last year’s speakers included Ian Tasker, assistant secretary at the Scottish Trades Union Congress

60 INSIDER July/August 2015

(STUC), who talked about the Stockline factory explosion in Glasgow, which 10 years earlier killed nine people and injured 33. That disaster is rightly marked by a memorial, as are many around the world, but what about the 133 people

The Stockline factory, Glasgow

For every one accident involving an absence of work for more than three days there can be ten-fold the number of minor accidents. Many minor incidents can be indicative of a poor health and safety culture within a business

Clare Bone, bto solicitors

in 2013-14 who left for work as usual and did not return home because they were killed at work? Or the 78,000 injured? Or those who were made ill? They do now have Workers Memorial Day, an internationally recognised event, held this year on

April 28. “Thousands of people who have lost their lives in workplace accidents or suffered serious injury or ill health are commemorated,” says RoSPA’s occupational safety and health policy adviser, Dr Karen McDonnell, of this year’s event. As well as the high-profile disasters it is the obviously high-risk industries that tend to attract attention. However, ill health accounts for more than 99 per cent of workrelated deaths, 84 per cent of sickness absence and 43 per cent of all health and safety incidents each year. Only one per cent of work-related deaths occur as a result of safety breaches with the rest being from occupational ill health. “It is the poor management of workplace health which is increasingly leading to high levels of sickness absence,” says Jan Burgess, partner at law firm CMS. “Around 80 per cent of the new workrelated conditions in 2013/14 were musculoskeletal disorders or stress, depression or anxiety. “There are various steps an employer should take. A competent desk screen equipment assessment

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REPORT: HEALTH & SAFETY

COMMENT Steven McCallum

principles to take into account limitations and strengths in human performance.” Minor accidents, if not given attention, can lead to worse. Clare Bone, partner at bto solicitors, has acted for organisations in health and safety prosecutions and Fatal Accident Inquiries. “Companies are generally well aware of the significant impact a serious workplace accident can have on their business. “Minor accidents, by contrast, are often overlooked, discounted as trivial, dismissed as ‘a lucky escape’ or a ‘near miss’, but when all minor, non-reportable accidents are added together they may be having a damaging effect on the company’s financial health and general performance. “It is recognised that for every one accident involving an absence of work for more than three days there can be ten-fold the number of minor accidents. Many minor incidents can be indicative of a poor health and safety culture within a business: cutting corners and poor housekeeping being two prime examples. “An untidy or cluttered shop floor can result in a minor tripping accident but what if, on the next occasion, an employee trips and falls into machinery, sustaining significant injuries? All organisations,

Health & Safety Manager, Law at Work T: 0141 271 5555 E: steven.mccallum @lawatwork.co.uk

It’s getting hot in here

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is not only a legislative requirement, it is an example of a low-cost control which allows management of associated risk, which include fatigue, eye strain, upper limb problems and back ache. Many workplaces fail in this basic requirement. “Leadership from managers at the top is essential, as well as a good occupational health service, training and support for line managers, and regular contact with those who are absent. A continual review of procedures for managing both health and safety is also essential.” Pamela Stevenson, insurance partner at Weightmans solicitors, says: “Many individuals work shift systems, work at night, or work very extended hours. Such working patterns can lead to adverse effects upon health, particularly for night workers. Reduced levels of performance have been associated with night working, which can also increase the likelihood of accidents and ill health. “Factors intrinsic to the job which can lead to stress are poor physical working conditions – such as high levels of noise, poor ventilation – working inconvenient and excessive hours, working on a repetitive and fast-paced task, or having a job which involves risk or danger. “Tasks should be designed in accordance with ergonomic

IN FOCUS

Health & Safety reporting JAMES Kelly, partner with Harper Macleod, explains how employers need to engage with the authorities after a workplace accident. “It is an oﬀence for an employer not to meet the requirements imposed under the regulations, including the reporting of events that have or could have given rise to injury. “As soon as an employee is injured at work, employers need to think about whether they are bound to engage with the HSE immediately, to report any relevant incident and

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then later to provide a more detailed report on the circumstances. “If the HSE concludes the breach of regulations has caused an employee injury or exposed them to the risk of injury, they are likely to bring it to the attention of the Procurator Fiscal’s oﬃce. “That’s one reason why it makes sense for an employer to engage with HSE from the outset. “That way, any decision to prosecute will be against the backdrop of the company’s co-operation and acknowledgement of

James Kelly, Harper Macleod

what has happened. “If there is going to be a prosecution, employers will need to instruct solicitors to communicate with the Procurator Fiscal to allow them to see the reports of the HSE inspectors. “Once they have seen these, the employer can then outline their own version of events to the prosecutor.” ■

Although looking out the window from our office over the past weeks, summer has been noticeable by its absence, the temperature is slowly increasing with some areas of the UK expecting the sun’s welcome appearance. This in turn can raise issues of temperature in the workplace. Some of you may have heard the health & safety cliché “it can be too cold but never too hot “and in some respects, when it comes to suggested guidance, that is correct. However, an employer still has duties under health and safety legislation to make reasonable adjustments to provide a comfortable temperature in the workplace; be it too hot or too cold. Complexities arise when we assess different workplaces. With roles involving manual labour, the heat can have a much greater impact than say workers in an office or small shop. The controls employers should implement for manual workers will need more thought & attention than simply opening a window or providing a small desk fan. Organisations may have to consider reasonable adjustments such as: t JOTVMBUJOH IPU QMBOUT PS QJQFT t TIBEJOH XJOEPXT t TJUJOH XPSLTUBUJPOT BXBZ GSPN QMBDFT TVCKFDU to radiant heat t BMMPXJOH PQFSBUJWFT UP XFBS MJHIUFS BJSJFS clothing provided they are not increasing any other risks, for example exposure to moving parts in machinery or hot liquids. If reasonable adjustments cannot be made and the temperature is having an impact on risk, production or overall morale, then mechanical options should be assessed, such as a suitable air conditioning system. This can be costly and is why organisations should consider the reasonable adjustments first before investing in such equipment. Where temperature in the workplace is an issue, employers would be well advised to seek advice on their legal obligations and what steps can be taken to minimise the effect on staff. www.lawatwork.co.uk

July/August June 2015 INSIDER 61

Don’t ﬁnd yourself up the creek.

Law At Work are your expert partners in employment law, HR and health & safety. We know that time consuming and expensive legal issues can take your business into dangerous waters. By delivering the high quality service you expect from a leading law ﬁrm, at an affordable, all-inclusive price, we will guide you safely through the rapids.

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regardless of size, have the same obligations under the health and safety legislation.” This is backed up by Thomas Elliott, health and safety services manager at Law At Work, who has conducted a number of investigations after serious and even fatal accidents. “One of the most common findings as part of the investigations I have carried out has been identifying a number of minor accidents or incidents that have not been adequately dealt with or, indeed, reported at all. “It only became apparent there were some minor accidents after interviewing employees. It is essential all minor accidents and incidents are reported internally. This gives the employer an invaluable mechanism for analysing their accidents and incidents and the opportunity to further improve their control measures to minimise the likelihood of a serious accident occurring.” Laura Cameron, head of litigation and regulatory group at legal firm Pinsent Masons, warns multimillion pound fines could result from new sentencing guidelines. The recommendations by the Sentencing Council for England and Wales, expected to come into force early next year, set out a maximum £20m penalty for corporate manslaughter for organisations with a turnover over £50m and £10m for other health and safety offences. “Our courts in Scotland have previously referred to similar guidelines produced by the council and there is no reason to expect they will do otherwise in the most serious cases,” says Cameron. “The move to hike up fines for health and safety offences is designed to bring them more into line with some of the fines for financial irregularities.” In addition, businesses will now be charged by the HSE for the time it takes their officials to investigate the alleged breach of health and safety law. “Before businesses would have been reprimanded and counselled about future behaviour,” she says. “Now they are receiving bills from the HSE for time spent on the investigation.” ■

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Health & safety legacy Problems you might think belong in the past can recur years later. These legacy claims include asbestos, for example, but there could be other legacy claims ahead. “Businesses didn’t appreciate the dangers of asbestos exposure at the time it was being used,” says Elena Fry, head of health & safety at Brodies. “Its use was slowly phased out after the introduction of the Asbestos Regulations 1969, but it wasn’t until much later the dangers of low-level exposure were understood. There are approximately 5,000 deaths a year from asbestos-related conditions. Current predictions suggest numbers will peak around 2020 then start to decline. “Although asbestos products are no longer used in manufacturing or construction, these days

tradesmen, employees or members of the public in buildings are most at risk of exposure because asbestos can be found in any building built or refurbished before 2000. If you don’t know if you have asbestos in your building, have a survey carried out to ﬁnd whether or not it is present and, if so, what condition it is in. “Without scientiﬁc proof it is not known what substances we are exposed to today might, in future, be known to have caused injury. However, the HSE’s 2013 report Occupational Cancer in Great Britain, referred to previous research that predicted exposure to silica, diesel engine exhaust, solar radiation, shift work, or working as painters and welders might become the main causes of occupational cancer in the future.

