BQ Scotland issue 16

www.bq-magazine.co.uk

ISSUE SIXTEEN: SUMMER 2014

HEADS IN THE CLOUDS The businessmen capitalising on the data storage revolution STRIPPING FOR ACTION Golfing legend aims to market comic strip character worldwide CREDIT WHERE IT’S DUE Meet the woman at the heart of Scotland’s credit union success THE SURVIVORS How a property giant weathered the economic storm ISSUE SIXTEEN: SUMMER 2014: SCOTLAND EDITION

CANCER DROVE ME TO SUCCEED Telecoms boss came back stronger after beating killer disease

BUSINESS NEWS: COMMERCE: FASHION: INTERVIEWS: MOTORS: EVENTS

SCOTLAND EDITION

BQ Breakfast - daily insight, news and analysis to help grow your business. Register free at www.bq-magazine.co.uk Business Quarter Magazine

£2.95

WELCOME

BUSINESS QUARTER: SUMMER 14: ISSUE SIXTEEN Welcome to BQ Scotland. We now only have the summer between us and the biggest decision we are likely to make about Scotland’s future – a decision that has exercised a great deal of thinking and discussion about the kind of country we want to create.

In terms of Scottish business, there are various pockets of joint opinion and sectoral interest.

According to a Fraser of Allander Institute survey conducted for Aberdeen Chamber of Commerce, many oil and gas companies believe Scottish independence would be a positive thing. While, when polled, independent financial advisers think we are better together with the rest of the UK because of the pension uncertainties. Perhaps the oil industry doesn’t really mind because the currency debate for them is in US dollars rather than UK sterling.

Some argue business groups should not be canvassed because this is a personal decision and every adult in Scotland only has one vote.

Whatever way we vote, Scotland needs a radical shift in the creation of a genuine culture of enterprise – which is why we applaud the merger of the Entrepreneurial Exchange and the Saltire Foundation. It is true that Scotland’s liberal welfare state, has allowed too many of our people to opt-out of becoming active citizens: yet taking personal responsibility for one’s own actions was once an ingrained Scottish trait.

We don’t need a referendum to tackle one major issue: the skills shortage.

We already have a plethora of organisations set up to tackle this. Yet still companies are clamouring for Scots with proper skills in maths, accounting, IT, physics, engineering and geology to undertake work. According to a Bank of Scotland survey, the oil and gas industry alone could create 39,000 jobs over the next couple of years. A record £14.4bn of

Principal Sponsors

capital investment is going into offshore projects, yet there aren’t enough Scots to undertake this work. This is a scandal.

The recruitment problem is now acute among contractors, subbies and operators. The scarcity of skills and talent means companies are now poaching from other industries and competitors. This is forcing up wages, making projects more expensive and endangering their viability, while harming companies who once placed great store on loyal and long-term workers.

Mobility of labour also becomes a problem when we have a massive disparity in wages, cost of living and housing between the prosperous north-east and subdued west central Scotland.

Poverty exists in large tracts of Scotland: much of it ingrained and deeply sad for the misery it compounds from one generation to the next.

But there is more here: a poverty of aspiration.

How can 60,000 able-bodied Scots be heroin addicts when we need so many people to work? Why do so many sit on our streets with pit-bull terriers begging for small change?

Is it really too hard to encourage them and retrain them to find work? Or does drug addiction mean these Scots will never become productive in this technologically driven world?

If we are truly concerned to create a fair and enterprising economy that benefits all of Scotland, and closes the gap between rich and poor, then all of the bodies from schools, colleges, government and skills development organisations need to work more closely.

We can do it as an independent nation – or as part of the UK. But we need to get our people doing things firstly for their own personal satisfaction and then for our national well-being.

Kenny Kemp Editor, BQ Scotland

CONTACTS ROOM501 LTD Christopher March Managing Director e: chris@room501.co.uk Bryan Hoare Director e: bryan@room501.co.uk EDITORIAL Kenny Kemp Editor e: editor@bq-scotland.co.uk DESIGN & PRODUCTION room501 e: studio@room501.co.uk PHOTOGRAPHY KG Photography e: info@kgphotography.co.uk ADVERTISING Michelle Farquhar e: michelle@room501.co.uk t: 07551 171 211

room501 Publishing Ltd, Spectrum 6, Spectrum Business Park, Seaham, SR7 7TT www.room501.co.uk room501 was formed from a partnership of directors who, combined, have many years of experience in contract publishing, print, marketing, sales and advertising and distribution. We are a passionate, dedicated company that strives to help you to meet your overall business needs and requirements.

All contents copyright © 2014 room501 Ltd. All rights reserved.

While every effort is made to ensure accuracy, no responsibility can be accepted for inaccuracies, howsoever caused. No liability can be accepted for illustrations, photographs, artwork or advertising materials while in transmission or with the publisher or their agents. All information is correct at time of going to print, June 2014. room501 Publishing Ltd is part of BE Group, the UK’s market leading business improvement specialists. www.be-group.co.uk

Associate sponsor

UNIVERSITY OF STRATHCLYDE MANUFACTURING

SCOTLAND EDITION

03

BQ Magazine is published quarterly by room501 Ltd.

BUSINESS QUARTER | SUMMER 14

You’re doing well.

What’s next?

Want to grow your business? Start here.

Business Gateway has a wealth of resources, fresh perspectives and new ideas to help growing businesses – all of which can be tailored to your needs. We also have qualified growth advisers who are experienced in helping businesses consider their options and develop their strategy for growth.

So why not find out more? Call now on 0845 609 6611 or visit www.bgateway.com

Business Advice • Networking • Events • Routes to Finance • HR • Sales & Marketing

Download our free business support app.

CONTE BUSINESS QUARTER: SUMMER 14 CLOUD APPS WITH SILVER LININGS

Features

42 FUN DOWN TO A TEE A golfing business legend is putting some humour back into the game

26 NUMBER ALMOST UP?

50 BUSINESS LUNCH

How cancer battle helped telecoms entrepreneur focus on success

High-flying businesswoman’s taxing journey that led to the boardroom

32 CELEBRATING SUCCESS

56 CREDIT WHERE IT’S DUE

Movers and shakers in the spotlight at BQ’s first ever Scottish Export Awards

36 HEADS IN THE CLOUDS The businessmen capitalising on the data storage revolution

BUSINESS QUARTER | SUMMER 14

The woman who is the driving force behind Scotland’s credit unions

74 THE SURVIVORS How property giants Buccleuch weathered the economic storm

06

36 A GOLFING LEGEND STRIPS FOR ACTION

42

TENTS SCOTLAND EDITION

46 COMMERCIAL PROPERTY

The latest deals and developments in this key sector

60 WINE The much-travelled Ed Watt enjoys a voyage of discovery with two wines

Regulars

62 MOTORING A top of the range Maserati has a marketing guru dancing in the streets

GIVING CREDIT WHERE IT’S DUE

56

66 EQUIPMENT 08 ON THE RECORD A thought-provoking book forces entrepreneurs to ask difficult questions

14 NEWS A round-up of key developments across the country

Attention to detail ensures devotion from fans of audio company Naim

70 FASHION The much-maligned trouser suit is back in vogue... but with added femininity

80 BIT OF A CHAT With BQ’s backroom boy Jock Yuler

22 AS I SEE IT Could a ‘can do’ attitude transform our ailing town centres?

SURVIVING THE ECONOMIC STORM

82 EVENTS Key business events for your diary

07

74 BUSINESS QUARTER | SUMMER 14

ON THE RECORD

SUMMER 14

>> A ‘Yes’ vote for Scotland’s craft beer makers BQ Editor Kenny Kemp drops in on for beer and banter at an Innis & Gunn tasting session

Dougal Sharp is passionate about every single drop his company produces. That’s why Innis & Gunn have become clear leaders in the burgeoning category of Scottish craft beers.

So when BQ Scotland was invited along to a sneak preview tasting of its malt-inflected and rum-finish new beers, it was rude not to accept the opportunity.

The tasting was a great excuse for Innis & Gunn to throw a party at its New Town lounge bar. There were two topics of heated discussion: beer and the referendum. And a few bottles of Innis & Gunn can certainly loosen the tongue, reminding us that it was Robert Burns who said that ‘whisky an’ freedom gang thegither’. The whisky-inflected beers encouraged ‘gentle disagreement’ among friends about the future direction of our beloved land.

Scotland’s craft beer industry is literally going from strength to strength, with Brewmeister from Keith winning the inaugural BQ Export Start-Up of the Year, with their ultra-strong beer, Snake Venom at a head-bashing 67.5% (think we’ll pass on this one today). There are nearly 60 micro-breweries in Scotland, from the Valhalla in Unst on the Shetland Islands, to Black Isle, to the Cairngorm, and Strathaven

BUSINESS QUARTER | SUMMER 14

Ales in Lanarkshire. In the past weeks, BrewDog, the Rottweiler of the category, with average growth of 285% over the past three years, has opened its second craft beer bar in Gothenburg, Sweden taking the total to 17 worldwide. While Arran Brewery sold 0.2% of its business for £160,000, valuing the company at £80m. The brewery has purchased two sites, one in St Fillans for the Loch Earn Brewery and the other in Dreghorn, North Ayrshire, where it is awaiting planning consent for Scotland’s first Sake brewery.

Online delivery companies, such as Edinburgh based Beer52.com, one the fastest growing in Scotland, are bringing boxes of beers to the doorstep. This includes the likes of Barney’s Beer, made in Edinburgh, and Knops Beer, based in East Lothian, while a new lager low-cal DuneSurfer Desert Lager, developed by

former S&N managing director John Hunt, fits into a new category of sports-related drinks.

In Glasgow, the trend is evolving with Petra Wetzel’s Noah Beers, now making eight WEST brews complementing its quaffable St Mungo, and at the trendy Clockwork brew howff, in the Southside; while nearby Tennent Caledonian, makers of brand-leader Tennent’s, have been sitting up and talking notice.

Its Irish parent, C&C Group have invested over £1m in Drygate Brewing Company, a craft brewing facility adjacent to Tennent’s Wellpark brewery. This is a joint venture with Williams Bros, makers of Fraoch Heather Ale. Elsewhere, Dark Island from Orkney, Bitter & Twisted and Schiehallion, from Harviestoun, are churning out some enjoyable brews.

However, back in Randolph Crescent the I&G tasting was introduced and led by Dougal,

A few bottles of Innis & Gunn can loosen the tongue. The whisky-inflected beers encouraged ‘gentle disagreement’ about the future direction of our beloved land

08

SUMMER 14

who showed all the expertise of a veteran sommelier, asking the guests to mouth and nose the beer and identify the notes of caramel, burnt malt, dark chocolate and creamy coconut.

He does not want it to become pretentious, like so much wine-tasting, but he feels there is room for educating the Scottish palate.

“This is the first tasting of our new beers.

We are very excited about this. Since the launch of our Innis & Gunn Original we have seen a real transformation in the beer sector. While customers have become more sophisticated and discerning, learning about the new tastes, at heart it is about enjoying great beer,” he says.

The Rum Finish, with its 6.8% strength, is a clear favourite of this reviewer. It is wonderfully rich and spicy with a hint of Pirates of the Caribbean: perhaps a trace of

ON THE RECORD

Jack Sparrow’s bandana. There is plenty to debate about when it comes to Scotland’s thriving craft beer industry. For the people who enjoy their ale, this is the time of beermaking renaissance. The industry will soon

be ripe for consolidation and some brews will certainly disappear. So now is the time to taste and talk. It certainly helps make the referendum debate more enjoyable – whether you are a ‘Yes’ or a ‘Naw’. n

Experience more at Fraser Suites.

Forget the conventional and experience more at Fraser Suites. Receive a warm welcome in either of our Scottish properties and make your stay a memberoable one. We pride ourselves in gold standard service and making sure our guests have the best stay possible. Relax and unwind in luxurious, stylish surroundings.

Plan your next stay by visiting www.frasershospitality.com We have everything you need to make you feel right at home.

1-19 Albion Street, Glasgow G1 1L H Tel: +44 (0)141 553 4288 Email: sales.glasgow@frasershospitality.com

12-26 St. Giles Street, Edinburgh EH1 1PT Tel: +44 (0)131 221 7200 Email: sales.edinburgh@frasershospitality.com

View the collection at www.frasershospitality.com

09

BUSINESS QUARTER | SUMMER 14

ON THE RECORD

SUMMER 14

>> Let’s get serious about wealth creation BQ Editor Kenny Kemp says that, despite the academic critics, the importance of Thomas Piketty’s book Capital in the Twenty-First Century cannot be ignored by Scotland’s entrepreneurs The super-rich are getting substantially richer.