“Updated estimates suggested about 8,000 cancer deaths and 13,500 cancer registrations per year in Great Britain could be attributable to past occupational exposure. “The research showed occupational cancer associated with asbestos would probably drop by more than 90 per cent by 2060, while cancer caused by silica dust should half by then. On the other hand, the numbers associated with diesel engine exhaust are estimated to remain the same, and those associated with solar radiation, shift work, polycyclic aromatic hydrocarbons and working as painters might increase. “However, carcinogens not included in the study include mineral oils, chromium VI, wood dust, benzene and rubber manufacturing.” ■

July/August 2015 INSIDER 63

INTERNATIONAL: CHINA

FOCUS NEEDED TO TARGET GROWTH IN VAST MARKET by PERRY GOURLEY

ELPING firms do business with China over the past 15 years has led businessman Craig MacKenzie to develop a saying he quotes to new clients. “I tell them everything they have heard about China is true – but then so is the opposite.” MacKenzie, of Glasgow-based UK-China trade facilitator Continuum, believes it is impossible to make generalisations about such a vast country. He argues the sheer scale of it also means companies looking to get a foothold there need to take time to really understand the challenge before investing the significant time and resources needed. “It is such a vast country you have to focus on a region to target and then look at how to create the allies and route to market there to be able to succeed,” he says. While MacKenzie stresses China is not the right market for every company to get into, for those that have a product or service the Chinese want, the potential is huge. Although not immune to global economic forces, the underlying trends of the Chinese economy put European growth in the shade. China’s economy grew by 7.4 per cent in 2014 and many Scottish companies have taken advantage of the opportunities which economic reforms have created. Scotland’s exports there have increased by almost 60 per cent in the past three years to £580m. Mark Dolan, Beijing-based country head at Scottish Development International (SDI), says the country has undergone huge change since the organisation first established a presence there 20 64 INSIDER July/August 2015

years ago. The approach of SDI to the market has also changed. “We have gone from being all things to all people to a much more focused and direct approach on the larger opportunities and key sectors,” he explains. He says areas such as renewable energy, healthcare and life sciences are among those which are key for Scotland. The rapid progress being made in technology sectors such as big data here are also opening up exciting opportunities and with the Chinese increasingly investing in the North Sea, there is much potential for

Building strong local relationships is critical, speaking the language, understanding the culture, will all help John MacKenzie, Shepherd & Wedderburn

greater collaboration between the two countries in oil and gas. But Dolan says one of the challenges in increasing trade between Scotland and China is a perception that it is a very difficult market to trade in. “There is a danger that bars Scottish businesses from taking advantage of the opportunities here. You have to take risks but you can offset those risks by taking a smarter approach.” He says in areas such as intellectual property – seen as a major hurdle by many companies – China has made significant strides. John MacKenzie, a partner at Shepherd & Wedderburn with

Main picture: Shanghai skyline Above: John MacKenzie, Shepherd & Wedderburn

significant experience of China, agrees the legal position over protecting intellectual property is much improved from 10 to 20 years ago. “But practical measures are always better than relying solely on legal protections,” he stresses. “Building strong local relationships is critical, speaking the language, understanding the culture, will all help UK businesses anticipate problems before they occur.” MacKenzie says although resolving commercial disputes can be difficult, not least because of cultural and language differences,

FACTFILE: CHINA China covers an area almost the size of Europe, with twice the population It comprises over 30 provinces and municipalities. Beijing, Shanghai, Guangzhou and Shenzhen account for much of the trade with the west but there are a number of emerging regional centres. China is the world’s largest car market and he largest market for ICT products, with over 600 million mobile users and more than 400 million internet users.

COMMENT Sharon Munro Chief Executive, Barrhead Business Travel T: 0141 250 7878 E: bdm@barrheadtravel.com W: www.barrheadbusinesstravel.com

Barrhead Travel opens up a world of Oriental business

businesses have access to a growing number of options if problems do arise. “This is where international arbitration, usually at a neutral venue, can be very effective in managing the dispute. Countries like Singapore have made a real effort to promote themselves as a good place for commercial organisations to resolve their disputes.” Continuum’s MacKenzie argues while there are obvious cultural differences between China and the UK, the fundamentals of doing business are very similar. “Businesses should approach trying to develop relationships in China in the same way as they do here. “A food and drink manufacturer wouldn’t expect to ust to knock on the door of a big retailer and get an order here and the same goes for China. You have to be prepared to www.insider.co.uk

invest the time and resources.” He believes Scottish companies looking to sell products in China need to give thought to the practicalities before embarking on a major export push. “Just because you make something in Scotland that you think will sell in China doesn’t necessarily mean it is a good idea. Could you handle the volumes they may want to be sent over for example?” he asks. He also points out getting products into China can be difficult because of import barriers. “The best way for many companies to test the water is to send a pallet of products over which they are prepared to write off and just see what problems they encounter. “That can be very valuable in assessing issues they may have to overcome if they want to export to China on a regular basis.” ■

Barrhead Business Travel has been helping corporate travellers across the country to do business abroad for over 30 years. Over the past five years, we’ve seen China feature much more frequently in our clients’ itineraries – hardly surprising, as it is currently the world’s second-largest economy, and has the potential to become Number 1 within the next ten years or so. For those heading out to China in the Year of the Goat, the travel options from Scotland have never been better – and thanks to the specially-negotiated fares available through Barrhead Business Travel, your company’s budgets can be stretched too, no matter which cabin you prefer to fly in. Why fly via London? Start flying east from the moment you take off from Glasgow or Edinburgh, and it’s arguably not just more convenient for the traveller, but can also be more time and cost-effective. We have excellent relationships with airlines such as Emirates, whose exceptional service from Glasgow via Dubai and onwards to China has earned itself a formidable reputation. From Edinburgh Airport, Turkish Airlines flies via Istanbul, and is known for its award-winning hospitality. Qatar Airways has been successfully operating from Edinburgh via Doha to China for a while now, and the newly-launched Etihad flight to Abu Dhabi and onwards to more than 100 destinations worldwide provides yet another convenient option. Beijing, Shanghai, Hong Kong, Chengdu or Guangzhou – wherever you need to go, Barrhead Business Travel can take the stress out of organising a business trip to China, from helping to arrange your visa to reserving your pick up from the airport, your accommodation and your internal flights. We’ll present you with the most appropriate options for your needs, giving you more time to prepare for your meetings and negotiations and to successfully clinch that vital deal for your organisation.

July/August 2015 INSIDER 65

SCOTTISH EXHIBITION + CONFERENCE CENTRE, GLASGOW With a world-class event team dedicated to you, the SECC Glasgow is the perfect backdrop for you to create a winning event in a city that offers an unforgettable experience for your attendees. 7KH 6(&& LV D KLJKO\ Ă H[LEOH LFRQLF YHQXH ZLWK DVVHWV WKDW HQDEOH LPSDFWIXO DWWHQGHH HQJDJHPHQW EUDQG activation and connectivity. Our meeting facilities work well for events of 200-10,000 delegates. 7R Ă&#x20AC;QG RXW PRUH DERXW KRZ ZH FDQ JLYH \RX DQG \RXU GHOHJDWHV DQ H[SHULHQFH WKH\ ZLOO UHPHPEHU contact our sales department: scc@secc.co.uk or call +44(0)1412756211. Visiting IMEX in Frankfurt? Please come by and say hello to us at the Visit Scotland stand.

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LIFESTYLE: ENTERTAINMENT

A RANGE OF OPTIONS FOR AN EXCITING EVENING OUT by ALASDAIR NORTHROP

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Resort, a 120-bedroom hotel adjacent to the BBC and STV’s fast-growing media zone, opened. Glasgow also has another dozen or so theatres in the city including the Royal Concert Hall, the Theatre Royal, the King’s Theatre and, if you prefer something a bit more radical, the Citizens Theatre. Shows being staged at the King’s Theatre this autumn include Jesus

Above: Violinist Nicola Benedetti will perform in Glasgow in September

Scotland’s own virtuoso violinist Nicola Benedetti is performing The Four Seasons in a programme inspired by Italy at the Royal Concert Hall Christ Superstar and a drama based on Daphne Du Maurier’s novel Rebecca. The Theatre Royal is staging George Bizet’s Carmen from October 7 to 17 and Matthew Bourne’s balletic version of Sleeping Beauty from November 17 to 21. Scotland’s own virtuoso violinist Nicola Benedetti is performing The Four Seasons in a programme

inspired by Italy at the Royal Concert Hall on September 29. If you want a fabulous meal before the show Glasgow is spoiled for choice. It has some 27 Michelin Guide recommended restaurants including Brian Maule at Chardon d’Or, Gamba, Rogano, the Ubiquitous Chip and the Two Fat Ladies West End. Like Glasgow, Edinburgh offers its citizens and visitors a wide range of attractions and entertainments. It also boasts a good number of excellent theatres including the Royal Lyceum, the King’s Theatre, The Edinburgh Festival Theatre and the Edinburgh Playhouse. Acclaimed playwright Laura Wade (Posh, Royal Court & West End) is bringing Sarah Waters’ audacious bestselling novel Tipping the Velvet to The Lyceum’s beautiful Victorian stage in an electrifying new adaptation, directed by Olivier award winner Lyndsey Turner. Another autumn highlight at the Lyceum will be Waiting for Godot starring two of Scotland’s greatest actors, Brian Cox and Bill Paterson. The King’s Theatre’s busy programme includes Oscar Wilde’s much loved and brilliantly witty masterpiece The Importance of Being July/August 2015 INSIDER 67

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OU HAVE finally got some free time to enjoy a night out with your partner, friends or family. Or maybe you have a major client coming up to Scotland and need to entertain them. So what should you do? Well there is a huge amount of choice and the biggest challenge you face is deciding what to do. Starting off with Glasgow, one of the biggest success stories in the last couple of years has been the Hydro Arena on the Clyde waterfront, which is now one of Europe’s top entertainment venues. Some of the biggest names in music including Paul Simon, Sting, Fleetwood Mac and Elton John have all played there in recent months. Stars lined up for the autumn include Madonna, Duran Duran and Paul Weller. It also features sports events and between October 23 and November 1 is hosting the World Gymnastics Championships. The smaller Clyde Auditorium also stages shows and a highlight during the last 12 months was the return of Billy Connolly to his home city. If you want to stay overnight there is plenty of choice in the area. On July 13, Scotland’s third Village Urban

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LIFESTYLE: ENTERTAINMENT

COMMENT Sharon Munro

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Earnest, starring Nigel Havers, Christine Kavanagh, and Siân Phillips. If you enjoy dance a new staging of the much-loved ballet Giselle is being performed by the Royal New Zealand Ballet. It is being is produced by two superstar performers, Ethan Stiefel and Johan Kobborg, former principal dancers of American Ballet Theatre and The Royal Ballet respectively. The Usher Hall is the city’s main concert venue and among the performers over the next few months will be chart-topping, Classical BRIT Award winning classical guitarist, Miloš Karadaglic. He will be joined by the ever-inventive Royal Northern Sinfonia. Edinburgh has over 50 Michelin listed restaurants to choose from including Martin Wishart, The Kitchin, Wedgwood, Café St Honore and Castle Terrace. Stirling’s Albert Halls is a venue with real character and upcoming shows include the Johnny Cash Roadshow in November. The city also has the MacRobert Arts Centre based on the Stirling University campus and it is featuring Arthur Miller’s play All My Sons on September 17 and 18. Right in the heart of the city is another performance venue, the Tollbooth, which features some celebrated musicians later this year including singer Judie Tzuke, who had a huge hit with Stay With Me Till Dawn, and Scotland’s supreme traditional style fiddler Aly Bain. Perth Concert Hall has a busy autumn programme including the Perthshire Amber Festival. Dougie MacLean, famed for his song Caledonia and composition The Gael used in Last of the Mohicans is performing with some of Scotland’s finest musicians including Jenna Reid (fiddle), Ross Ainslie (pipes, whistles, mandocello), Sorren Maclean (acoustic guitar, vocals) and Iain Sandilands (percussion) as well as the Perthshire Ensemble in a show called Caledonian Cantata. Top restaurants in Perth include 63 Tay Street, which is by the River Tay, and Deans@Lets Eat, which is near the concert hall. Dundee boasts a permanent fulltime company of actors, the only one of its kind in Scotland. They are based at the award winning Dundee Rep Theatre, which puts on an ambitious and varied programme

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through the year. Shows this autumn include Sherlock Holmes and the Ripper Murders, George Bernard Shaw’s Pygmalion and Jeeves & Wooster. Music shows include a concert by Big Country, and Christine Bovill performing her award-winning show based on the life on Edith Piaf. The city’s Caird Hall also has a busy programme including a performance by the world-renowned Moscow Ballet of Tchaikovsky’s Swan Lake. Aberdeen has a number of excellent performance venues including His Majesty’s Theatre. Shows this autumn include a new stage production of the Shawshank Redemption inspired by the classic film, and the musical Dirty Dancing. The nearby Aberdeen Music Hall has been the heart of the concert and community life in the north-east of Scotland since 1922. Chef, TV personality and bestselling author Gino D’Acampo is one of the performers appearing at the Music Hall this autumn with a live stage show which will blend his love of Italy, some delicious signature dishes and audience participation. If you like comedy the Lemon Tree is another Aberdeen venue you will enjoy. BBC News Quiz veteran Jeremy Hardy is among the performers appearing there in the coming months. Aberdeen has a number of excellent restaurants including the Silver Darling, which is based on the top floor of the castellated former customs house, with seafood being a speciality. Another notable restaurant is the award-winning Fusion. It has an open-plan bar and bistro dining downstairs and an intimate dining space in The Gallery upstairs. It features chic furniture, stylish Perrier-Jouët inspired wall stencils and offers monthly changing menus and seasonal local produce. In Inverness you get two theatres for the price of one at Eden Court. The Empire Theatre has a great variety of shows including the Royal Scottish National Orchestra on October 17 while the neighbouring OneTouch Theatre’s highlights include country music singer Charlie Landsborough on October 24. Among the Highland capital’s top restaurants are Rocpool, Chez Roux and Abstract. ■

Chief Executive, Barrhead Business Travel T: 0141 250 7878 E: bdm@barrheadtravel.com W: www.barrheadbusinesstravel.com

There’s entertainment to suit every taste on a cruise Going on holiday doesn’t mean that you have to make your own entertainment – choose to cruise, and you’ll be spoiled for choice when it comes to filling your days. Feel free to do as much, or as little, as you like as you sail from port to port onboard your floating resort. Each cruise line has its own distinctive entertainment options, so if you’re travelling with kids, if you’re a couple, if you’re with friends, or if you’re taking a break on your own, Barrhead Travel’s Cruise Consultants will help you find the best option to suit what you like to do. The large ship experience will provide plenty of adrenaline-pumping moments for families who like full-on fun and lots of action. Flow-riders, ice rinks, abseiling, bowling alleys, dodgem cars and climbing walls can all be found on cruise ships these days, and many have large pools with waterparks too. The kids will never want to leave. Evenings onboard can be filled with variety, from throwing the dice in the casino to tapping your feet to West End, Las Vegas and Broadway shows. Take in a movie at an open-air cinema – something Scotland is not renowned for! – give your cocktail order to a robotic barman, or literally chill out in the only Ice Bar at sea. The real joy of cruising is that you call the tune. Prefer to enjoy a laid-back pre-dinner drink followed by a quiet dinner a deux on your cabin’s private balcony as the scenery slips by? Fancy letting your hair down in the nightclub – or just have a nightcap after dinner and then bed? Just let the cruise experts at Barrhead Travel know what entertainment means to you, and not only will they find the right holiday for you, they’ll find the right price too.

July/August 2015 INSIDER 69

IT MATTERS: EMAIL

EMAIL REMAINS TOP TOOL FOR BUSINESS COMMUNICATIONS by BILL MAGEE

70 INSIDER July/August 2014

Industrial Revolution, especially now we have entered what has been termed the internet’s ‘third platform’ combining social, mobile, cloud and big data-rich media offerings. In contrast, electronic mail has been around for many years. MIT’s host-based compatible time-sharing system (CTSS) from 1961 onwards allowed multiple users to

[The internet of things] is a huge digital wave crashing down upon business as usual

Joe Tucci, EMC

informally log into a central system from remote dial-up terminals and pass messages back and forth. Fast forward and Gartner analysts maintain the integration of digital elements into work processes has accelerated. Every employee is a digital employee, every business endeavour has a technology component, every budget an IT budget.

Alan Quinn, newly-installed executive chairman at Capito, says: “Increasingly businesses are being built on digitised information and engaging with media tools like cloud, mobile, big data and social. But it can appear daunting at times, positioning an organisation to compete globally when it’s been used to operating in a perceived ‘safer’ home market.” Balance this with opening up new business channels that can make all the difference to the fortunes of a company: “It is wise to engage the right specialists to create a joinedup environment that ensures governance and security and reduces risk.” Mark Rodger, head of development at Cortex, reminds companies: “In the digital world geography is not an impediment with capital requirements relatively modest and rapid time-to-revenue for an innovation-based business. “Working in the cloud on Microsoft Azure, for example, it is the organisation that seeks solutions enabling it to be much quicker and more agile that will win the day.

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ECH ‘OLD TIMER’ the email is doggedly hanging on as the number one communications tool for many businesses. Significant numbers of companies continue to resist harnessing the undoubted online power of social media in the workplace. It follows a prolonged open season of heavilypublicised security breaches. Even well-known consumer sites like Facebook and Twitter are viewed as something of a threat to an organisation’s profile, brand and reputation not to mention customer loyalty. Yet, according to McKinsey Global Institute, social technologies are expected to unlock commercial value of more than £650bn ($1tn) in the next few years. Such reticence has led to technology leaders claiming far too many organisations are failing to take full advantage of a digital ‘always connected and engaged’ agenda. This digital age we’re all engaged in is reckoned to represent the biggest shift to occur since the

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IT MATTERS: EMAIL ▲

“A WordPress site, data cluster, or predictive analytics; in literally a couple of clicks and matter of minutes an organisation can be at the very cutting edge of the action. The end result is business idea to delivery is now achieved much, much quicker.” EMC’s chairman and chief executive Joe Tucci says too many firms lack “laser focus” to overcome fears of cyber risk and take full advantage of the digital agenda. He told EMC World in Silicon Valley’s ‘conference centre’ Las Vegas, of a transition to an ever more connected world brought on by the internet of things (IoT). IoT represents an anticipated eye-watering $19tn global nervous system of sensory networks connecting people, processes and data. “It’s a huge digital wave crashing down upon business as usual,” says Tucci. “Businesses must decide whether they want to ride opportunities presented by this wave, or crash under it.” Although it’s early days, IoT is already having an impact on wearable health monitors and smart www.insider.co.uk

cars. From Scotland, one Edinburgh Informatics offering is Sansible with its mobile power/kinetic movement prototype for such devices. Another, through the Converge Challenge, is AT-BAN activity tracking sensors. At the University of Strathclyde, £350m is being spent in a 10-year plan creating a fully-fledged digital campus fit for the 21st century with 380 student residence wireless access points and over 1,000 across the campus. It includes £89m on a technology and innovation centre acting as a clear signal of the direction the university is taking in partnership with industry. Strathclyde also won the bid to host the West of Scotland Supercomputer Centre – ARCHIE – with funding of £1.6m. “This new investment plan allows us to operate on a level playing field and to appeal to an international base of students,” says Professor David Hillier, dean of Strathclyde Business School. “Such a plan requires leading edge technology.” Scott McGlinchey, chief operations officer at Exception, says: “A lot of what we can describe as digital technology has been around for some time but there is definitely a new energy and focus. Especially when it comes to looking at ways h an organisation can improve the flow of information to respond to the customer faster and quicker.” A number of the banks “get it”, pouring hundreds of millions of pounds into providing an improved digital process service. “The bottom line is it is all about gaining competitive advantage and overall profitability.” Yet many organisations remain nervous that their networking security controls might not be robust enough. In contrast, the simple email is perceived as a safer tool where a measure of individual control exists. After all, you don’t have to click on that mailbox link, no matter how tempting it might appear. A new IDG survey, commissioned by F5 Networks, reveals financial services across Europe, the Middle East and Africa are increasingly exposed to, and concerned about, web fraud threats. Gad Elkin, F5’s EMEA security

director reports: “Almost half of those surveyed said they have experienced financial losses of between £50,000 and £500,000 within the last two years.” Diane McWade, who runs Evolution Network, says a data clean-up should come before any mass digital enhancement programme. “Focus on data to make good decisions on your strategy, have a quality review, implement a clear functional accountability structure, and know how data flows through your business life cycle.” It’s not enough to put every knowledge worker into contact with each other and hope for the best. It has to show value, have a directed outcome and reap potential benefits.