And the inequality between the rich and the poor in Western economies is growing larger.

While BQ’s raison d’etre is the encouragement and celebration of entrepreneurs and the creation of wealth in our society, we cannot ignore what is a fundamental truth for everyone to consider. The recent Sunday Times Rich List 2014 concluded that the wealthiest 1,000 people in Britain today – including 104 billionaires – are worth £518.9bn, up 13% from the previous year. Should we be bothered about this? While Scotland’s policy-makers, economic development professionals and politicians must continue to argue for the creation of an entrepreneurial culture, there are real dangers of a widening gap, creating long-term social and political disharmony and upheaval, discrediting the genuine ambitions and drive of those hard-working wealth creators. This is not some kind of dreamy socialist scare story – but the most central tenet of what drives economic growth.

Speaking of the moral hierarchy of wealth, Thomas Piketty in Capital in the TwentyFirst Century says: “No one denies that it is important for society to have entrepreneurs, inventions and innovations … the problems is that argument cannot justify all inequalities of wealth, no matter how extreme.”

Piketty says that inequality has allowed fortunes to grow and perpetuate themselves beyond all reasonable limits and beyond any possible justification in terms of social utility.

Capital in the Twenty-First Century has fast become one of the most influential books in recent years: one of which we should have at least a passing knowledge and understanding.

It was name-checked at the Scottish Business Awards in Edinburgh as one of the most significant pieces of economic research into income, wages, and capital ownership. Capital is a massive data-enriched book that has sparked a major international controversy over

BUSINESS QUARTER | SUMMER 14

the veracity of its analysis and observations.

The FT’s Economics Editor claims such conclusions do not appear to be backed by the book’s own data sources, and there is a serious academic debate over whether the book has overstated the rise in inequality in the UK. Nonetheless, there remains something central about this book’s point – the rich are getting substantially richer, and that cannot be good for the global economy in general.

It was during the ‘Gilded Age’ in America, when Dunfermline-born Andrew Carnegie was the richest man in the world, that the unequal distribution of industrial wealth came to a head. This gulf continued until the First World War, through the Great Depression until after the Second World War, when the technological advances, the educated middle classes, and fuller employment with wage levels to match, began to narrow the gap.

Inequality reached its lowest ebb in the US between 1950 and 1980, when the top 10% of the high earners claimed 30-35% of national income. Since 1980, income

inequality has ‘exploded’ in the United States.

The top 10% has increased to 50% by 2000.

Piketty says if the trend continues then it will be 60% of national income by 2030. A similar graph is being set out for the UK, while a similar ‘U’-shaped inequality curve appears in France and Germany. Piketty examines the super-rich. Between 1990 and 2010, the fortune of Microsoft founder Bill Gates increased from $4bn to $50bn. At the same time, the fortune of Liliane Bettencourt, the heiress of L’Oreal, the cosmetics company created in 1907, increased from $2bn to £25bn.“Both fortunes thus grew at an annual rate of 13% from 1990 to 2010, equivalent to a real return on capital of 10-11% accounting for inflation.”

He said Liliane Bettencourt, who he says never worked a day in her life, saw her fortune grow as fast as Bill Gates.

“Once a fortune is established, the capital grows according to a dynamic of its own, and it can continue to grow at a rapid pace for decades simply because of its size.”

Wealthiest in Scotland One: The Grant-Gordon family: chaired by Glenn Grant-Gordon, the Banffshire whisky dynasty, makers of Glenfiddich and Hendrick’s gin – £1,900m.

Two: Mahdi al-Tajir, the Emirati businessman who owns exclusive property near Gleneagles and Highland Spring bottled water – £1,670m.

Three: Sir Ian Wood and family, the former chairman of oil services giant, Wood Group PSN – £1,320m.

Four: Mohamed al-Fayed, owners of Harrods and Scottish landowner – £1,300m Five: The DC Thomson Family, publishing and fund-management. Owners of the Press & Journal, Sunday Post and Beano – £1,207m.

Sixth equal: Jim McColl, of Clyde Blowers, Sir Brian Souter and Ann Gloag, both of Stagecoach and other investments – £1,000m.

Eight: Alastair Salvesen, a food producer and Aggreko shareholder – £912m.

Nine: Lord Laidlaw, the publishing company businessman – £912m.

Ten: Sir Arnold Clark, the motor car magnate – £675m.

Source: Sunday Times Rich List 2014.

10

SUMMER 14

Piketty is not saying people who have worked hard do not deserve their fortune When a fortune reaches a certain threshold economies of scale in fund management and the opportunities for risk mean that all the income can be invested. Piketty is not saying people who have worked hard and been innovative do not deserve their fortune, but he is focusing on the power of money to make substantially more for those who are already

ON THE RECORD

very rich. This prompts the question: how can society re-dress this imbalance? It involves the use of taxation to counter this growing trend of inequality. According to Piketty, a progressive annual tax on the largest fortunes worldwide is the only way of democratically controlling this potentially explosive process while preserving entrepreneurial dynamism and international economic openness.

He says: “Every fortune is partially justified yet potentially excessive. Outright theft is rare, as is absolute merit.”

He is right when he says the debate about great wealth comes down to a ‘few peremptory – and largely arbitrary – assertions about the relative merits of this or that individual.’

The broad brush of what this book says has to be considered.

The onus is on the super-rich to recycle their

wealth in a way that is productive for society, through charitable donations to any number of worthwhile causes.

What is apparent in Scotland – and visible at the Scottish Business Awards – is that Scotland’s very rich have a strong sense of social responsibility.

It is all still about working hard, playing hard and giving something back. In the slipstream of the debate about Piketty’s book, this is more important now than ever before.

Why is this happening? This huge disparity of inequality of capital ownership is something that should concern Scotland as an entrepreneurial society.

The book is a great starting point: let’s have more of this kind of debate in Scotland. n Capital in the Twenty-First Century: Thomas Piketty, Belknap Press of Harvard University Press, 2014. n

2 LISTER SQUARE, EDINBURGH, EH3 9GL

Prime Grade A office space from 4,956 sq ft to 11,570 sq ft • Fully fitted options available • Award winning design by Foster & Partners architects • Commercial occupiers at Quartermile: Investec, IBM, Skyscanner, Morton Fraser, Maclay Murray & Spens • Leisure/ Retail at Quartermile includes: Pure Gym, Peter’s Yard, Sainsbury’s, Starbucks, Nanyang

AdvertQuartermile.indd 1

11

27/05/2014 13:47

BUSINESS QUARTER | SUMMER 14

211x

ON THE RECORD

SUMMER 14

>> Lifting the £10 billion bar on Scotland’s smaller businesses Harry McMaster runs an electrical contracting business in Ayrshire. He has tried to win some Scottish Government contracts on his own merits, but each time he is told his ‘micro’ business – he employs eight people – is too small and does not jump through all the hoops. Along comes a major European player with resources to tender and walks into the contract. Guess what? The big contractor doesn’t have people to undertake the work, and so McMaster’s company is called in as a ‘subbie’ to do the work.

The Scottish taxpayer is paying over the odds for a procurement system that is simply not serving the smaller firms in Scotland. And Harry McMaster’s story is repeated right across Scotland. The Scottish public sector spends more than £9.7bn a year buying goods and services, yet not enough is being done to make it easier for SMEs, especially those micro businesses, to win public work. Over £4bn is spent by Scotland’s 32 local councils.

According to the Federation of Small Businesses in Scotland, there needs to be a focus on improving public purchasing processes to give smaller businesses the best chance of winning public contracts.

“Evidence from our members suggests that some processes, such as excessive paperwork, high levels of turnover or insurances, multiple examples of experience of similar work, can make it much more difficult for new and small businesses to win work and make it easier for those that currently get large amounts of work to maintain their advantage,” says Borland.

An average Scottish council spends £158m a year on goods and services but only 27% is spent with businesses within its own boundaries, compared to a UK-wide figure of 31%. So Scotland’s public sector is letting down our indigenous private sector.

Harry McMaster is clearly unhappy. “In 2006 we had the McClelland report and there have been some reforms such as the single portal for contracts in Scotland. But it remains far too difficult, particularly with the aggregation of contracts. Small firms who have previously sold

BUSINESS QUARTER | SUMMER 14

to the public sector feel we are being positively discouraged from direct public procurement.

Yet we end up helping the bigger boys who can’t fulfil their contracts without us.”

In early May, the Procurement Reform (Scotland) Bill completed its passage through the Scottish Parliament. This is the first time any of the UK countries have introduced their own procurement laws, over and above rules from EU. The main provisions of the Bill place duties on public bodies in Scotland, including a ‘sustainable procurement’ duty. This means they must consider how their organisation’s procurement practices can improve, not only the social, economic and environmental wellbeing of an area, but also the involvement of SMEs and third sector bodies.

SMEs rely on sub-contracting work from major Scottish infrastructure projects such as the new Forth Crossing, Glasgow 2014, and the newly opened Edinburgh Trams.

The Scottish Government will also be obliged to produce an annual report on procurement activity. The Bill also abolishes certain bad practices, such as charging for tender documents, and forces certain good practices, such as advertising all contracts on the Scottish procurement portal, Public Contracts Scotland.

12

This is all well and good. However, passing laws rarely addresses the deeper-seated problems because, as the FSB says, there needs to be a programme that changes purchasing behaviour, breaking contracts into smaller lots.

Andy Willox, the FSB’s Scottish policy convener, said: “The FSB has spent years arguing that we need to use the public sector’s purchasing power to support our local economies and develop our small enterprises. We’re pleased with the Procurement Reform Bill which we believe has the potential to make a real difference to our members and the wider small business community.”

There are still concerns, such as the use of blanket terms and conditions for all contracts regardless of size, and this has an impact on insurance, the length of the pre-qualification questionnaire (PQQ), the levels of qualification and accreditations, and the framing of PQQs in relation to experience.

It is clear that good procurement can work as a tool for economic development but it needs public servants to take the interests of smaller firms to heart.

The FSB has said: “We are aware of some good links between procurement and economic development across Scotland but there is still more to do. This might involve closer working between procurement and economic development teams in councils in addition to more joint working between Supplier Development Programme and Business Gateway. It could also involve stronger roles for Scottish Enterprise and Highland & Islands Enterprise, identifying and supporting potential new suppliers.”

There remain further issues over the exclusion of Scottish Water from this Bill and how HubCos will spend hundreds of millions of pounds of Scottish money. The key tenet of the bill is that everyone should be treated equally and given an equal chance of winning a contract. The proof will be if companies, such as Harry McMaster’s, can secure direct, local contract work. n

211x266-BQ.qxp_SIDI 09/06/2014 10:26 Page 1

V

I

S

I

T

There is plenty to see and do in Sunderland from beautiful beaches and countryside, to theatres, museums and galleries.

Many of the city’s attractions are free and all offer a great family day out, packed with fun.

Sunderland is a welcoming, bustling city set right on the coast and at the mouth of the River Wear. It boasts wide sandy beaches and acres of relaxing and invigorating green spaces. Culturally its offer includes the Empire Theatre, National Glass Centre and Northern Gallery for Contemporary Art, while its underground music scene is considered one of the most vibrant in the UK. This proud city by the sea also has a fascinating history, outstanding sporting attractions and a family-friendly programme of events and festivals.

S

U

N

D

• Roker and Seaburn At Roker and Seaburn there are wide, sandy, family-friendly beaches – the ideal place for building sandcastles or to try your hand at one of the many water-sports on offer.

• Empire Theatre Why not take in a show at Sunderland Empire Theatre this summer, its packed programme has something for the whole family, including The Lion King!

• St. Peter’s Church The Anglo-Saxon church of St Peter’s, first built in 674AD is one of the UK’s earliest stone churches. St Peter’s features a craft shop and fascinating interactive displays as well as Bede’s Bakehouse coffee shop serving homemade delicacies.

E

R

L

A

N

D

• Stadium of Light The Stadium hosted One Direction in May and will welcome North East Live on 22 June. As well as the Premier League fixtures the Stadium runs yearround tours, offering you an exclusive behind-the-scenes experience.

• Sunderland International Airshow 25-27 July 2014 Sunderland’s stunning coastline provides the backdrop to a thrilling line up of flying displays over an action packed weekend. With a massive choice of exciting activities and entertainment on the ground, as well as the action in the sky, there’s something for everyone to see and do at the Sunderland International Airshow.