A lot of what we can describe as digital technology has been around for some time Scott McGlinchey, Exception

Stuart Little, director and technical solutions manager at Provista UK, says: “Find the right balance between employees’ needs and business demands, maintain IT security, data, privacy and asset protection specific to a company’s operations and risk factors.” Harvey Nash’s 2015 CIO survey, in association with KPMG, reports the rising role of chief digital officer. CEO Albert Ellis says: “We have never seen a demand for a skill expand so quickly.” Adjuvi’s chief strategy officer Dion Hinchcliffe says it will surprise some that email continues to be the top “social” tool of choice in the workplace. “This is largely because workers already know how to use it. It’s simple, and it still lets workers collaborate with anyone that has an email address.” Oasys managing director Alec Milton claims email is here to stay for the business community. “It’s embedded into the national psyche. What we need is a better way to manage information.” McKinsey concludes that a mere five per cent of all commercial communications and content use currently occurs on social networks. So, the email is sticking around for some time yet. ■ July/August 2014 INSIDER 71

BUSINESS PROFILE

HIGH FLYING OIL AND GAS FIRMS OPT FOR ABZ AIRPORT LOCATION The largest speculative office building in the vicinity of Aberdeen International Airport in recent years has been completed and is ready for occupation at ABZ Business Park. The three-storey 16,000 sq ft Grade A Stratus Building is already attracting interest and marks a major step forward in the next phase of the 54-acre site owned by ABZ Development Ltd. Two other 20,000 speculative office/warehouse units at 7A and 7B International Avenue have recently been completed and are immediately available for occupation, while inspection and testing service specialist REEL, part of the Global Energy Group, recently took occupation of 5B International Avenue. ABZ Business Park has proved popular with a number of leading oil and gas technology firms which have opted to relocate to the site which has excellent transport links in to Aberdeen city and to central and north Scotland. In November, home-grown Aberdeen success story AFS Technologies Ltd relocated to their purpose built facility at 3 International Avenue, which comprises of 12,000 sq ft of office space and 6,000 sq ft of workshop. The company provides inspection, installation, assembly, product solutions and training for pressure tools and systems used widely in the energy sector. Other occupiers at ABZ include subsea equipment specialist Teledyne Bowtech (formerly Bowtech Products), testing and materials company Exova, global equipment supplier ATR

www.abzbusinesspark.com

Group, solids control business Axiom Process Management, and US-owned SPX which opened its first service centre in Aberdeen as it targets the North Sea pump repair market. ABZ was also chosen by Regus, the world’s largest provider of flexible workspace, as the location for its third Aberdeen facility. Regus are situated in the 18,500 sq ft Cirrus Building and offers a range of fully-equipped workspace options and business services, including a business lounge, part-time and Virtual Offices, serviced offices, meeting rooms and video conferencing. Addressing Aberdeen’s well documented shortage of hotel accommodation and providing excellent stop-over facilities for business passengers transiting through Aberdeen International Airport, ABZ has secured four international hotel operators for the business park – Holiday Inn Express, Crowne Plaza, Marriott Moxy and Ibis.

Operated by Dominvs Group’s hotel division, the 193-bedroom Holiday Inn Express opened in May while the 165-bedroom Crowne Plaza will open in September and boasts 10 meeting rooms, a grill restaurant, two bars, a club lounge, gym and 251 parking spaces. The 200-bedroom Marriott Moxy is due to open late 2016 and the 156-bed Ibis opening is scheduled in early 2017. The 3-star Marriott Moxy, one of the first Moxy brand hotels to open in the UK, is aimed at the millennial traveller who embraces new technology and it will feature contemporary stylish design, with bright open spaces and free state-of-the-art computing and Wi-Fi. ABZ Development director, Paul Stevenson, said: “With a £13 million redevelopment of the airport terminal underway and passenger numbers forecast to grow by 20% over the next six years, we are doing our part to ensure that accommodation standards meet the ambitions of Aberdeen Airport and befit the city’s position as Europe’s oil capital.” Fellow ABZ Development director Tim Stevenson added: “Our commitment to building a combination of high-quality speculative office and industrial developments have attracted a host of well-established national and international companies. The delivery of the Stratus building and a further two 20,000 sq ft facilities marks another chapter in the success of ABZ and we are confident the business park will continue to attract the cream of the north-east energy sector.”

NEWS: PROPERTY Property news compiled by Stewart McIntosh

IN BRIEF

Major letting at Glasgow’s Cuprum building

Law Society on the move

TRISTAN Capital Partners has announced a major letting within Glasgow’s Cuprum building; the new occupier is outsourced contact centre provider Teleperformance UK. Alistair Niederer, chief executive of Teleperformance UK, said: “The building is perfect for our operation, with significant open floor plates and clear lines of sight within. “Operational excellence is critical and facilities need to be first rate to support our people, so they can support our clients and their customers. “With more than 270 sites in 62 countries, we adhere to exacting global best practice principles when sourcing and fitting out facilities; Cuprum now joins that family of world class Teleperformance premises”. Chris Webb of Tristan Capital Partners said: “Since acquiring Cuprum we have added subtle enhancements to the building including security barriers, showers

The Law Society of Scotland is preparing to relocate to Atria One on Edinburgh’s Morrison Street later this year. The move involves the sale of the society’s premises at Drumsheugh Gardens. Their staﬀ will occupy suites one and four on the second ﬂoor of Atria One, covering approximately 19,000 sq ft. The society has signed a 15year lease at Atria One and plans to be operational by the end of this year.

New hire for Savills Aberdeen Catherine Thornhill (above) has joined Savills’ planning team as an associate director in the company’s Aberdeen oﬃce, having previously worked for Ryden, Jenkins and Marr, and Aberdeenshire Council. Alastair Wood, Savills’ head of planning in Scotland, said: “Catherine is an excellent ﬁt for Savills. We already have a strong client base in north-east Scotland and the Highlands across the residential, commercial and rural sectors.”

Balfour Beatty appoints NED Balfour Beatty has appointed Stephen Billingham as a non-executive director with immediate eﬀect. Billingham has over three decades of business and management experience, including 11 years at Balfour Beatty’s predecessor BICC Plc. He is currently executive chairman of Punch Taverns Plc, where he will stand down from executive duties later this month. www.insider.co.uk

Cuprum Building, Glasgow

for dedicated cyclists and M&E improvements to facilitate occupiers such as Teleperformance. We are delighted to welcome them to the building.” Teleperformance is taking approximately 28,000 sq ft. The quoting rent at Cuprum is £21 per sq ft. The Cuprum letting provides further evidence

that Glasgow’s office market is undergoing something of a resurgence, with over 500,000 sq ft of live occupier requirements on the market faced by a growing shortage of Grade A office space within the city. Knight Frank and JLL acted for the landlord and Dornan & Co acted for Teleperformance. ■

Contract win Q1 sees returns edge downwards for consultancy for most sectors PROPERTY consultancy Graham + Sibbald has been awarded the lease consultancy contract by City Property (Glasgow). The major contract covers rent review and lease renewals on a portfolio extending to some 2000 sites and properties. The portfolio covers a diverse range of properties across the office, retail and industrial sectors. Lesley Goodfellow, head of Graham & Sibbald’s lease consultancy department, said: “Having recently established the lease consultancy department at Graham & Sibbald, it is fantastic to have secured this extensive contract. I am very much looking forward to working with City Property” ■

CBRE’s latest Scotland Property Quarterly report shows that, with the exception of industrials, all sectors saw returns edge downwards, with the biggest shifts seen in offices and high street retail. Industrials was the only sector to see returns improve in Q1, while offices and retail saw capital growth rates level off. Retail was by far the weakest of the main sectors. Total returns in Scotland were 1.6 per cent in the first quarter, a stark contrast to the 2.4 per cent return of the previous quarter. However, office markets in both Glasgow and Edinburgh are improving. Campbell Docherty (pictured), senior director at CBRE National Capital Markets, said: “Whilst the quarterly analysis for Q1 reports a slowdown in investment

volumes in Scotland, we believe this accounts for a lack of investment product and not a slowdown in demand. “We expect to see an increase in deal activity in Q2 with current large lot sizes. Princes Street has three prime retail holdings on the market, with lot sizes totalling £50m. “Shopping centre and retail warehouse activity has been dominated by the recent marketing of Eastgate Centre, Inverness, and Forge Retail Park, Glasgow.” ■ July/August 2015 INSIDER 73