For more information on these attractions and to find out what other things you can see and do in Sunderland visit

www.sunderland.gov.uk/seeit-doit

NEWS

SUMMER 14

Law firm puts faith in Scotland, golf clubs all teed up for Ryder Cup tourism, BT in £20m rugby deal, organisations join forces to champion entrepreneurs, insolvency expert calls for directors to sit tests >> US rival buys Scots firm Wolfson Microelectronics, the Scottish microchip company that has struggled since the departure of founding entrepreneur David Milne in 2012, has been acquired by its American rival Cirrus Logic for £278m.

Wolfson, based in Edinburgh and spun-out from Edinburgh University, specialises in audio processors for smartphones and other consumer electronics devices and was once viewed alongside ARM and Imagination as a UK champion in technology. However, it has been under pressure from US rivals including Cirrus and Qualcomm. Wolfson has become reliant on a few big customers including BlackBerry, which has seen sales of its smartphones collapse, and had not invested enough in 4G. The company reported revenues of £106m and losses of up to £7m last year. Wolfson’s general meeting will be held at 44 Westfield Road, Edinburgh, EH11 2QB on 23 June.

>> Iconic stores sold House of Fraser – owner of Edinburgh’s iconic Jenner’s store and Glasgow’s Fraser’s – has been taken over by the Chinese conglomerate Sanpower for more than £450m. The 165-year old department store chain, set up in Glasgow by Hugh Fraser and James Arthur in 1849, has been bought by one of China’s richest men, Yuan Yafei, who set up Sanpower in 1993.

>> Firm lands award Honeywell Control Systems of Newhouse, Lanarkshire, has won the Scottish Engineering Award for the manufacturing company that has done most to promote the industry in 2013.

>> Stronger together The Entrepreneurial Exchange and the Saltire Foundation have joined forces to create Entrepreneurial Scotland, a new organisation that will champion a new era of entrepreneurship and economic growth in Scotland. The not-for-profit organisation, with over £17 billion of turnover and 150,000 employees, aims to create a new inclusive movement that develops significantly more entrepreneurial leaders with greater confidence and success rates in Scotland with global knowledge and reach. John Anderson, the Exchange’s chief executive, a member of the BQ Scotland Export Awards judging panel, said this was a natural extension for both organisations and that he was delighted to see its creation. “By combining our strengths we build strategic linkage between the talent Saltire enables and the expertise our businesses need. Not only that, by building on Saltire’s global connectivity we will extend out the great work of GlobalScot in delivering strategic linkages for Scottish business.” Peter Lederer, chair of Saltire said: “As a small nation Scotland needs to drive maximum efficiency from its resources

UNIVERSITY OF STRATHCLYDE MANUFACTURING

BUSINESS QUARTER | SUMMER 14

14

to maximise economic return. Creating Entrepreneurial Scotland does just that.

Equally, to be clear, this new entity will seek to enable further partnership across the entrepreneurial sector to deliver on that principle.” Chris van der Kuyl, who is Chair designate of ES, said: “We need to break down the mythical notion that entrepreneurship is only about building business; entrapreneurship in government, education and social enterprise is fundamental to Scotland’s future growth and prosperity and we aim to engage actively on that agenda.” ES will be a non-partisan organisation with a charitable subsidiary – the Saltire Foundation – and be governed by a board, chaired by Chris van der Kuyl, including international, UK and Scottish representatives. Sandy Kennedy, current chief executive of Saltire, steps up to chief executive designate for ES while John Anderson becomes chair of the Awards programme and Special Adviser to the Board of ES. Anderson also joins the Hunter Centre for Entrepreneurship at Strathclyde University in a senior role.

>> BT backs Scottish rugby Scottish Rugby has secured a £20m deal with global communications and broadcasting giant BT, which included the naming rights for Murrayfield Stadium, now BT Murrayfield Stadium. The four-year partnership also means BT are sponsors of the Scotland Seven team from the outset of the 2014-15 HSBC Sevens World Series, are principal and exclusive sponsor of Scotland’s domestic league and cup competitions from next season; and sponsor of Scottish Rugby’s four new academies.

Collaborating with leading industry partners to develop innovative solutions to industry challenges

AmaZing Scottish Corporate Venues >> Irn-Bru makers’ sparkling performance AG Barr – makers of Irn-Bru and an official supporter of Glasgow 2014 – increased revenues by 5.2% in the 15 weeks to 11 May while the rest of the soft drinks sector flattened. “Our core brands are responding well to increased marketing support and sustained consumer promotional investment,” said Roger White, the company’s chief executive.

Ackergill Tower

>> Closures threatening local economies Nearly 100 Scottish towns are facing High Street closures, according to the Federation of Small Businesses in Scotland. Clydesdale Bank, the Royal Bank of Scotland, the Post Office, Police Scotland, HMRC and the Scottish Courts Service either have or plan to close services to the public, or shut local buildings, in 98 Scottish towns and cities.

The FSB warn the closures will disrupt efforts to rejuvenate local economies.

>> New radiotherapy centre underway

◆ 3,000 Acres ◆ 35 Bedroom suites ◆ 11 Function spaces

Kinnettles Castle ◆ 44 Acres ◆ 13 Bedroom suites ◆ 9 Function spaces

Architecture group Keppie is designing a £22m satellite radiotherapy centre at Monklands Hospital Campus in Airdrie, Lanarkshire, on behalf of NHS Scotland. The new Lanarkshire Beatson will operate as a satellite of the Beatson West of Scotland Cancer Centre in Glasgow. Construction has commenced and completion is expected by September 2015.

Carberry Tower ◆ 35 Acres ◆ 30 Bedroom suites ◆ 29 Lodge bedrooms

>> Update imminent Aberdeen-based John Wood Group – winners of the PLC of the Year in the Scottish Business Awards – will give a trading update on 26 June. Ian Marchant, the former chief executive of SSE, has taken over as chairman. Ian has served as a non-executive director since 2006.

>> Home sales at highest level since 2008 Scotland’s home building industry has welcomed news that the number of residential properties sold during January to March this year was up 22.9% on the same period in 2013.

This is the highest volume of sales since 2008, while the average price of a residential property for this quarter was £153,352.

With spectacular grounds and historical backdrops, our Venues offer a unique setting for director’s retreats, boardroom lockdowns and corporate fun as well as product launches and film locations.

We specialise in activities from fishing, shooting and golf to whisky/gin tastings and bonfires on the beach.

It’s all about delivering an AmaZing experience, so let our event managers ensure you deliver an unforgettable event.

Let us AmaZe you! Call: 0330 333 7 222 or email: corporate@amazingvenues.co.uk

>> Bank sells property loan portfolio A busted property loan portfolio has been bought by Kennedy Wilson Europe Real Estate from Bank of Scotland for £93.5m. The exact consideration will be determined following the ‘satisfaction of certain conditions in the underlying agreements.’ The consideration will be paid out of the company’s cash resources. The Portfolio – named Project Avon – comprises five real estate loans under receivership which are secured against five high-tech properties located across England,

15

AmaZingVenues.co.uk

BUSINESS QUARTER | SUMMER 14

NEWS

SUMMER 14

>> Viva Thomas Cook!

>> Powerful performance

>> A host with the most

Power Jacks, the engineering business headquartered in Ellon, has hit record growth in its 25-year history with revenues increasing by 175% to £13.1m in 2013.

Iomart, the cloud services computing company, has made a massive 29% leap in revenue growth from hosting services from £43.1m to £55.6m, and an increase in profits of 37%.

The Glasgow-based company has reported adjusted growth of 43% to £23.6m (2013: £16.5m) and adjusted profit before tax growth of 37% to £14.6m (2013: £10.7m). Highlights include increased European footprint and dedicated server expertise through the acquisition of Redstation Limited for £8.1m. The company has acquired major presence in the Cloud backup and disaster recovery market through the £23m acquisition of Backup Technology. It has also completed the fit out of around 600 racks of datacentre space in Maidenhead.

>> Investments pour in A new angel investment group in Scotland – founded by father and son Hector and Richard Cameron – has attracted 35 investments since launching in February.

Glasgow-based Lancaster Capital Investments is run on a not-for-profit basis and wishes to help early stage technology firms. The Camerons have invested in life science firms such as i2Eye Diagnostics, Profactor Pharma and Taragenyx as well as smartphone antenna developer Sofant Technologies.

>> Independence fears Babcock International Group – which announced pre-tax profits of £316m for the last year – has warned about the uncertainty over the Scottish referendum in September. “If the referendum results in a vote in favour of independence, the consequences for the group’s businesses cannot be predicted with certainty,” it said in its financial statement to the stock exchange. “Regardless of the ultimate impact, there is likely to be a lengthy period of uncertainty which may have adverse consequences for the group’s business, financial condition, operating results or prospects. There may also be a medium-term knock-on effect on the nature, timing and scope of the policies and procurement plans of the United Kingdom, especially in defence terms, the impact of which cannot be predicted with certainty,” said the company.

>> Profit boost for Optos Dunfermline-based Optos, a world leader in medical retinal imaging, has increased its profits while revenues and operating income have dipped. In its results for the first half of its financial year ending 30 September 2014, Optos had revenues of £43.35m, with gross profit £26.1m, up from £25.5m. Operating profit is £298,000 and profit after tax £600,000. The company reports an improved cash flow and net debt is down from £33.27m to £21.17m.

>> Braemore takes on more Braemore, Edinburgh’s largest lettings company, has acquired Steyn Lettings, which will see it manage an additional 400 properties. The capital-based business will be responsible for over 6,000 tenants and nearly 3,500 properties, with a portfolio value of more than £660m.

UNIVERSITY OF STRATHCLYDE MANUFACTURING

BUSINESS QUARTER | SUMMER 14

16

A weekly direct flight to Las Vegas from Glasgow Airport will be operated by Thomas Cook airlines next summer. Operating each Monday on an Airbus A330 fleet, the new flights in 2015 will begin on Monday 4 May – and continue up until the 31 October.

>> Scots’ Brave new world VisitScotland chairman Mike Cantlay says Scottish tourism bounced back in 2013 – despite a fall in visitors from the rest of the UK – while 2014 is hotting up for a record year... thanks in part to the movie Brave.

Mike Cantlay was responding to the release of the quarterly International Passenger Survey tourism statistics by the UK Office of National Statistics and the Domestic tourism statistics derived from the Great Britain Tourism Survey.

“After a challenging 2012, tourism bounced back in 2013 and the results are very encouraging. The growth in our international markets is superb and illustrates increasing confidence within global markets.

In particular, these results point to the success of our international marketing campaigns such as Meet the Scots and VisitScotland’s partnership with Disney surrounding the movie, Brave.

“Crucial to our success has been attracting more direct flights than ever before to our airports across Scotland. That ease of access and improved air connectivity has been key.

Domestic visits were principally affected by a decrease in ‘visiting friends and relatives’.

“However, we did see growth in the domestic leisure market with many heading to rural areas for their holidays, which was apt in 2013, the Year of Natural Scotland.”

Working towards the future growth and success of manufacturing in the UK

What a bank should be

Whether small family companies or global corporations, we approach every business customer as an individual relationship. We strive to understand your unique needs and to make banking straightforward, so you can focus on growth.

That’s why our clients get a dedicated, expert Relationship Director.

We believe credit partners should meet you directly, so our decisions are as transparent as possible. We work hard to do right by you and your business now and in the long term.

It’s thanks to this approach that we’reproud to say 4 out of 5 of our business customers would recommend us.

Find out how we’re supporting businesses like yours across the UK at youtube.com/SantanderUKCCB and if you’d like to get in touch, call Graham Silcock on 0141 275 9674* or email graham.silcock@santander.co.uk We’re proud sponsors of the International Festival for Business.

GfK NOP Research: Santander Business Satisfaction survey Q4’13. 1,628 respondents interviewed. *Calls charged at national rates. Santander Corporate & Commercial is a brand name of Santander UK plc, Abbey National Treasury Services plc (which also uses the brand name Santander Global Banking and Markets) and Santander Asset Finance plc, all (with the exception of Santander Asset Finance plc) authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority. Our Financial Services Register numbers are 106054 and 146003 respectively. In Jersey, Santander UK plc is regulated by the Jersey Financial Services Commission to carry on deposit-taking business under the Banking Business (Jersey) Law 1991. Registered offi ce: 2 Triton Square, Regent’s Place, London NW1 3AN. Company numbers: 2294747, 2338548 and 153312 respectively. Registered in England. Santander and the flame logo are registered trademarks. Santander UK plc is a participant in the Jersey Banking Depositor Compensation Scheme. The Scheme offers protection for eligible deposits of up to £50,000. The maximum total amount of compensation is capped at £100,000,000 in any 5 year period. Full details of the scheme and banking groups covered are available on the States of Jersey website (www.gov.je) or on request.