WEALTH MANAGEMENT: FRANK SHENNAN

SLOW, STEADY GROWTH BETTER THAN NO GROWTH AT ALL

UROPE is going to dominate the political and economic agenda for the foreseeable future. By some accounts we could already be less than a year away from an in-out referendum on Britain’s’ EU membership. Ironically that might serve to obscure Europe on people’s investment agenda. Eurozone activity grew 0.4 per cent in the first three months of this year, up from 0.3 per cent in the previous quarter. Alright, those are not the kind of numbers we are used to hearing from the BRIC countries. In the same period India’s economy grew 6.1 per cent, but below the expected seven per cent and down from 7.5 per cent the previous quarter – although India did recently change its growth measurement. Brazil beat expectations – but by contracting less than expected at 1.6 per cent – and further contraction is expected. By contrast, France grew by 0.6 per cent, although that could yet be revised down. Italy pulled out of recession for the first time since 2013 to grow by 0.3 per cent, the Netherlands by 0.4 per cent, Germany disappointed at only 0.3 per cent, and Spain – once challenging for the title of continental basket case – grew by 0.9 per cent. “Activity is growing at its fastest pace since the first quarter of 2014,” says Schroders’ senior European economist Azad Zangana, “a sign that the European recovery is finally gathering momentum”. And this all while Greece was delaying repayments and railing against the troika of the EU, European Central Bank and International Monetary Fund for pushing it towards the door. At the same time investors are being advised to avoid emerging markets this year, “very much a developed market play in terms of equities,” according to Kames Capital’s chief investment officer Stephen Jones, and Europe, in particular, where returns have already met full-year forecasts. “Emerging markets have had their day in the

sun, and now they are being battered by a strong US dollar and weak commodity prices,” he says. He adds: “Investors can point to India as a brighter spot, but certainly the majority of countries across Latin America, China and Asia look challenged.” This is likely to chime with UK retail investors of whom 70 per cent are looking to generate a regular income from their investments. “This year the Schroders Global Investment Trends Survey demonstrates a thirst for income but a worrying

Eurozone activity grew 0.4 per cent in the ﬁrst three months of this year, up from 0.3 per cent in the previous quarter over-confidence amongst retail investors. “Growth is returning but it could be challenging for investors to achieve returns of between eight and 12 per cent while only placing 14 to 21 per cent of their investment portfolio in higher-risk assets.” Adds Jones: “The necessity and challenge to generate income from investments is strong, particularly given low interest rates in many countries, but income need not come at the expense of capital growth.” However, slow growth is better than no growth at all and the prospect of steady growth closer to home will have an appeal for many. The battle over Europe is likely to be intense, especially outside of Scotland where seven out of 10 voters are undecided. Most are leaning towards staying in or getting out, but they’re capable of being won over. From an investment perspective, though, Europe might yet win many over. ■

PRODUCT OF THE MONTH

Royal London Asset Management Enhanced Cash Plus Fund Royal London Asset Management has launched an Enhanced Cash Plus Fund, an open-ended investment company (OEIC) to invest in money market instruments and short-dated investment grade debt securities issued by ﬁnancials, corporates and governments. Its aim is to minimise risk to capital while providing income and capital growth above money market rates. 74 INSIDER July/August 2015

The fund, managed by Craig Inches and Richard Nelson, who have 35 years’ experience between them, has a similar approach to the existing Royal London Cash Plus Fund, which has assets of more than £1bn, but caters for clients with a longer time horizon for cash investing and looking to achieve a higher yield. It is diversiﬁed across a range of asset types with the debt securities predominantly

sterling investment grade. Overseas assets are permitted but all foreign currency investments will be hedged back to sterling. The aim is delivering the potential for increased yield and a corresponding increase in risk. Inches says: “This fund will appeal to investors seeking the potential for enhanced yield, in excess of that currently oﬀered by our existing cash funds.” ■ www.insider.co.uk

WEALTH MANAGEMENT: INTERVIEW

MARKET COMMENTARY Anna Croze Executive Director Adam & Company Email: anna.croze@adambank.com

Q&A Jason Hemmings, Cornerstone Asset Management

Financial advisers are always telling people to think ahead to be well prepared for any eventualities. Succession planning is no different, but you go further, don’t you? A: Succession planning is the art of passing money to the next generation. With ever increasing financial burdens placed on younger families, the older generation could help by working with their financial advisers on letting assets trickle down the generations sooner. While people may be increasingly planning in plenty of time, not enough are giving assets over to loved ones when those assets are actually needed. Q: Isn’t the time to give money to the next generation after your death? A: The problem is people are living much longer than they used to and, as those legacies move further into the distance, beneficiaries aren’t getting access to their family’s wealth at a meaningful and needy time, such as when buying a house, or paying school fees. Exacerbating this issue is the fact those in the 30 to 50 age bracket face much tougher financial pressures than earlier generations. We regularly come across people with modest accumulations of un-needed wealth that have passed from generation to generation before. The difficulty is this money is always waiting there to be passed on, but never gets used for any meaningful purpose. Q: Are you suggesting this cycle ought to be broken? A: Too much financial planning is stale and obsessed with pensions, life assurance and personal investments rather than using money to fit in with people’s lifestyles. The solution is never in the financial products. The solution is always the plan. And financial planning isn’t just about you, it’s also about your next generation. Both generations are contributing to the problem. Spending patterns have changed, with those younger than 50 much more consumerist, often lured and pressured into buying things on credit rather than saving as they would have in the past. All too often many find themselves overburdened financially. This trend has combined www.insider.co.uk

with rocketing house prices and soaring childcare and educational costs. Q: So why should the retirees help? A: Today’s generation of retirees are healthier and wealthier than those that came before so can spend much of their pensionable years holidaying and living a leisurely life. One of the outcomes of this is planning for the ﬁnancial future of their children has sometimes fallen by the wayside. Too many retirees still see the family home as a static store of wealth that can’t be touched. Instead, many should be looking at downsizing – an attractive option when only two people are living in a house designed for six – and some of that money could be used to help with the property needs of the next generation. For those who want to help their children but don’t want to lose control of their money, a good option is to set up a trust which places money outside of an estate and therefore limits inheritance tax. While gifting money earlier can help reduce tax liabilities, the main reason to help your family sooner rather than later is personal. It’s very generous to give money to your family but if you leave it in your will you’re missing out on the pleasure of seeing for yourself how you have beneﬁted your children and grandchildren. ■

Challenges and opportunities in healthcare spending Global healthcare costs have been escalating at a rate that may become unsustainable. The pressure is growing to manage costs, especially in the US, where healthcare expenditure is projected to hit $3.2trn this year, and runs at double what is spent in the rest of the developed world. Drugs make up around 10% of NHS spending. The public have sometimes criticised the drug companies for appearing profit driven and unethical. But a new drug’s high price can often be justified by the lengthy and expensive research and development (R&D) process. An average $1bn is spent on R&D for every successful new drug, with nine out of every 10 failing in development, and it takes an average ten years for regulatory approval. Yet as medical science grows more sophisticated, there are real prospects on the horizon for treating the chronic diseases of older age, such as cancer, effectively. But with increasing life expectancy comes an inevitable increase in healthcare costs, and the price of drugs will be of paramount importance. SMALL AND SIMPLE Drugs are classified as either ‘small molecule’ drugs or ‘biologics’. Until 15 years ago, small molecule drugs – such as ibuprofen – dominated sales. These drugs have simple chemical structures so can be manufactured very easily. When a small molecule drug goes off patent after ten or more years on sale, other companies can move into the market with identical copies called generics. When this happens, revenues for the originator drug typically fall by more than 90%, reducing the burden on the healthcare system. A ‘GROWING’ MARKET Biologics, on the other hand, are derived from living material, so the development process is much more complex; it can take six months to ‘grow’ a batch. These drugs are becoming hugely popular as they are able to treat complex unmet needs such as cancer and rheumatoid arthritis. An example is Herceptin, a drug for breast and stomach cancers, produced by Roche. Herceptin costs £30,000 per patient per 12 month treatment cycle. Just as generics are copies of small molecules, biosimilars are copies of biologics. Understandably, governments are keen to approve biosimilars in order to cut costs. What does this mean for the pharmaceutical giants? Despite the threat from biosimilars, there are still huge areas of unmet need such as cancer and degenerative diseases which will allow innovative companies to develop new treatments, more than offsetting the loss from cheaper copies of their existing drugs, and benefiting both the drug developers and society.

Jason Hemmings is a partner and co-founder of Cornerstone Asset Management. July/August 2015 INSIDER 75

EVENTS: YOUNG ENTERPRISE SCOTLAND AWARDS

Success for Scotland’s school businesses

IRKWALL Grammar from Orkney scooped five prizes – including the coveted Company of the Year award – at this year’s Young Enterprise Scotland Awards. The event, which celebrates the success of businesses set up by school pupils aged between 16 and 18, is in its 20th year. Kirkwall School’s firm Fjara – the Norse word for beach – impressed the judges with a collection of hand-crafted jewellery made from glass collected from beaches in the area and sold at local events and craft fairs. Sixth year pupil Betty Andrews, named Director of the Year, said: “We wanted a product with a really strong connection to Orkney but we wanted something that would work all over the world – not just in Orkney. “High quality and affordability were the most important things and we think we’ve captured a piece of Orkney that will be nice for both visitors and locals. “The sea is really important to our culture and sea glass is so pretty and a lot of people collect it. Every piece is unique. “We had a six-hour overnight boat journey and a three-hour bus ride to get to the awards but it’s been so worth it.”