CCBB0409 JUN 14HT

NEWS

SUMMER 14

>> Call for directors to sit tests One of Scotland’s most experienced insolvency practitioners says more needs to be done to ensure company directors have the skills to run viable firms.

Tom MacLennan, a partner with FRP Advisory in Scotland, said the question of qualifications for directors might be a political ‘hot potato’ but it requires being addressed.

“You can be a director of a business without any skills, knowledge or ability. Whenever you see a CBI or Institute of Directors survey done on ‘reasons for business failure’, management failing are low down the scale. If that same survey is done by the UK’s insolvency practitioners, then it is number one.”

With over 35 years of experience, he says he is still amazed by the number of company directors who cannot understand a profit and loss account, a balance sheet and a cash flow.

“The number of directors who don’t understand the figures related to their own business basics would scare you. In my view there should be some sort of compulsory test for people seeking the benefit of limited liability in putting other people’s money at risk.

We should have something in place to show that directors have the basic competencies to run a business.”

He admits the counter argument will be that compulsory tests might ‘discourage entrepreneurship’, but it is a debate that requires to be raised.

MacLennan, a practitioner since 1981 who began with Touche Ross, has undertaken hundreds of corporate recoveries across Scotland in a range of sectors from retail, hotels, shipping, and property. In 1991, he set up business as Scott Oswald, the largest Scottish independent accountancy firm, which was sold to Tenon in 2001. It later went into administration, with Baker Tilley buying the operating company. Last September Tom and Iain Fraser left the group, taking over the offices in Edinburgh, Glasgow, Aberdeen and Inverness to create FRP Advisory.

>> Ryder feel-good factor could drive business Golf clubs all over Scotland are getting in the swing for the Ryder Cup feel-good factor.

Exclusive golf clubs, such as the Renaissance Club at Dirleton, North Berwick, are expecting to host a number of amateur and professional golfers from the United States, who will use the course for pre-Ryder Cup matches and relaxation. The club, featured in BQ Scotland with an interview with founders Jerry and Paul Sarvadi, now has a superb clubhouse, with five-star accommodation and dining rooms for members and guests.

Jordan Whyte, the Renaissance Club marketing manager, said: “There will be a lot of Americans coming across to cheer on their guys and we want to give them a warm Scottish welcome. Our course is in fantastic shape and we’re delighted with the response to our new clubhouse.”

Elsewhere, a ‘Golf Club Toolkit’ is encouraging clubs to build a legacy from the Ryder Cup through access to coveted tickets. The Scottish Golf Union, Scottish Ladies’ Golfing Association and ClubGolf, in association with VisitScotland, have given over 600 golf clubs the opportunity to receive at least two tickets for the Gleneagles showcase in September.

Clubs will be invited to apply for the tickets, which have been awarded by the Scottish Government as part of Scotland’s host nation allocation, based on running Ryder Cup themed activity in the run up to the event.

Hamish Grey, chief executive of the Scottish Golf Union, added: “The SGU and SLGA are hugely grateful to the Scottish Government, as host nation, for passing these tickets onto clubs and those involved at the grass roots of the game. We were keen to ensure that the Ryder Cup can provide a benefit to Scottish golf at all levels and, through the ideas within the toolkit, we’re sure that clubs will make the most of this fantastic opportunity, whether that’s through a Ryder Cup theme day for all their members or an Open Day to attract new members.”

>> Weir bid rejected The Weir Group’s final all-share bid for the Metso Corporation was rejected by the Finnish board. Weir proposed an all-share exchange offer under which Metso shareholders would have received 0.95 Weir shares per Metso share, a 13% increase on the initial proposal.

It valued each Metso share at £24.79, a 34%

UNIVERSITY OF STRATHCLYDE MANUFACTURING

BUSINESS QUARTER | SUMMER 14

premium to Metso’s share price of £18.49.

Weir also proposed a special dividend payable to all shareholders in the combined group post-closing equivalent to £1.74 per share in cash. It was Weir’s intention that the combined group would have been listed and index included on the Stock Exchanges of Helsinki and London. Weir does not intend to pursue the proposal.

Providing support to the manufacturing sector with more than £300M in research investment over the past five years

18

Defectors willkommen

The Volvo V40 R-Design

Book a test drive at Murray Volvo today For years we've been indoctrinated to believe that German cars are the only choice; the only option. But an alternative is out there, and it's closer than you think. Just look north to Sweden, and come see what's on the other side: • Adaptive Digital Display • R-Design Sports Upholstery with perforated leather • 5 spoke diamond cut 17" lxion alloy wheels • Up to 83.1 mpg (combined figure)

PERSONAL CONTRACT PURCHASE REPRESENTATIVE EXAMPLE: V40 D2 R-DESIGN 36 monthly payments Customer deposit On the road price* Total amount of credit Interest charges Total amount payable Final Payment Finance Deposit Contribution Duration of agreement (months) Fixed Rate of interest p.a Representative APR

£249 £1,999 £21,080 £18,581 £2,752 £23,832 £12,369 £500 37 3.04% 5.9% APR

Official fuel consumption for the Volvo V40 D2 R-Design (manual) in MPG (l/100km): Urban 74.3 (3.8), Extra Urban 91.1 (3.1), Combined 83.1 (3.4). CO2 Emissions 88g/km. MPG figures are obtained from laboratory testing intended for comparisons between vehicles and may not reflect real driving results. Finance

subject to status. 5.9% finance available on all V40 models registered by 30th June 2014. *At participating dealers. Example based on mileage of 8000 per annum, excess mileage charge 14.9p per mile. At the end of the Personal Contract Purchase there are three options: (i) pay the Final Payment/GFV (Guaranteed Future Value) to own the vehicle; (ii) part exchange the vehicle, where equity is available; or (iii) return the vehicle. Further charges may be made subject to the condition of the vehicle. We can introduce you to a number of finance providers. We may receive commission for the introduction. Terms and conditions apply. 18s or over. Guarantee/Indemnity may be required. Volvo Car Credit RH1 1SR.

Murray Volvo

Bankhead Drive Sighthill Edinburgh EH11 4DJ

www.volvocarsedinburgh.co.uk

0131 442 3333

PEOPLE ON THE MOVE

SUMMER 14

>> Four staff promoted DLA Piper has promoted four team members across the corporate, real estate, litigation & regulatory and employment practices to support the firm’s growth objectives in Scotland. Alasdair Wood has been made partner in the corporate team after joining the firm as a trainee in 2002; Jonathan Gaskell and James McGachie have been promoted to legal directors within the real estate and litigation & regulatory practices, while Julie Simpson rises to senior associate within employment.

>> Weston is new CEO at Aggreko Dumbarton-based Aggreko, the global leader in the temporary power and temperature control services, has appointed Chris Weston as its chief executive officer. He is managing director of international downstream at Centrica plc, where he is an executive director running the group’s largest division.

>> Top job for Baur Mark Baur has been appointed EMC’s first channel development manager for Scotland. With 28 years’ experience in the Scottish IT sector, including roles with Dell, CommVault, Hitachi and NetApp, Mark brings a wealth of knowledge and contacts to the company’s Scottish headquarters in Livingston.

>> Kennedy to join Havelock Europa as new finance chief Ciaran Kennedy is the new finance director of Havelock Europa, replacing Grant Findlay who has resigned from the Dunfermline-based retail and educational interiors group. Mr Kennedy joins from Kier Group plc’s Scottish Utilities business where he was the operations director for Utilities Scotland.

>> Law firm insists it can thrive in Scotland A new full service legal firm has bucked the trend of disappearing Scottish law firms by launching in Edinburgh and Glasgow. Gilson Gray has taken a year of planning and negotiation to set up, attracting a team of specialists from across the Scottish legal, property and financial sectors. The senior figures are Glen Gilson, a private client lawyer previously on the senior management team at HBJ Gateley, and Matthew Gray, former head of property and legal services at Pagan Osborne. Glen has been appointed managing partner while Matthew, a nonlawyer, is managing director of Gilson Gray Property Services. Gilson Gray have recruited nine solicitor partners and four senior executives to develop the business’s legal, property and financial services divisions.“We will provide the same full service technical expertise as any of the largest law firms in Scotland. We believe, however, that we can offer a more cost effective solution,” said Gilson. The team includes Andrew Fleetwood, Iain Clark, Derek Hamill, Murray Stewart, Graham Millar, Steven Jansch, David Alexander, Jonathan Williams, and finance director Gerry Cockburn. Many of the Gilson Gray lawyers, based at 29 Rutland Square, Edinburgh, and 160 West George Street, Glasgow, are dual qualified in both Scottish and English law.

>> New man at the helm Devro, the Glasgow-based collagen maker for sausages, have appointed Gerard Hoetmer as chairman following Steve Hannam’s retirement from the board.

Gerard has been a non-executive director of Devro since July 2013.

>> FirstGroup retirees FirstGroup, headquartered in Aberdeen, has announced the retirement from the board of John Sievwright, Professor David Begg, and Colin Hood, a director of Glasgow 2014. Warwick Brady, chief operations officer of EasyJet, Drummond Hall and Imelda Walsh have been appointed to the board as non-executive directors.

www.prgrecruitment.com Edinburgh - 0131 550 1460 Glasgow - 0141 331 9380

BUSINESS QUARTER | SUMMER 14

20

SUMMER 14

COMPANY VIEWPOINT

A spell of calm water for community renewables?

Kirsty Murray, Senior Tax Manager at Scott-Moncrieff looks at the recent changes to tax incentives and funding for ‘small energy’ projects In Scotland, perhaps because of our abundance of natural resources – particularly wet and windy weather - ‘small energy’ projects have captured the imagination of communities. Community energy projects are becoming a more regular occurrence, with a number of wind and small scale hydro schemes already launched.

But funding renewable projects is neither cheap, nor easy. Thankfully, there are a number of ways to ease their passage. Recently, the Scottish Government launched CARES (Community and Rural Energy Scheme) – a consortium of private and public sector bodies that have come together to advise groups on projects, including access to funds. It also operates a loan fund for renewable projects. Of course, the other route is fundraising, and most community and rural energy projects have an element of both grant funding and funds raised.

Utilising tax incentives can further grow the pot of money available. Tax incentives for green energy have been tinkered with quite a lot as Government tries to encourage more projects off the ground.

So, there have been a few amendments. The energy it takes to keep track of the changes could probably power a small village.

After the 2014 budget announced that EIS and SEIS would be incompatible with Renewable Obligation Certificates and Renewable Heat Incentives, the sector has lobbied to get the details of the legislation changed. Good news for the sector arrived in May though, giving some certainty that EIS and SEIS tax reliefs will still be available to people who buy shares in community energy projects if they are operated through

community interest companies, bencoms or co -operatives.

With this clarification, at last we can provide an overview of how tax relief in the sector works.

Given this restriction, many organisations operate this on a first come first serve basis – and it’s a great way to attract investors quickly. In the case of community energy this can help get the EIS TAX RELIEF project off the ground.

EIS is a tax relief The first investors get available to those relief at 50% and once investing in high risk the £150,000 allocation companies, allowing is complete further shares individuals to reduce their will need to be issued under income tax liability by 30% of EIS and the individuals will the amount they invest. One of receive tax relief at 30%. One Kirsty Murray is a senior tax the major issues for renewable thing to note is that 70% of the manager energy investors wanting to take £150,000 SEIS money needs this route is the timing. The project to be spent before HMRC will has to be up and running within accept an EIS application. two years of the investment being made, and if After a worrying time for some renewable projects, planning objections come into play, this can throw all is well. Although we now have some certainty, a spanner in the works. Still, there are still plans to review investment tax reliefs many community energy projects have managed and their interaction with government subsidies, to meet the conditions of EIS, so the relief is so more change could be on the horizon yet. certainly achievable.

SEIS TAX RELIEF Some of the good news recently included the fact that Seed EIS is still available to the community renewable sector. SEIS is similar to EIS, but the gain is larger – up to 50% tax relief on the investment. This means however that the threshold is lower, allowing the ‘entity’ – or the project - to attract only up to £150,000 of SEIS, compared to £5m for EIS.

Funding renewable projects is neither cheap, nor easy. Thankfully, there are a number of ways to ease their passage

21

Kirsty Murray is a senior tax manager at leading accountants and business advisors Scott-Moncrieff. Kirsty recently presented on community and rural renewable projects at the All Energy Conference, in Aberdeen.

Kirsty Murray, senior tax manager.

T: 0131 473 3500 E: Kirsty.murray@scott-moncrieff.com www.scott-moncrieff.com

BUSINESS QUARTER | SUMMER 14

AS I SEE IT

SUMMER 14

Putting the ‘Hi!’ back into Scotland’s High Street

BUSINESS QUARTER | SUMMER 14

SUMMER 14

Iain Scott, the inspirational business guru, is behind the Can-Do challenge to get more creative business ideas out into Scotland’s town centres and High Streets Give it five or ten minutes but inevitably any discussion on the future of Scotland’s town centres has to feature business rates and the dearth of car parking. Yet if cheaper rates and easier parking are the solutions to getting more footfall on our High Streets, what was the problem in the first place? We all know it’s more complex than that.

From the massive rise of online shopping to those out-of-town air-conditioned shopping malls with massive car parks, to the usage of empty property for charity shops, betting establishments, and kebab outlets, so many things have changed the way we use our town centres.

There is one thing that remains: passion.

Most Scottish people are passionate about their towns and Scotland’s town centres have one great asset – people. People who want to meet, talk and trade. For most Scots, their town is woven into their identity. We have to do more to harness that passion and sense of local pride to get people excited about our High Streets again.

The newly-launched Can Do Innovation Challenge is about looking at our town centres in a different way and opening up new business opportunities to help neglected centres prosper once again.

TEMPORARY IS THE NEW PERMANENT It’s easier than ever to have a go at something these days. You can find supporters and funding online. Crowd funding is ideal for this.

Pop-up restaurants are the trend in the world’s big cities, why not in Stranraer, Peterhead, Arbroath and Dumbarton? Technology means we can create amazing spaces cheaply. I love what’s happened with the re-use of shipping containers as homes and office space. This is all part of the exciting new waterfront district in Dundee. We can now try something different without a huge spend and that’s the aim of the Challenge: to use our

places and spaces in a new way to open up entrepreneurial opportunities. It’s creating the holy trinity: people, places and prosperity.

The Can Do Innovation challenge is open to people who are either already in a Development Trust Association or Business Improvement District, or moving towards one, who want to help open up the entrepreneurial opportunities of our town centres. It’s also open to huddles of people who want a chance to test an idea.

That idea might be using a much loved building in a new way. It might be closing off an area to bring new life to a space. Whatever the reason, this Challenge is about involving people who want to do something. It’s also a recognition that ideas need to be tested, shaped and tried out. It’s about recognising that true innovation starts with something small, using a mix of knowledge and expertise and a lot of energy to get it off the ground.

It’s also a recognition that that process can be both exciting and frustrating, particularly if people feel that they are on their own and without access to some really good technical expertise to help test the idea and then turn the vision into reality. The Innovation Challenge is a unique opportunity to translate that idea into action. Or not!

The Challenge is being run by the Scottish Business Resilience Centre in partnership with 1001 Enterprising Scots who designed it. The Challenge is part of the Scotland CAN DO Action Framework, described by John Swinney, MSP and Cabinet Secretary for Finance, as “the next step on our journey towards being a world-leading entrepreneurial and innovative nation.” There’s also whole range of other private, public and voluntary sector supporters.

HOW IT WORKS First we are looking for people and groups to come forward with that unique combination – what they want to do and why they want

23

AS I SEE IT

to do it. In other words: stories. We are not looking for fully formed projects – that will come later. Just a few lines. It can be as simple as “rescue a space and make it busy again” or “provide an opportunity for … whatever you care to think about.”

Working with all kinds of groups across Scotland everyone will shape and talk through their ideas, test them with each other, learn some new techniques and begin to identify how to take things forward. It may be that original thoughts are completely binned and people start afresh. Or we may find that what seemed really tricky could actually be very simple. There’s the opportunity to meet likeminded people and share ideas, knowledge and experience throughout the programme and beyond.

There will be a specially designed community website to upload and share stories and experiences. To this we will add technical workshops on specific topics to help make something happen.

The aim is to work up a fully formed project and to put it into action. We will be building in crowd funding and crowd sourcing to make the project happen. We are also bringing on board other supporters as we progress. The spirit is collaborative and fun. n WHO WILL JUDGE THE IDEAS? No one. That’s not what this is about. How can we tell what makes a good idea? This is all about working with like-minded people to help shape and create projects that will make a significant difference to your town centre.

To take part: email innovation@sbrcentre. co.uk or have a look at candotowns.org

The aim is to work up a fully formed project and put it into action... the spirit is collaborative

BUSINESS QUARTER | SUMMER 14

UNIVERSITY OF STRATHCLYDE MANUFACTURING

Working towards the future growth and success of manufacturing in the UK

A leading University and its industrial partners are finding solutions to global challenges – while driving economic growth.

It is this ethos of partnership working that secured the award of Times Higher Education UK University of the Year 2012/13, and more recently, Entrepreneurial University of the Year 2013/14.

Manufacturing remains an important sector in the UK economy with growth increasing steadily. Academics at the University of Strathclyde in Glasgow are working side-by-side with partners in industry to develop a new generation of products, processes and services, and set new standards in manufacturing design.

Much of the University’s focus on collaborating with industry will take place within the Technnology and Innovation Centre, a £90 million capital investment in research capability.

The Centre will allow the University to concentrate on four key sectors— Health, Energy, Future Cities and Manufacturing.

Specialising in high value manufacturing, the University’s approach ensures technology development is relevant to global industrial challenges – from design, rapid prototyping, fabrication, operational deployment and business excellence through to management and optimisation.

Archie MacPherson, CEO of the University’s Advanced Forming Research Centre, a world-class research facility to support design and manufacture in industries from aviation to energy, said: “Strathclyde’s unique research facilities enable business and academia to work together to tackle the challenges and to exploit opportunities for

innovation. Ultimately, it’s about revitalising manufacturing in the UK.” The Advanced Forming Research Centre is one of 7 elite technology and innovation centres that form the UK High Value Manufacturing Catapult. The success of the Centre is such that it has more than doubled in size to meet demand. This collaborative venture between the University, High Value Manufacturing Catapult , Technology Strategy Board, Scottish Enterprise and leading multinational firms including Boeing, Rolls-Royce, TIMET, Aubert & Duval and Barnes, has already seen more than £30 million of investment in its bespoke building and facilities near Glasgow airport.

Meanwhile, scientists at the University’s EPSRC Centre for Innovative Manufacturing in Continuous Manufacturing (CMAC) are working closely with companies including GlaxoSmithKline, Novartis and AstraZeneca to enable a step change from current batch manufacturing methods, towards the development of high-quality pharmaceuticals at a lower cost, more quickly and in a more sustainable way.

CMAC Director Professor Alastair Florence said: “For centuries, many chemical products – including medicines – have been manufactured using traditional processes, whereby they are produced in large batches and stored in expensive warehouses. We are leading a revolution in the way such medicines will be produced in the future.

“Allowing drug companies to tailor medicine production to reflect patient demand reduces the need for firms to stockpile supplies – meaning they can make significant savings and reinvest in the research and development of new treatments.”

In the oil and gas, mining and power sectors,

a partnership between the Weir Group and the University is making a significant contribution to existing and new design concepts, product design, and development. The Weir Advanced Research Centre offers a crucial opportunity to develop innovative technologies and equipment for Weir’s served market. Senior company engineers are working together with leading engineering academics to develop equipment and services in the company’s three main markets.

With nearly 1,000 of Strathclyde’s alumni working around the world in the oil and gas industry, the University is also a major provider of skilled undergraduate and postgraduate students to the sector. Its new Oil and Gas Institute focuses on addressing the industry’s key business drivers of reducing costs, increasing production efficiency and continually improving safety and environmental performance.

Dr Simon Puttock, Business Development Director for the Institute, said: “Our partnership with industry enables the transfer of advanced research outcomes and staff skills from Strathclyde into industry design and manufacture; in return, Strathclyde gains valuable insight into industry best practice.

“We are taking partnership to a new level and helping Scotland’s industries compete on the world stage. Available for either ad-hoc testing or consultancy work or for larger more extended development work, we aim to ensure that manufacturing remains an important sector in the UK economy.”

For more information on the University of Strathclyde’s partnerships with industry please contact the Technology and Innovation Centre on tic@strath.ac.uk.

www.strath.ac.uk/manufacturing The University of Strathclyde is a charitable body, registered in Scotland, number SC015263

ENTREPRENEUR

SUMMER 14

Ricky won’t lose that number Commsworld is Scotland’s largest independent telecoms firm bidding to become a leader of the next generation networks. Its entrepreneurial founder Ricky Nicol talks to BQ Editor Kenny Kemp about how beating cancer has given him the determination to pursue his professional vision By any definition, Ricky Nicol is an inspirational Scotsman. He might be open-minded, friendly and willing to listen to professional advice, but he’s no push-over. He’s imbued with a set of working-class values instilled by his parents who lived on one of Edinburgh’s toughest housing schemes.

Today his business, Commsworld, is on the cusp of becoming a significant player in the communications market. Without investor hyperbole or PR spin-meistering, there is a serious ambition and aspiration to create a multi-level platform for Scottish business which he argues will be superior to anything south of the Border.

For this fervent Hibernian supporter – who remains gutted by the team’s relegation from the Scottish Premier League – and staunch member of the pro-Yes Business for Scotland group, this is a mouth-watering prospect. But there is more: Ricky Nicol’s vision was forged by his thinking when he faced up to his own mortality with a savage bout of cancer which resulted in some hefty chemotherapy sessions and major surgery on his neck. Somehow this has not diminished Nicol’s ambition and drive by one iota.

You will find the global HQ of Commsworld tucked away in Edinburgh’s Craigmillar area, in a two-storey 1990s office building, opposite

the Castlebrae Business Centre, the former Niddrie Marischal school, and the Church of Light and Life. This was once on the fringes of one of the capital’s council estates of shame – famous for the tearaways called Niddrie Terror and associated with a different kind of entrepreneur, more used to purveyors of illegal substances and dodgy roofing. Today Craigmillar is being re-born and companies, such as Commsworld, are an important part of its renaissance.

Ricky was born in Greendykes, a stone’s throw from his office. His mother, Ina, and David, his father, were both cleaners. His father worked for 38 years on the Edinburgh Corporation and then Lothian Region buses. He was the chargehand in the all-night black squad, working through from 10pm until 6am. Then Ricky’s dad would work from 7 until 11am part-time as a fishmonger.

“My father was an incredible worker. He never stopped: he worked six days a week.

My mother and my father instilled in me two things: honesty and integrity. That gave me the fundamental grounding as time went on and I grew up.”

In 1978, Ricky left Castlebrae High School in Edinburgh at 16 with five O-Grades. As a bright leaver, he was offered five positions, as a welder, a coal mining engineer, an electrician

or sparkie, an apprenticeship with Ferranti in Crewe Toll, and as a ‘telecom’ engineer.

“I was kind of pre-set. What you do is get a job and work for an organisation. If you’re really lucky you’ll be there all your life and you’ll retire and get a good pension. My ambition was to get married and have a family. I didn’t have an aspiration from an entrepreneurial business point of view.”

A successful uncle had returned on holiday from Zambia and he advised Ricky to ‘get into telecoms’. For a family that didn’t even have a phone in the house, this was an alien idea.

However, Ricky decided to take the job with GEC-Reliance/GEC-Plessey, then Siemens.

He was sent on various college day-release courses, learning on the job installing telephone systems and Tannoy public address systems for football and rugby stadiums. He was involved in putting in systems at Leith Docks, for Scottish Agricultural Industries, and the cement works at Dunbar and Torness Power Station. It was an incredible grounding. “It wasn’t what I thought work would be like, it was enjoyable. I worked with a group of great guys installing and repairing communications systems.”

It was the humble prospect of buying his own home that encouraged him to try and make some extra money. >>

Jewellers and silversmiths since 1866 hamiltonandinches.com BUSINESS QUARTER | SUMMER 14

26

SUMMER 14

27

AS IS SEE IT

BUSINESS QUARTER | SUMMER 14

ENTREPRENEUR “What I did next gave me a shock and an understanding of entrepreneurship. I joined Lander Alarms, created by Ron Lander, a wellknown Scottish business figure. In comparison to the big corporates, the technology was poorer and cumbersome and I fixed alarms all over Scotland but it gave me an understanding that small companies can be set up by motivated people. Ron has just sold the business for £5million.”