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Teacher of the Year Kerry Warman added: “Our kids are enthusiastic and passionate. They have worked so hard and it’s been a great team effort.” Edinburgh Academy’s Dundas

I’ve suffered from anxiety and being in social situations is hard for me but when I became involved with Young Enterprise I could feel myself becoming more and more conﬁdent Rachel Crichton, Lochend Community High School, Glasgow

Links won the prize for Best Company Report. Callum Hunter, 17, said: “We decided to make quality cufflinks from antique coins and used shotgun shells donated by farmers. It’s been a great experience.” Cookbooks gave Airdrie Academy’s Rise Enterprise and Castle Dining from Castle Douglas High a taste of success. Craig Stobie, 18, from Airdrie Academy said: “We wanted to come

up with good, healthy meals that were easy to make.” Jack Bell, 17, from Castle Douglas High, said: “Castle Douglas is a Scottish food town and we wanted to promote both Scotland and the town. We had help from top Michelinstarred chefs Andrew Fairlie, Tom Kitchin and Tony Pierce, and gave all our profits to charity.” Red Thistle, from Mearns Castle High, in Newton Mearns near Glasgow, designed a lambswool tartan scarf based on their school colours. They picked up the Organisational Excellence Award. Sam Rafique, 17, said: “We designed the tartan ourselves. It’s now part of our school uniform.” Inverurie Academy’s Top Glass were recognised for their environmentally friendly upcycled glass creations by winning both the Innovation Award and Best Trade Stand. Mikey Watson, 18, said: “We capitalised on Aberdeenshire Council policy changes to recycling, which meant glass bottles and jars would no longer be part of weekly collections. We took bottles and jars from people and melted them down in a ceramic kiln into serving plates, which we sold with huge profit margins.” As well as celebrating the success and innovation of school businesses, Young Enterprise Scotland also helps with pupils’ personal development. Rachel Crichton, 16, from Lochend Community High School in Glasgow, was honoured for her progress with the Journey Award. She said: “I’ve suffered from anxiety and being in social situations is hard for me but when I became involved with

Above: The representatives from Inverurie Academy’s Top Glass

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EVENTS: YOUNG ENTERPRISE SCOTLAND AWARDS ENTERPRISE WINNERS COMPANY OF THE YEAR: Fjara, Kirkwall Grammar School BEST COMPANY REPORT: Dundas Links, Edinburgh Academy BEST TRADE STAND: Top Glass, Inverurie Academy BEST PRESENTATION: Rise Enterprise, Airdrie Academy QUALITY SCOTLAND ORGANISATIONAL EXCELLENCE AWARD: Red Thistle, Mearns Castle High School

The representatives from Kirkwall Grammar School’s Fjara

High quality and affordability were the most important things and we think we’ve captured a piece of Orkney that will be nice for both visitors and locals Betty Andrews, Fjara, Kirkwall Grammar School

Young Enterprise I could feel myself becoming more and more confident. “I feel so much better about myself now. I know I’ll be able to go to college and make friends and just have a normal experience.” The awards were hosted by comedian Des Clarke, and Deputy First Minister John Swinney was among the guests. Swinney said: “It’s really important to celebrate the achievements of young people in Scotland and encourage a culture and climate of enterprise. “We are very fortunate to have such an enthusiastic crop of young people and we should be so proud of them. They contribute to making Scotland the kind of country we now are.” ■

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IOD DIRECTOR OF THE YEAR: Betty Andrews, Kirkwall Grammar School ASDA RETAIL EXCELLENCE AWARD: Rise Enterprise, Airdrie Academy THE MARKETING SOCIETY STAR SCHOOL AWARD: Fjara, Kirkwall Grammar School

Above: Comedian Des Clarke hosted the event

Deputy First Minister John Swinney MSP was among the guests at the awards

SQA SOCIAL ENTERPRISE IMPACT AWARD: Castle Dining, Castle Douglas High School PEOPLE’S CHOICE AWARD: Rise Enterprise, Airdrie Academy INVESTORS IN YOUNG PEOPLE AWARD: Fjara, Kirkwall Grammar School QTS INNOVATION AWARD: Top Glass, Inverurie Academy ASDA JOURNEY AWARD: Rachel Crichton, Lochend Community High School, Glasgow BUSINESS ADVISER OF THE YEAR AWARD: Andrea Thompson, Castle Dining BUSINESS GATEWAY LINK TEACHER OF THE YEAR AWARD: Kerry Warman and Aileen MacGregor, Kirkwall Grammar School

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EVENTS: SCOTTISH ACCOUNTANCY & FINANCE AWARDS

Finance excellence celebrated

AMPBELL Dallas was named Large Accountancy Firm of the Year at this year’s Business Insider and Aldermore Scottish Accountancy & Finance Awards. The judges said the Renfrewbased firm was a clear winner due to its vision, goals and values. “Campbell Dallas have a clear strategy for development of staff and the introduction of the school leavers recruitment programme shows confidence for future success,” they said. They also said Campbell Dallas had enjoyed an “exceptional year in 2014 and demonstrated outstanding achievement”. Accepting the award, Fraser Campbell of Campbell Dallas said: “We really enjoy what we do, we take our work seriously, we are passionate in what we do and we know our clients appreciate what we do. It is a cliché to say it is all about people, but we have some of the best in Scotland, if not the UK, and I am privileged to work with them.” The Accountant of the Year award went to Ian Main, founder and director of Stark Main & Co. The judges said Main had demonstrated “a clear strategic vision with a real personal approach to business”, having “guided the firm through a period of impressive growth since it was established in 2006”. They added: “His clear focus on

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ensuring client and staff happiness really stood out.” Accepting the award, Main said: “Although this is an individual award, you can’t achieve anything without a dedicated team behind you, and from day one it has been all about the team for Stark Main & Co. I would like to dedicate this award to the exceptional team who work alongside me every day, and I am greatly privileged to work alongside them.” The Small Accountancy Firm

We really enjoy what we do, we take our work seriously, we are passionate in what we do

Fraser Campbell, Campbell Dallas

of the Year title was won by Mint Accounting. The judging panel said it was a truly innovative firm which had shown impressive forward thinking with their investment in cloud technology to improve client services and innovative branding and marketing. Accepting the award, Allison Walker from Mint Accounting, said: “We couldn’t have won this award without the help of Xero, who have been phenomenal in helping us with our technology and cloud offering.” Finance Director of the Year was Shane Corstorphine of Skyscanner. The judges said he has succeeded in embedding

the “right financial infrastructure and rigour for rapid growth, along with the ability to ensure commercial acumen and financial understanding were integral across the business and part of the culture and philosophy of the company”. Accepting the award, Corstorphine said: “Skyscanner is a business which continues to go from strength to strength and I am really lucky to be a part of that. And I am also lucky to get to work with fantastic people on a day-to-day basis, who all deserve this award more than I do and are a huge part of me winning it.” Emerging Finance Director of the Year was BrewDog’s Neil Simpson. BrewDog co-founder James Watt, who nominated Simpson, said he had faced “many challenges” since joining the brewer, “but has proven he can deal with any situation we throw at him”. The judges said Simpson had shown “clear financial leadership within a dynamic and challenging organisation”. Simpson said: “It is really nice to see our finance team and myself recognised.” Young Accountant of the Year was Barry McGonagle, also of Skyscanner. The judging panel said: “Specialising in the technical side of accounting, McGonagle has played a key role in major transactions in recent years in addition to supporting other members of staff ”. The panel added: “In a relatively short space of time, McGonagle has

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EVENTS: SCOTTISH ACCOUNTANCY & FINANCE AWARDS

Above (l-r): Matt Henderson, Johnston Carmichael; Gill Pryde, Anderson, Anderson & Brown; Phil McNaull, University of Edinburgh; Ian Main, Stark Main & Co; Barry McGonagle, Skyscanner; Arlene Stuart, host; Fraser Campbell, Campbell Dallas; Allison Walker, Mint Accounting; Yvonne Anderson, Campbell Dallas; Neil Simpson, BrewDog; and Jennifer Williams, Campbell Dallas

developed strong trust at board level and his interactions led to real value being driven across the business”. Accepting the award, McGonagle said: “The team at Skyscanner are an incredible bunch and they bring the best out in me every single day.” The Training Team of the Year award went to Campbell Dallas, which demonstrated a clear vision of the skills and behaviours required for happy staff, happy clients, quality service and financial strength. Public Sector Team of the Year was won by the University of Edinburgh finance team “due to the amazing transformation they have undergone and the long-term changes being made.” The judging panel said the transformation of the team has been “massive”, and it was recently awarded the Silver Investors in People Award in recognition of the changes they have made to improve how the team works. Accepting the award, Phil McNaull said: “We normally get recognised for the quality of the academic achievements of the

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university and being 17th in the world is something we all aspire to maintain, so it is nice to see the support mechanisms recognised, and the finance team have done a phenomenal job in the last couple of years.” The Insolvency Team of the Year award winner was Johnston

“a real passion for their profession”. Accepting the award,Matt Henderson said: “This is a fantastic accolade for us, and we are absolutely thrilled.” The Tax Team of the Year accolade went to Aberdeen-based Anderson Anderson and Brown, which the judging panel said had shown “a clear understanding of the difference they make and the value they add to clients”. They described the firm as having “a strong plan for the future” and they were particularly impressed with its graduate recruitment and staff development programmes. Shane Corstorphine, Skyscanner Of the 17 graduates taken on by the firm during 2014, seven were Carmichael. The judges said while within the tax team. A further seven undergoing a major rebrand, the staff in the tax team were promoted team at Johnston Carmichael to managerial roles and a new tax launched a new insolvency and partner was appointed in the year. liquidation service, Contractor Accepting the award,Gill Pryde Members Voluntary Liquidations, of Anderson Anderson and Brown, to assist clients and help them to said: “When we started in 1990 unlock cash. there were only three of us in the The judging panel described tax team; there are now 103 tax the firm as being “traditional yet professionals all under one roof.” ■ innovative” and said it demonstrates

Skyscanner is a business which continues to go from strength to strength and I am really lucky to be a part of that

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EVENTS: DEALS & DEALMAKERS AWARDS 2015

PR guru turned TV presenter to be special guest speaker

ORD Sugar’s former right-hand man on The Apprentice, Nick Hewer, is special guest speaker at this year’s Deals & Dealmakers Awards at Glasgow’s Hilton Hotel on Wednesday September 9. Hewer, who has been hosting Channel 4’s popular Countdown programme since 2012, is famous for his wonderfully dry wit and facial expressions which told you exactly what he thought of the contestants on The Apprentice. His PR firm was selected to represent Amstrad in the eighties and soon became responsible for media handling of all Lord Sugar’s business and charitable activities. For over 20 years Hewer played an integral part in Amstrad’s management structure. He also built a long and impressive client list, including the Secretariat of HH The Aga Khan and the wife of the ruler of Dubai, the late Sheikh Maktoum, as well as a number of British and international companies. After selling the business, Hewer withdrew to his house in south-west France; but having become firm friends with Lord Sugar, he was called to negotiate on his behalf with The Apprentice producers. The tables were turned when Sugar persuaded Hewer to take an on-screen role and promised to negotiate his fees. “I fought hard against it,” says Hewer, “but he cajoled me – in a muscular sort of way.” Taking to television like a duck to water, Hewer has since amassed a string of credits from Have I Got