Ricky’s salary was bigger and working in a small company he found that the management were just ordinary guys. “It wasn’t a big corporate environment and I learned a lot about the business side.”

Ricky was headhunted to set up a telecoms outfit for Sir David Murray’s Murray International Metals Group which was called Dial Telephone Systems. He was approached

by Dave McKenzie, a West Calder guy who was to become a long-time friend and cofounder of Commsworld.

“I knew Dave who worked with Rank Xerox.

He was approached to be the sales director but didn’t have the engineering knowledge, so I joined Dial in October 1988.”

“I was gobsmacked. I had never heard of David Murray. Then he bought Rangers two months after I joined and everyone knew who he was.

I was in awe of the Murray Group.”

In the Dial Group, Ricky and Dave worked alongside inspirational people such as Alec MacDonald. The company was based in Murray House at the Gyle and then moved to Dial House in Dalry. Dial acquired companies across the UK and was a fledgling telecoms business emerging as BT was being broken up.

“The excitement was immense. I was building up my business knowledge, my social skills and I enjoyed it. I was meeting predominantly salesminded entrepreneurs. I didn’t meet many engineering people.”

The Murray Group made a number of acquisitions across the UK buying up photocopying companies, while the telecoms side remained smaller.

In 1994, the opportunity arose for Ricky and Dave to go out on their own with a management buy-out.

“We took a lot of inspiration from David Murray and others within the group. We thought we could do this and approached the

BUSINESS QUARTER | SUMMER 14

SUMMER 14

28

SUMMER 14

company to be given the opportunity to set up on their own. They were brilliant. Top class with us. They helped us in so many ways and I can’t thank them enough. We were a tiny company and they could have sold us off and made some money. I’m so grateful and they helped us financially too.”

Commsworld, named after a defunct telecoms magazine, now faced the future as a start-up.

Ricky Nicol was certain that telecoms and the converging technology was the future, but it was much slower than even he anticipated.

However, he knew he could create a brand and the name was ideal, with people even thinking the firm was WorldCom. “Where we are now, I thought we would be ten years ago in terms of technology. However, the whole global telecoms industry has been stifled by massive amounts of debt to build the infrastructure, and this has now worked its way through all that.”

He also had no idea about how to start a business from scratch. With no regular wages coming out, Commsworld, had to get moving quickly. They required cash for credit terms with suppliers, and they needed to ensure that their existing Dial customers were happy to shift to a new start-up.

“Our time spent in the Dial Group gave us an entrepreneurial drive. We were no longer the wee boys who left school and turn up and are told to do a job. There was a different world emerging and we could see the opportunity.”

It says something about Ricky and Dave’s idea that they were able to tap support from Robin Steele, the finance director of Dial Group, to help create a business plan, and then gain the support and investment of Trevor Slater, who came on as chairman. Both were experienced in finance, and they helped steer the inexperienced Commsworld founders.

“We had built up a good relationship with our customers at the Dial group and we still have many of them today. Douglas Brown and Nasser Mohammed at the EasternWestern Motor Group supported us from the start and

ENTREPRENEUR

they have been loyal customers. Douglas and Nasser said to us they dealt with people and we had never let them down. This backed us and this was a great start.”

Ricky’s strength was as a sales person [‘Although I’m not a bad engineer!].

“It is 100% relationships. Today you can buy anything online and have it delivered next day. It’s about building these strong customer relationships and never letting them down. We are in a technology world, so there are always problems. Things will go wrong – nothing is more certain – but it is how you fix it.”

The major telcos have a ‘one-size-fits-all’ approach to telecoms and convergence, yet Ricky could see that every business had a distinct set of requirements. He stresses: “People want deeper, wider and better than that. You will get me 24/7 at any time. You can tweet me at 2am in the morning. The buck stops with me. If you have a concern then we will get someone to fix it. We are dealing with multi-technologies that are all converging from suppliers all over the world.”

By 2000, Commsworld were successfully supplying and installing telephone systems to businesses but profit was based on skimming the margin from selling and installing equipment. Increasingly, Nicol sensed that building networks using existing infrastructures and the unbundling of the BT local exchange loops was changing the landscape. Then he was advised that penetrating owner-managed firms based in the West of Scotland was the

way ahead, and so he bought Glasgow-based Scotia Telecom.

“Up until this stage, I never thought about buying businesses. Scotia were our biggest competitor and had a great reputation as a telecoms engineering company. After we did the diligence, it was a no brainer,” he says.

Commsworld were good at supplying the systems, whereas Scotia had engineering expertise but issues in its sales department.

Ricky met the owners, one being Martin Davidson who is now Commsworld’s technical director, for a chat. He persuaded them that he wasn’t an aggressive predator, and that he wanted to build a business alongside them.

“It took a while but I said if we merged the two businesses we would have something special here. The owners were given some money and a percentage of the new business and a single business was set up.”

Commsworld was still pretty tight on capital.

Money was raised through the Royal Bank, East of Scotland Finance and various other groups. They insisted on having someone on board to represent their interest. Ricky resisted this and approached Malcolm Macpherson, then of Henderson Boyd Jackson, and one of Scotland’s best known deal-making lawyers.

In 1995, Malcolm and Ricky, a fellow Hibs supporter had hit it off at Bar Roma. Malcolm later became Hibernian FC chairman.

“Malcolm gave me the best business advice I’ve had to this day. He said, ‘Put a real finance director in place, and I’ll come on board’.” >>

You will get me 24/7. You can tweet me at 2am in the morning. The buck stops with me. If you have a concern then we will get someone to fix it. We are dealing with multi-technologies that are converging suppliers all over the world

Jewellers and silversmiths since 1866 hamiltonandinches.com

29

BUSINESS QUARTER | SUMMER 14

ENTREPRENEUR Ricky asked him what a ‘real FD’ meant and it transpired that Graeme St John, who was a former Ernst & Young CA running the turnaround team with Clydesdale Bank, was the ideal person to fit the role. McPherson’s advice was that solid financial controls, good governance and the right person to help with capital funding were all necessities for a business that was serious about scaling up.

“Graeme’s appointment is the single most important thing we have done in business.

Beyond doubt. It’s not just the money, he has business knowledge beyond finance. Graeme said we had a lot of potential but that we were too narrowly focused and it would cost a lot more than we understood. He was right.”

Graeme is now Ricky’s right hand man.

After the Scotia deal, Commsworld was motoring, but it needed to move onto a difference tack. “Martin runs our entire engineering. He is technically very clever and hardworking. We were still selling telephone systems, the concept hadn’t changed but we needed more engineers. However, we wanted to create something special.” Another well-known Scottish adviser Bill McCall, who worked for consultancy, and now with FWB Park Brown and Lyceum Capital, helped Ricky define where Commsworld should be heading. [‘Most business models are a paradox waiting to be solved,’ concludes McCall.] He could see that telephones and computers were becoming low-margin commodities. After 2005, the company started to build as ‘servicecentric, recurring revenue business’ that would replace the BTs in the business market place.

“We made a decision that we were going to become a Telecom Network Operator. Why couldn’t we build our own network and service centres? This was a significant mark in the sand for us. We had something unique that was scalable.”

Ian Blackford, a former head of equities for Deutsche Bank in the Netherlands, and former treasurer of the SNP, came on board. He was keen to help with refinancing, bringing in John Bennett, head of European equities at Henderson Global Investors, and Fund Manager of the Year 2014 from FinanzenVerlag. John is the biggest external shareholder with a 19% stake.

This allowed Commsworld to have a stronger

BUSINESS QUARTER | SUMMER 14

SUMMER 14

How does Commsworld work Commsworld have created their own unique ‘superfast’ digital network. The big carriers, such as BT, were viewed as risk to the business, even though Commsworld uses the BT infrastructure and the exchanges.

The company knew it was acting as a ‘travel agent’ for the telecom world, taking away the hassle for businesses. That relationship had to change because Commsworld had no real control.

In 2012, the firm embarked on a programme to place their own kit in exchanges. At the heart is Fluency, the ISP provider, which is being rolled out to connect existing exchanges across the UK. Products include standard ADSL, through ADSL2+, EFM to superfast FTTC (fibre to the cabinet) fibre optic.

Data centre companies, such as Iomart, ScoLocate, Pulsant, Onyx, BrightSolid, are all working with Commsworld, who are now placing their hardware inside the ‘carrier-neutral’ data centres.

“What we do is put our own equipment physically inside those centre. No-one else’s, we buy it.

We then go to the BT exchanges – and we are licenced to do so – and put our equipment and buy the last mile from BT Open Reach. Our customers are then connected around the world,” says Ricky.

With this Commsworld can deliver unified communications which can integrate real-time services such as data sharing, conferencing, instant messaging and non real-time including voicemail, email, SMS on a secure system that has been built by its own engineers.

balance sheet to undertake its expansion plans.

Ricky was willing to hand over some of his equity to grow a much larger slice of the pie.

Dave McKenzie wasn’t so sure about this new direction, so Ricky agreed amicably to buy out his partner’s share in cash. It was all looking great: then Ricky was diagnosed with throat cancer in 2 January 2006.

The prognosis was not good: a 50:50 chance of survival with seven weeks of intensive radiotherapy and chemotherapy and a neck dissection. It was a shock for Ricky’s system and to everyone who knew him. Meantime, Dave remained in situ for a year while the cancer treatment went on. He then departed

30

after 13 years with Commsworld.

“The treatment I received was phenomenal.

I was really lucky. Dave was a rock and stayed on until I returned with the all-clear. We had implemented some of the changes but now I was more determined to make it work. I had been thinking about it whilst recuperating.”

In July 2007, Graeme and Ricky were on track and about to secure finance with RBS to do another telco deal to accelerate their network service. The deal was ready for signing when Ian Blackford warned them about the impending collapse of the bank. Instead, it was funded privately rather than going bust. It was a fortunate escape – or perhaps it was down

SUMMER 14

to good advisers.

“When I came back to work I realised we had something special. Even if I had sold the business, I’d never have got another chance like this. It would have bugged me.”

While Ricky maintains that facing death impressed on him the central importance of his wife Joan and family [‘They mean everything to me’] he knew that Commsworld had to take a leap into the future.

“We have a strong balance sheet and we diversified. I’ve learned that having clever people around is paramount. All the senior people and advisers around me are much smarter than me. All of our network engineers are top class. My door is always open because I don’t have all the answers. Then I said to the guys, ‘why don’t we build our own network’.”

Commsworld had most of the components in the licences, the engineers and the sales people, and the strong relationships with the big telcos. One chink in the armoury was they were not an ISP, an internet service provider.

Increasingly, this was an essential part of developing the next generation network.

It was then that Ricky heard about a tiny Edinburgh internet company called Fluency, run by a young internet ‘guru’ and software developer called Charlie Boisseau, set up in 2010.

“These were extremely clever guys, particularly Charlie who is chair of the Scottish Internet Exchange. I said to Graeme, we need to buy Fluency. But the board said to me: ‘Who is Fluency? And what is it going to cost?’ So we did our research.”

Ricky went to meet him, offering to buy the business and he asked Charlie for his thoughts on Commsworld. Ricky laughs when he recalls Charlie’s reply: “You have no street cred in my space. Don’t get me wrong, you’re good at what you do, but I’m an ISP. We are oil and water.”

Both could see that Commsworld’s sales marketing and customers would dovetail well with Fluency. Charlie sought the advice

ENTREPRENEUR

Having clever people around is paramount. All the senior people and advisers around me are much smarter than me. All of our network engineers are top class. My door is always open because I don’t have all the answers of Sandy Finlayson, a partner at MBM Commercial and well-known investment adviser, who thought the marriage could be a good one. In this case, oil and water could mix.

The announcement was made in November 2012, so Fluency joined up bringing its small technically excellent network skills.

“We will build a Scottish network with a UK footprint that will rival the last Scottish network, which was Thus, formerly Scottish Telecom. I told Charlie my ambition was to create the Thus for the next generation.

Crucially, this would be a privately owned business and not controlled by venture capital or by stock markets.”

According to Ricky, when C&W bought Thus they took the Scottish network and ripped out the core equipment and put it in skips, because it didn’t fit with their business plan. Today’s massive telcos have too much complexity and latency. They are also more sharply focused on domestic users and streaming to HD televisions and smart phones, rather than businesses.

Commsworld’s turnover is £8.6m with profits of £240,000, while Ricky says around 70% is recurring revenues from existing customers with the remainder new business growth.

“We will build a unique network that is better – not bigger – than the big carriers for our clients. And we have done. It is really special what we have done. We plan to have our kit in 39 BT exchanges across Scotland with further expansion into England – and this is increasing every day. People haven’t quite grasped what

we have achieved for businesses.”

“Our Fluency network currently consists of five LLU exchanges and five data centre PoPs (London, Manchester, Glasgow and two in Edinburgh) we are actively unbundling another three and have plans to unbundle another 31 exchanges throughout Scotland,” he says.

Indeed, Commsworld are using the BT Edinburgh Waverley and Rose Street exchanges, the Aberdeen Dyce and Lochnagar exchanges, and the Glasgow Central exchanges for their customers.

Companies such as Veripos in Aberdeen, an oil and gas company tracking exploration vehicles around the world, have signed up. With offices in Manchester, Singapore, Houston and Colorado, Veripos is connected by Fluency, including through a satellite link with NASA. [‘We completely take them off the BT network and put them on our one. We take fibre into their offices for their vital networks. BT and Vodafone simply cannot do this for business.’]

The beauty for Ricky and Commsworld is that the legacy of a massive digital network already exists. Thankfully, they are not digging up the roads. That has already been done.

Now a customer gets linked up to an existing exchange, where Commsworld has its own system in place. Smart thinking at a fraction of the previous costs. To bowdlerise that great Steely Dan hit, it should ensure that Ricky – a hard-working, working class lad from Niddrie – and his team of Eggheads never lose your number. n

Jewellers and silversmiths since 1866 hamiltonandinches.com

31

BUSINESS QUARTER | SUMMER 14

R

E

S

U

L

T

S

Lingo24 talk the language of Scottish success at inaugural BQ Scottish Export Awards

SCOTTISH

EXPORT AWARDS

2014 In association with

Sponsored by

bqawards_export www.bq-magazine.co.uk/export-awards

BUSINESS QUARTER | SUMMER 14

32

A Scottish translation service with over 4,000 specialist language experts around the globe has become the first BQ Scottish Exporter of the Year. Lingo24 is one of the world’s fastest growing agencies with offices in 18 countries, headquartered in Edinburgh, and 60% of its sales are exported.

“It is wonderful to see a Scottish company that is helping people with language translation. Lingo24 is incredibly professional and super-focused on every element of their business. We can see that there is also a huge opportunity for Lingo24. It has been a pleasure to hear about this company’s success. We congratulate their achievements,” said the judges.

All of the winners in the inaugural BQ Scottish Export Awards 2014, supported by Scottish Enterprise, have enormous potential to become significant enterprises adding value to Scotland’s economy. Nearly 300 guests applauded the achievements of the six winning Scottish companies who picked up the prizes and the shortlisted finalists at a glittering event in the Glasgow Science Centre on Wednesday 28 May 2014.

“This is the first year of the awards and it is an excellent start. We have a clutch of worthy winners that have surprised and impressed the judging panel,” said chairman Brian Wilson, the former UK Energy Minister, and chairman of award-winning exporter Harris Tweed Hebrides.

“These awards are not simply about major name exporters who are already well established but for those, perhaps, who are on the early rungs of the exporting ladder.

These awards are about an emerging cohort of Scottish companies who are exploring their overseas markets and winning great business. We applaud them all: winners and finalists.”

The other judges, who deliberated with Brian Wilson in early May at the Blythswood Hotel in Glasgow, were: John Anderson, the chief executive of the Entrepreneurial Exchange; Jack Perry, a former chief executive of Scottish Enterprise and a non-executive director; Fiona Fraser, cofounder of Slow Luxury, member of Scotland International Group and business development manager for Women’s Enterprise Scotland; and Neil Boyd, commercial director of Ian Macleod Distillers, makers of Isle of Skye, Glengoyne and Tamdhu whiskies, and aided by academics from Strathclyde Business School. From what the judges were able to determine, and with input from interviews conducted by academics at Strathclyde Business School, all the companies presented sound evidence of exporting success.

NOTHING LOST IN TRANSLATION

Scottish Exporter of the Year 2014: Host Adrienne Lawler with Claudia Barna and Andrew Campbell, of Lingo24, presented with their award by Alastair MacColl, chief executive of BE Group

The Best Start-Up Exporter of the Year is Brewmeister.

The judges enjoyed a healthy debate on the definition of a ‘start-up’ as opposed to a ‘spin-out, but were highly impressed with the development of this company from the north-east of Scotland. The judges felt that Brewmeister, who make six beers, was an exciting Scottish drinks company to watch. The judges were impressed that in two years, the firm had moved to a new brewery in Keith, was exporting 70% of its products to Sweden, Denmark, France and Poland, and has signed up with a US importer. Beers include Snake Venom, the world’s strongest beer at 67.5% alcohol, while the brewer uses only four natural ingredients, including 100% pure Scottish water from a rock-filtered stream. Brewmeister’s turnover was on track for £1m this year. The judges felt that Brewmeister were “doing all the right things in their exporting strategy but were not yet the finished article.”

Lingo 24 was unanimously selected by the judges from the category winners as the ultimate BQ Scottish Exporter of the Year 2014. Lingo24 managing director Andrew Campbell told the gathering in Glasgow: “Our success is down to businesses in Scotland and overseas who see the value in exporting. It’s a great world out there. It’s expanding and we can support the work with our translation services.”

“We’d like to thank BQ Scotland and the judges for selecting our business from such a strong field of Scottish exporters,” he said after receiving his award from Alastair MacColl, chief executive of BE Group, parent company of BQ magazine.

Among the other awards, Andrew Hall, chief executive of Sumdog, said: “Thanks mainly to the millions of kids and teachers around the world who use what we do - and enjoy it. There is nothing more rewarding than hearing kids playing Sumdog in their lunch hour instead of going out and getting exercise!’ The event host was TV presenter and journalist Adrienne Lawler, while the after-dinner speaker was adventurer and entrepreneur Kevin Gaskell, the chief executive of Fairline Boats.

The E-Commerce Exporter of the Year is Sumdog, based in Edinburgh. The company, employing 20 people, produces an adaptive learning game website which was launched in 2010. It has more than six million registered users in 33,000 schools, and around 75% of the users are elementary and middle school students in the United States. Teachers have been amazed at how Sumdog has been able to improve the maths and English skills of students. According to Sumdog, sales were up 139% to over £310,000, and 98% of sales from subscriptions are exported from Scotland. Total revenues of Sumdog and its other products for £961,000 in 2013.

The judges said: “We see real substance to their export growth. It is a fantastic product that is genuinely international. We are really impressed that it engages so well with the user online – that is the schools, pupils and parents.”

The International Trade Best Professional Service Advisor award winner is Lingo24. The judges were hugely impressed with this firm and the vision of its founder Christian Arno, which was set up in Aberdeen in 2001.

One of the judges said: “The firm has shown great tenacity over the years taking on some of the biggest players in the field of translation. They have built a formidable business with over 4,000 professional translators, most of them based in their native countries. What makes it all tick is the IT and computing system with its expert programmers and online turnaround. It is a 24-hour a day operation working around the globe.” The company’s revenues climbed by 12% to £7.5 million, with high growth European markets including Switzerland, Belgium and France, while the firm has offices in Panama, New Zealand, the Philippines, Romania and Germany. The company engaged with Scottish Enterprise and the Global Scot network to secure its largest contract worth £4million. >>

33

BUSINESS QUARTER | SUMMER 14

R

E

S

U

L

T

S

A night to remember: the BQ Scottish Export Award winners for 2014 gather on stage at the Glasgow Science Centre. (From left) the award recipients from Brewmeister, Vegware, Alba Power, the Eribé Knitwear team winners, and Sumdog

Best Start-up Exporter 2014: Palash Abdul, Adrienne Lawler, Lewis Shand, the founder of Brewmeister, Neil McInnes, Scottish Enterprise

The Most Entrepreneurial Exporter of the Year is Alba Power, based at Netherley, near Stonehaven. The judges loved the success story of this gas turbine and oil and gas and aero engine servicing and support business. It heard that a potential Houston client was initially hesitant to break away from an existing supplier. However, they ordered a spare part from Alba Power with a nominal value of £150. An Alba Power engineer was dispatched at the company’s expense to fit the spare part, taking all the tooling required for the installation. This impressed the client and resulted in a major nine-year deal worth £7.5m. Since then, the company has set up a base in Texas. The judges felt this commitment to service and exporting was above and beyond normal commercial activities yet succeeded in winning a valuable export market.

Most Innovative Exporter 2014: Adrianne Lawler, Eilidh Brunton picked up the award on behalf of Vegware from Christopher Lynch, Santander

The Most Innovative Exporter of the Year is Vegware. This was another hotly contested category and among the finalists were Activpayroll, Insignia Technologies, Online Electronics, Subsea Technologies and Loch Duart Salmon: all strong contenders for the award. This was very tight and the judging panel felt that a clear demonstration of export revenues was required to make this award.

“All have embraced innovation in their exporting in a major way but some were further down the road in terms of sales. However, one particular firm stood out for the speed of invention and scope of the market and this was Vegware,” said the judges.

Vegware has developed completely decomposable products for the food packing industry.

The firm, based in Edinburgh, employs 42 people and has partnerships in Australia, South Africa, UAE, and the United States. Sales have grown from £674,000 in 2010 to nearly £7m for 2014, with overall sales growth of 66%. Export sales have grown by 71% over this time.

BUSINESS QUARTER | SUMMER 14

34

SUMMER 14

XXXXXXXX

THE OPPORTUNITIES ARE THERE TO TAKE

E-Commerce Exporter of the Year 2014: Host Adrienne Lawler with members of the Sumdog team pick up the award presented by Hugh Lightbody (right), chief officer of Business Gateway National Unit, the category sponsor The Scottish Export Team of the Year award goes to Eribé Knitwear, a business set up by designer Rosemary Eribé. This has been described as a ‘a cottage industry gone global’. The judges were impressed by the creation of a dedicated community of knitters who were absolutely committed to top-quality, hand-made garments produced in Scotland.

Nearly 70% of the knitwear is exported to 17 countries, with 230 major customers, while 10% is knitted for global brands such as Paul Smith, Prada, Pringle and Mulberry. Japan is the largest market for the knitted products, which is expected to be £600,000 this year. The company has also appointed sales support in the United States, and is on target for £2 million by 2017. “At the heart of Eribé’s growth is the teamwork to ensure that every one of the individual knitters is part of the success story. The company is continuously improving its objectives with staff empowered to make decisions and act upon them immediately. We like the idea there is a nurturing system with strong personal contact running alongside normal every-day communications,” said the judges.

Most Entrepreneurial Exporter 2014: Adrienne Lawler, Campbell Archibald, sales director from Alba Power, holds the export award presented by Hugh Lightbody (right), chief officer of Business Gateway National Unit, the category sponsor

35

The last few years have seen unprecedented change in global trade patterns and in the dynamics of global growth. The impact of the financial crisis and economic slowdown has created a shift in the world’s economic ‘centre of gravity’, which has swung significantly from the Western developed countries back towards the emerging markets in the East and South. It is predicted that by 2025 China and India will be the world’s 1st and 3rd largest economies and 2013 saw China overtake the USA as the world’s top trading nation, a title the US had held for decades. China’s middle class consumers already number 300 million – more than the entire population of America!

Across all of the emerging economies, the middle class is expected to expand by another three billion over the next 20 years – a huge potential market for high value goods and services. All this change is creating huge opportunities for Scottish companies who are ambitious, innovative and prepared to embrace internationalisation, to expand and grow. I want to encourage businesses in Scotland, if they aren’t already doing so, to see the bigger picture of global opportunities – Scotland’s economy doesn’t exist in a vacuum. We are part of a global economy and our companies need to have vision and ambition. I firmly believe that to remain competitive, and really take Scotland’s economy to the next level, we must be focused on growth and crucially we must instill an international mindset in everything we do. There is strong recognition that international competitiveness is key to economic growth. Our research has shown that exporting boosts company productivity by between 16 and 18%, and Scottish companies that internationalise through outward FDI have an additional productivity advantage of between 7 and 8%. If we want the Scottish economy to flourish we have to become more internationally competitive. Whilst we have a good track record on pan-UK exports (ranking 9th in relative exports to GDP) we let ourselves down when it comes to international exports, ranking 33rd. As a small country, with a small domestic market, exporting is crucial to generating economic growth. We have a need to have more companies operating in more markets.