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News For You and Farm Fixer to The Town That Never Retired, Nick and Margaret: Too Many Immigrants?, and Countdown to Freetown. Hewer and his original opposite number Margaret Mountford became surprising stars of the hit reality show. He decided to stand down last

Nick Hewer, who has been hosting Channel 4’s popular Countdown programme since 2012, is famous for his wonderfully dry wit and facial expressions which told you exactly what he thought of the contestants on The Apprentice December at the end of the tenth series. Hewer’s after dinner speech takes audiences behind the scenes, before turning into an extended question and answer session. With The Apprentice consistently topping the ratings, there is never any shortage of questions. Firmly established as one of Scotland’s biggest and most prestigious business events, the awards highlight and reward successful dealmaking in Scotland and recognise the achievements and skill of

THIS YEAR’S CATEGORIES ARE: EARLY-STAGE / RISK CAPITAL DEAL OF THE YEAR INVESTOR OF THE YEAR DEAL TRANSACTION SUPPORT AWARD LEGAL ADVISOR OF THE YEAR ACQUISITION OF THE YEAR SALE OF THE YEAR MBO/MBI/IBO/EBO OF THE YEAR SMALL/MID-SIZED COMPANY DEAL OF THE YEAR DEALMAKER OF THE YEAR DEAL OF THE YEAR management teams, advisers and financiers. The chairman of the judging panel for this year’s awards is Dr Chris Masters, who is currently the chairman of Energy Assets Group Plc and senior independent director of Speedy Hire Plc and The Crown Agents. The other members of our judging panel include Allister Langlands, who is former chairman and chief executive of international energy services

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EVENTS: DEALS & DEALMAKERS AWARDS 2015

company Wood Group; David Thorburn, who recently retired as chief executive of both Clydesdale Bank and Yorkshire Bank; Alec Carstairs, former head of UK oil and gas mergers and acquisitions at EY as well as managing partner of its office in Aberdeen; Scott Black,

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managing director and co-founder of executive headhunting company FWB Park Brown; and Paul A Stevens, who heads up the private equity and mergers & acquisitions practice at insurance group Marsh. â&#x2013;

To book a table or discuss sponsorship opportunities please call David Hill 0141 309 4913 email david.hill@insider.co.uk.

July/August 2015 INSIDER 81

INSIDER: APPOINTMENTS People on the move in Scotland’s business community

Skeoch to step up at Standard Life In the t h spotlig

Name: Previous title: New title:

Keith Skeoch Chief executive, Standard Life Investments Chief executive, Standard Life Plc

KEITH Skeoch, who is currently chief executive of Standard Life Investments, will take over as Standard Life chief executive on August 5, following David Nish’s announcement he is stepping down after six years in the role. Appointed director in May 2006, having been a director of the Standard Life Assurance Company since March 2006, Skeoch joined Standard Life

Promotions at law ﬁrm MMS Maclay Murray & Spens (MMS) has announced a raft of promotions. Moving up to partner are Derek McCombe – Glasgow, corporate; Gareth Hale Edinburgh, commercial dispute resolution; Rona Hutchison – Glasgow, commercial dispute resolution; Allan Cairns – Edinburgh, property; Jo Campbell-Smith – Glasgow, property; and Barry Edgar – Glasgow, property. And moving up to director level are Sandra Hartley – Edinburgh, capital projects; Alan Delaney – Edinburgh, employment & pensions; Alison Weatherhead – Glasgow, employment & pensions; Helen Hutcheson – Glasgow, construction & engineering; and Kenneth McLaren – Glasgow, property. ■ 82 INSIDER July/August 2015

Investments in 1999 as chief investment officer after nearly 20 years’ investment experience at James Capel & Company in a number of roles, including chief economist and managing director international equities. He is also a director of the Investment Management Association and a non-executive director of the Financial Reporting Council. The Edinburgh-based group

said the change at the top is subject to regulatory approval and a “rigorous succession planning process”. It added in a statement to the stock market: “Over recent months David and the Standard Life board have been discussing the development of our senior leadership and succession planning to continue the delivery of our strategy. “In light of this, the board and David have agreed this is the right time to hand over to his successor.” Commenting on his appointment, Skeoch said: “I am delighted to have the opportunity to lead Standard Life. “[It] has been both transformed and simplified in recent years. This has put the fundamentals in place to build a world class business with investment management at its heart, serving savers and investors through our strong and innovative distribution channels.” ■

New chair for climate change group Lady (Susan) Rice, recently appointed chairman of Scottish Water, has taken over from Ian Marchant as chair of Scotland’s 2020 Climate Group. Lady Rice, who has been a vice chair of the group since 2009 when the group was formed, will take the reins and steer the group with a businessfocused strategy, encouraging meaningful collaborations, partnerships and relevant activity to help all civic society play its part in reaching climate change targets. Lady Rice commented: “I am delighted to take up this challenging role. No-one said change is easy and I firmly believe that by working collaboratively and smartly we can be innovative in our approach and achieve the impact we need. “We will continue to be a critical friend to the Scottish

Ian Marchant, former chair, Lady Susan Rice, chair, and Elizabeth Dirth, vice chair, Scotland’s 2020 Climate Group

Government to ensure that the public and private sector support each other in their work towards a low carbon Scotland. “The forthcoming 21st Convention of Parties (COP) in Paris will act as a prompt for a new and different approach. The next five years require attention, planning and behaviour change. “Scotland’s world leading targets will certainly bring challenges, but challenges also bring opportunity.” ■

NEW POSTS Wallaces TCB has announced Alastair Campbell, previously group company director at Contiki Holidays, has joined the business as managing director for Scotland. Former MSP and Scottish Government minister Jim Mather has been appointed as chair of home-building industry body Homes for Scotland on a three-year term. Scottish Tourism Alliance has appointed Alison McRae, projects director at Glasgow Chamber of Commerce; David Lonsdale, director of the Scottish Retail Consortium; and Henk Berits, director of marketing & commercial services at the National Trust for Scotland, to its board. Glasgow Chamber of Commerce chief executive Stuart Patrick has been appointed as the new chair of Glasgow City of Science. Property agent GVA James Barr has appointed investment agent Alasdair Ramsay, formerly with Deloitte, as a senior director. North-east HR company Hunter Adams has appointed a new managing director: Leigh Stott has taken over from Dean Hunter, the company’s owner and founder. Johnston Carmichael has announced eight key appointments: Graham Leith, Inverurie; Hugh Boyle, Glasgow; Neil Steven, Edinburgh; and Peter Innes, Stirling, have been promoted to partner while Gillian Hadden, Glasgow; James Thompson, Michael Murray, and Stewart Pennington, all Edinburgh, have been promoted to director. www.insider.co.uk

PERSONNEL FILES The latest news on HR, recruitment, employment law and staff issues

MILITARY EXPERIENCE UNDER-VALUED Military service is not given the respect it deserves in civilian employment, according to a study by the Barclays Armed Forces Transition, Employment and Resettlement (AFTER) programme. Some eight per cent would look unfavourably on military service on a CV, and 54 per cent were reluctant to hire veterans because of fears they may suﬀer from psychological ill health. Only 47 per cent of respondents said they would value military experience, ranking it the third least valued attribute in the study. Only being sporty (43 per cent) and being well travelled (42 per cent) ranked below it. Stuart Tootal, head of the AFTER programme, said: “From leadership skills to strategic thinking and problem solving, the strengths often displayed by veterans are exactly what the workforce needs. However, the results of this study clearly show more must be done to help veterans translate these skills in a way that resonates with UK employers.” ■

HOLIDAY STRESSES HIGHLIGHTED Some 73 per cent of employees feel stressed ahead of taking annual leave, research from the Institute of Leadership & Management (ILM) has found. Some 68 per cent of respondents worked late the day before their holiday, and 18 per cent said they return to work more stressed than when they left. The poll found 61 per cent of workers feel obliged to work while on holiday; 64 per cent read and send emails and eight per cent go into work during their time off. At the end of the year 54 per cent of employees have holiday entitlement left, and 42 per cent of managers have needed to encourage their staff to take a break. Charles Elvin, chief executive of the ILM, says: “Organisations can foster positive work environments by encouraging staff to use their full holiday allowance, handing over responsibilities to co-workers in the lead-up to leave, and having face-to-face meetings on their return.” ■

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APPRENTICESHIP FIGURES SURPASS TARGETS ONCE MORE MORE than 100,000 people started a Modern Apprenticeship over the past four years, according to recent figures published by Skills Development Scotland (SDS). The target of delivering at least 25,000 modern apprenticeship (MA) opportunities has been surpassed for the fourth consecutive year with the announcement that 25,247 apprenticeships were delivered during 2014/15. The figures also show: 80 per cent of starts were aged 16 to 24, an increase of one percentage point compared to last year; 64 per cent of starts were at level three or above, an increase of two percentage points on last year. The achievement rate for MAs in 2014-15 was 74 per cent. Other data from SDS shows moving to a better job is the most common reason why MAs do not complete. And some 454 MAs were made redundant in the period, 17 per cent fewer than in 2013/14. In terms of gender split, 60 per cent of MA starts were male and 40 per cent were female, while 1.4 per cent of MA starts self-reported as being from black and minority ethnic (BME) groups, a slight increase on 2013/14 levels. SDS, which leads on the delivery of MAs, is working with partners to increase the number of apprenticeship opportunities to at least 30,000 MAs each year by 2020. Damien Yeates, chief executive of SDS, said: “The delivery of more than 100,000 modern apprenticeships over four years demonstrates more and more people are recognising the value of earning while you learn.

“It’s a great testament to employers in Scotland that they have sustained their investment in modern apprenticeship opportunities right through the economic downturn. It’s also a great credit to the modern apprentices that so many have successfully completed or are on their way to completing their apprenticeship.” Minister for Youth and Women’s Employment Annabelle Ewing said: “Apprenticeships not only offer our young people better job prospects – they also have a positive impact on businesses and industry, bringing value to employers and our economy. “Youth unemployment has reached its lowest level in seven years and we compare very well to other EU countries, but I would urge more businesses to consider how an MA could help them grow and prosper.” “As we move towards this target, it is vital we continue to tackle inequality and we are taking action to ensure more women are aware of the tremendous opportunities that an MA offers to learn while you earn. It’s particularly good to see a rise in the number of girls doing MAs at SVQ level three or above. Young people must see the full range of options available to them, not just those that are traditionally seen as jobs for men or for women. “Our national programme for Developing the Young Workforce outlines a number of further actions to tackle inequality and we have given Skills Development Scotland £500,000 to move forward with an equalities action plan that will also benefit care leavers, the disabled and minority groups.” ■ July/August 2015 INSIDER 83

Insider’s regular events picture page In association with

HIGHLAND SINGLE MALT SCOTCH WHISKY

Above left: Anne Stevenson of Robert Gordon University, shows oﬀ her Top cHeRry for Outstanding Contribution award; and above: Shari Norris of Petrofac celebrates winning the Fantastic HR Advisor award, both at the cHeRries Awards which celebrated HR excellence in the north-east, which were staged at the Aberdeen Exhibition and Conference Centrte. Left: Innes Smith (centre) of Springﬁeld Properties receives the Homes for Scotland Home Builder of the Year award at the Homes for Scotland Annual Lunch & Awards, which took place at the Edinburgh International Conference Centre, from (l-r) Elaine Farquharson-Black, Burness Paull; speaker Gordon Strachan; Mike Galloway, Dundee City Council; and Mike Hartley, Media Scotland.

84 INSIDER July/August 2015

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Above: (l-r): Laura Baldie, University of the West of Scotland; Lucy Lilburn, Subsea Technologies UK; Lesley-Anne Patrick, Quarriers; Kelly McAulay, William Grant & Sons Distillers; Kawin Chau, SECC; Donna Coulling, speaker; Rosemary McLennan, Scottish PA Network; and Victoria Darragh, Hays, at the Scottish PA Network PA of the Year Awards. Right: Fiona Kerr of First Glasgow receives the Woman of the Year award at the Freight Transport Associationâ&#x20AC;&#x2122;s Everywoman in Transport & Logistics Awards from David Wells of the Freight Transport Association. Below (l-r): Terry Aâ&#x20AC;&#x2122;Hearn, SEPA; Andrew Bachel, Scottish Natural Heritage; Dr Aileen McLeod, Minister for Environment, Climate Change and Land Reform; and David Sigsworth, SEPA, at the opening of Strathallan House, Stirling. Photo: SEPA.

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July/August 2015 INSIDER 85

THE TEN MINUTE INTERVIEW In association with

David Welch David Welch is the ﬁrst chief executive of Beatson Cancer Charity, with responsibility for overseeing its strategic development and impact. He has had a highly successful 20-year career in the not-for-proﬁt and healthcare sector, including stints with the NHS at local, national and international level as well as Yorkhill Children’s Charity and Highland Hospice.

Describe a perfect day/night/weekend. Warm sunshine, peace, quiet and tranquility with no email, text or social media distractions, a good book, time for a cycle, and a nice seafood dish with good wine for dinner.

What ﬁve words would friends/colleagues use to describe you? Dynamic, inspirational, strategic, visionary, supportive. If you could choose anyone, who would be your fantasy board members and why? Other than the current chairman and board members of course, it would need to be Bill Gates; Richard Branson; [co-founder of Google] Larry Page; Angelina Jolie; Kate Middleton, Duchess of Cambridge; Emeli Sandé; Keanu Reeves; oh, and as special ambassador, Yoda – ‘donate to the Beatson, you will, your help they need’. If you could choose anyone, who would be your fantasy dinner party guests and why? Mahatma Gandhi; Nelson Mandela; Dalai Lama; Martin Luther King; Mother Theresa; Emmeline Pankhurst; [decorated US Army war veteran] Dick Winters; Diana, Princess of Wales; Nicola Sturgeon; and Sir Bradley Wiggins.

Above top: Diana, Princess of Wales, would be a guest at his fantasy dinner party. Above: Yoda would be a special ambassador on his fantasy board. And below: Portree, Skye.

What is your most embarrassing moment? I really couldn’t say but my second most embarrassing moment must be cycling into a car park barrier and being left suspended around the barrier in mid air while my bike kept going. Another is being asked by my dad to check the chassis number of his car to match the paint to touch up a scratch and ending up denting the garage door, and reversing his car into a pillar, which duly fell down and only stopping the car by embedding it in the side of mine which was parked across the driveway – try telling that one to the insurance company!

What is your favourite way to unwind during time oﬀ ? Cycling, running, a glass of wine with nice food, watching a ﬁlm, reading a real book over a Kindle.

Who would play you in the ﬁlm of your life? I’ve always wanted to star in a movie, or if not it has to be the adventurous Harrison Ford.

What sport are you interested in/which sporting team do you follow? I enjoy most sports, especially football, cycling, golf, athletics and tennis.

What is your signature dish to cook? Oeufs brouillés en pain grillé.

What was the first record you bought/first film you saw at the cinema/concert you attended? Dynamite by Mud; The Wizard of Oz; The Jam at Glasgow Apollo. What is your earliest childhood memory? Getting on a trolley bus with my mum to go visit my gran in Springburn and the facilities on the half-landing on the way up the stairs in the close.

If you could choose your last meal on earth what would it be? Something very, very hot and spicy – an authentic Thai or Indian ﬁsh/seafood dish with a nice glass of oaked Chardonnay or a classic Viognier. What is your karaoke song/party piece? Dignity by Deacon Blue. What is your favourite part of Scotland? Skye and Glasgow. ■

www.davidsonchalmers.com 86 INSIDER July/August 2015

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FORWARD FEATURES: SEMPTEMBER 2015 ISSUE

Insider editorial synopsis September 2015 edition SME300 Insider reveals the 300 top performing SMEs in Scotland with turnover £8m to £20m. With full analysis of our ﬁndings plus proﬁles of some of the companies listed. * The SME300 is collated by Insider’s research team and is based on the latest available information in Companies House but we also try and make sure it is up to date as possible by contacting individual companies. If any PR has a client whose company is headquartered in Scotland and not a subsidiary of a company outwith Scotland and has turnover between £8m and £20m they are welcome to contact our researcher Andrea Moulding on 0141 309 3289 or email her at a.moulding@insider.co.uk.

COUNTRY ESTATES REVIEW Country estates in Scotland play an important role in the country’s economy, employing thousands of people and bringing in millions of pounds in revenue. But estate owners claim they are now under threat from Scottish Government proposals to give tenants the right to buy their farms under certain circumstances. The government is also proposing to end business rates exemptions for shooting and deerstalking estates. Insider looks at the implications for the country’s estate owners.

DUNDEE REVIEW Insider’s series of regional proﬁles turns its focus on Dundee. We look at how the economy of the region is faring, what new developments have recently been completed and what is in the pipeline.

INDEPENDENT SCHOOLS Every parent wants the best for their children and education is arguably the top priority. Scotland is blessed with some of the best independent schools in the UK and choosing between them is no easy task. In this feature we look at some of the leaders in the ﬁeld and ﬁnd out what makes them stand out from the crowd.

CONFERENCING AND EVENTS Planning a conference or event to promote your company? Need a venue? Need an event organiser to bring it together? Then look no further. In this special feature Insider casts its eye over the wide choice of conference venues available in Scotland and talks to a selection of event organisers about what they have got on oﬀer.

WOMEN ON BOARDS Earlier this year the UK Government announced that almost a quarter of all FTSE 100 board positions were being ﬁlled by women in its quest to increase gender diversity in the boardrooms of the country’s top companies. Inevitably the pressure will be on smaller companies to follow in their footsteps. Insider looks at the question of gender diversity in boardrooms and provides advice for women who have ambitions to become both directors or non executive directors.

DEALS QUARTERLY ROUND-UP Insider’s quarterly round of corporate deals activity in Scotland.

LEISURE: COUNTRY SPORTS With the game season getting under way Insider looks at Scotland’s thriving country sports industry and what is on oﬀer

PLUS OUR REGULAR FEATURES…

INSIDER INTERNATIONAL Insider International looks at the opportunities for trade for Scottish businesses in a particular country.

IT MATTERS Insider looks at the latest developments in information technology.

Should you require further information on any advertising or sponsorship opportunities relating to any of the above, please contact: Eleanor Hunt, senior advertising sales executive T: 07788 168576 E-Mail: ehunt@insider.co.uk

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WEALTH MANAGEMENT Insider’s regular look at personal ﬁnance issues and products for investors.

PROPERTY NEWS A round-up of property news across both the commercial and residential sector in Scotland.

THE BURNING QUESTION Each month, Insider solicits the opinions of Scotland’s business leaders on key questions of the day.

PEOPLE ON THE MOVE A round up of new appointments in Scottish companies and also organisations outwith the country which have a major inﬂuence on business north of the border.

PERSONNEL FILES Update on emplyment law and HR issues.

THE TEN MINUTE INTERVIEW A leading Scottish businessperson answers our quickﬁre questionnaire

SLAINTE Scotland’s business social scene on ﬁlm.

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