So, while there is much to celebrate and be proud of, there is still work to be done. We see it as our role to help ambitious Scottish companies take full advantage of the emerging patterns of international trade. By having experts and offices based in key markets across the globe we can help more home-grown businesses tap into new overseas opportunities.

Lena Wilson, chief executive, Scottish Enterprise Find out how to access the services, knowledge, expertise and networks to support your business.

Visit www.scottish-enterprise.com/international or call 0800 019 1953.

BUSINESS QUARTER | SUMMER 14

BUSINESS QUARTER | SUMMER 14

36

SUMMER 14

INTERVIEW

Scottish businesses need to grab the opportunities posed by the next stage of the digital revolution – or they will simply be left behind. BQ Editor Kenny Kemp talks to Martin Brown and Phil Smith about the shape of things to come There is heated debate over the origins of the term ‘cloud computing’. Some say it was a marketing exec at Compaq in the mid-1990s.

But I first heard the term in the preposterously massive Orange County Conference Centre in Orlando in July 2001 at a major shindig for 20,000 staff, customers and media organised

by Computer Associates, then run by Sanjay Kumar, who subsequently went to jail.

It was a heady time with numerous guest speakers: Mike Lazaridis, the founder of the BlackBerry, showing off his first handheld computer which he said would ‘become a management tool to check out stock and inventories while you are on the move.’ And then Joe Tucci, then the chief executive of EMC Corporation, the world’s leading firm in the sphere of digital data storage, announced a deal with Computer Associates with its backup and data retrieval system called Brightstor.

I can’t recall if Joe actually used the term ‘cloud computing’, but what the application did was allow high volumes of mission-critical data to be continuously and reliably stored outside of a business’s in-house mainframes systems. It might not have been the cloud,

more like Glencoe mist. Fast forward 13 years, and EMC’s points man in Scotland, Martin Brown, is able to take Joe Tucci’s story of the cloud into the business troposphere.

“The opportunities are endless: there is going to be so much more data that can be measured and analysed and useful to business.

But it is up to organisations to understand that this is the case – and to embrace the opportunities,” he says as we meet in Edinburgh’s Huxley Hotel.

Software applications will become the defining aspect of almost every business. That will be the DNA of every kind of company, no matter what sector. So big organisations, like EMC, using their platform as a service, will allow companies to piggyback on its digital infrastructure when developing their unique business applications, and then provide the analytics to scrutinise and assess this monster volume of teratoid data.

“We did a survey and we found that chief executive officers said it was difficult to continually innovate. But there were stark examples of what would happen if they didn’t innovative. The quicker you can get your head

around these applications and innovate, the more likely your business will stay ahead of the curve,” he says.

That’s a pretty blunt warning to Scottish businesses of all shapes and sizes. Yet the magnitude of all this data is too terrifying for many businesses to properly contemplate.

And the big computer giants can smell the opportunity. After a period of consolidation and belt-tightening, many of the global computer players, such as Cisco, IBM and Microsoft, are again marketing their wares – and they have compelling reasons to do so.

Recently Phil Smith, chief executive of Cisco UK, is one who has been future gazing.

Speaking to BQ in London, the Glasgow University graduate said: “We stand at the cusp of an era in which everything from cars, trees, street-lights and even cows can be given an internet address and connected to an ever-expanding network. With personal, everchanging, mobile and wearable technology, this really is a hyper-connected world.”

A report entitled The Internet of Everything: Bringing the Future to Life, has examined the situation in the UK today and how it >>

Every cloud application has a silver lining

37

BUSINESS QUARTER | SUMMER 14

INTERVIEW

SUMMER 14

We stand at the cusp of an era in which everything from cars, trees, street-lights and even cows can be given an internet address and connected to an everexpanding network will fuel the British economy for years to come. While sensors have been in use for decades, now they can be harnessed in massive numbers to check and regulate every kind of activity, and this Himalayan mountain of information can be viewed on a dashboard set up on a standard lap-top. Phil, one the most influential people in UK IT, is the chairman of the UK Technology Strategy Board and Chair of e-Skills UK. He is also the co-chair of the Future Technologies and Infrastructure Working Group for the Information Economy Council, so he knows what we should expect.

“The Internet of Everything provides the platform from which an ever-increasing number of connections will ‘wake-up’ the world around us,” he says.

With just 1% of the physical world connected, he says this is just the beginning of an amazing future. As connections become smarter, faster and more insightful, we will only see more imaginative and ambitious applications of the IoE which will change the world. In this era when it is possible for everything to be connected to the network, it is estimated 50 billion ‘things’ will be connected globally by 2020, creating £11.5 trillion worth of value. Cisco has a new range of unified next generation servers to create data centres on a single platform. Its CRS-X is the epicentre of the internet with speeds of 400gigabits per second, double the present capacity. A single CRS-X rack is able to stream high-definition video to every home in Scotland simultaneously. A rack slaved together like a rock band’s amplifiers can download the whole British Library printed

BUSINESS QUARTER | SUMMER 14

collection in a split second. EMC, who employ 60 in Livingston and 3,000 in manufacturing in Cork, are doing their own promotional work. In July EMC will be unveiling their latest mega applications at the Old Billingsgate Market in London. David Goulden, the chief executive of EMC Information Infrastructure, who took over from Joe Tucci earlier this year, is pitching to a listening audience. It will be worth hearing what Goulden, a EMC veteran who was chief financial officer for seven years, has to say too. After all, it is finance directors, rather than the IT boffins, who need to hear how harnessing big data and using the cloud will make money for investors and shareholders. Goulden has also been instrumental in making mergers and acquisitions a core competency for EMC by playing a leading role in more than 70 acquisitions since 2003. One of the EMC companies is Vmware with its product vCloud Hybrid Service (vCHS).

Back in Edinburgh, Martin Brown talks about what the cloud and vCHS can do, helping businesses become more efficient and agile enough to change. He talks about Blockbuster, the retail video and DVD chain unable to repulse the arrival of digital downloading of film and fell victim to the success of Lovefilm, Redbox and then NetFlix. That’s a warning. He cites Airbnb, set up by Nathan Blecharczyk, Brian Chesky and Joe Gebbia, where people can rent their spare rooms or houses for people to come on holiday in over 30,000 cities. That’s the future.

“I like the idea of Airbnb. It’s an application and a technology that has allowed people

38

to get access to rooms and it is changing the game.”

One of the early successes for Big Data was the Tesco Clubcard which provided the supermarket giant with masses of customer information.

“They were able to use the data on the customer to differentiate the service. It is about understanding your consumer better by analysing the data, whatever that data is.

That is the opportunity. The technology allows you to do that today. The insights you now get allow you to change products,” he says.

Yet the recent poor showing of Tesco shows that the innovation of Clubcard, which made the name for ex chief executive Terry Leahy, has not been keeping pace. Clubcard is now having to find fresh ways to excite Tesco customers. Martin Brown says that everywhere you look there are defining changes to each industry sector.

“In huge industries, such as aviation, a small percentage reduction in operations can make a big difference. Globally, airlines spend $200bn a year on aviation fuel, so a 2% saving in fuel is $4bn. GE is spending $1.5bn to develop new services and sensor technology.”

The 20 sensors in an Airbus A380 gas turbine engine generate a massive amount of data. Each blade generates 520GB per day. The detection of a fracture or a change in temperature can allow earlier replacement or prevent malfunction. The savings are vast and why Rolls-Royce make more money on servicing the on-going assets, rather than on the outright sale. It is the same on oil >>

39

BUSINESS QUARTER | SUMMER 14

INTERVIEW

SUMMER 14

and gas platforms where low-cost sensors embedded in sub-sea systems in gas, oil pipelines and umbilicals can prevent danger to valves once too difficult to reach. In Big Pharma, drug testing time is now being dramatically cut back, which means new products will come to market more quickly.

Previously, companies had to scale up to meet their testing milestones. Now new cloud-based applications can crunch data in days rather than months.

“For EMC’s point of view, it’s the pivotal part of helping companies develop these applications much more quickly. We’ve also got the people to help develop this.”

Brown says companies are ‘virtualising’ their IT infrastructure which is now being placed on the cloud, making it easier to manage, then it is ‘standardising’ by using more automation, which allows companies to manage more with fewer resources. This is the golden goose. Studies show that 73% of IT budgets are spent on keeping the lights on in a business. “That’s not where companies want to be spending their money. If start-ups with no legacy systems are innovating then the established businesses needs to take this on too. As much as possible need to be spent on innovation, which allows you to get new products to market sooner.”

The beauty is firms don’t need to invest massively in new racks of technology. This is a made-to-measure solution for off-the-shelf pricing. The buzz word here is resilience.

“We have our own cloud, Vmware’s vCHS which has a big part of this market. We’ve got a public cloud offering alongside something similar to what you can get from Amazon or Google. It is easy for them to integrate back and forward. For example, a finance team in a bank might require more computing power at the end of a quarter when they are doing their results. You simply burst out and use what you need on the cloud.”

Martin admits this comes with security and regulatory issues, so the ‘plumbing’ technology is more robust and hyper encrypted. In Scotland, Registers of Scotland have been digitising all the land registry information about the nation, and they have used EMC technology to sit behind this, archiving and retrieving

BUSINESS QUARTER | SUMMER 14

A BQ technology primer App or application: An application is a computer programme designed to help people perform a task beyond the running of the computer itself. A specific instance of such software is called a software application, application programme, application or app. The term app is generally used for applications that are used on a smartphone or tablet.

Big Data: A term used to describe a massive volume of both structured and unstructured data that is so large that it’s difficult to process using traditional database and software techniques.

The challenges include capture, storage, search, sharing, transfer, analysis and visualisation.

Cloud: This includes public, private and hybrid cloud. Cloud computing is a general term for anything that involves delivering hosted services over the Internet. A cloud service has three distinct characteristics that differentiate it from traditional hosting: it is sold on demand, typically by the minute or the hour; it is elastic – a user can have as much or as little of a service as they want at any given time; and the service is fully managed by the provider (the consumer needs nothing but a personal computer and Internet access).

A cloud can be private, public or hybrid. A public cloud sells services to anyone on the Internet.

A private cloud is a proprietary network or a data centre that supplies hosted services to a limited number of people. Hybrid is a mixture of public and private cloud in which an organisation provides and manages some resources in-house (private) and has others provided externally (public).

IT-as-a-Service (ITaaS): This is a service where a customer purchases computing power and IT resources in a similar manner to a utility and instead of buying or leasing products and services to then address their IT needs, it is purchased as a service. As a result a customer is able to only pay for what they need and during peak times have scope to secure additional resources.

Software defined: An emerging approach to using significant IT resources. Through this approach changes in IT resource such as storage capacity can be specified through using software and at no time is there a need to make any physical adjustments to the hardware being used.

Analytics: The discovery and communication of meaningful patterns in data. Organisations may commonly apply analytics to business data, to describe, predict, and improve business performance.

Open source technology: A program where intellectual property is released to the public by the ‘inventor’ and as a result the technology can be used for no charge. Open source code is typically created as a collaborative effort in which programmers improve upon the code and share the changes within the community.

Business continuity: The processes and procedures an organisation puts in place to ensure that essential functions can continue during and after a disaster. Business continuity planning seeks to prevent interruption of mission-critical services, and to re-establish full functioning as swiftly and smoothly as possible.

Shadow IT: This describes IT systems and IT solutions built and used inside organisations without an explicit approval. Shadow IT solutions are not often in line with the organisation’s requirements for control, documentation, security and reliability.

information when necessary.

The data is replicated in real-time, so that it should never get lost. Companies, such as Glasgow-based Iomart, who are delivering great financial results as a ’cloud computing company’, uses EMC kit in its data centres. “We have been speaking to many finance directors and managing directors who are asking us: ‘Where is

40

this all going?’. I see our job as trying to help them understand what is going on and the opportunities.” In Scotland, companies, whether they like it or not, will become data-intensive. What is clear is that there are now opportunities and it would be a dereliction of duties if businesses did not explore how to use the cloud more effectively. n

SUMMER 14

COMPANY PROFILE

Five minutes with Steve McCutcheon, CEO of PRG Steve McCutcheon is founder and CEO of PRG, Scotland’s largest independent specialist recruiter. With offices in Glasgow and Edinburgh, from a standing start in 2002 PRG quickly became established as the leading recruiter of accountants in commerce and industry, financial services and the professions.

More recently, client demand has seen PRG enter new markets in Technology, Energy and Construction, and now PRG’s client list reads like a who’s who of corporate Scotland.

With almost 20 years as a specialist recruiter, Steve has built PRG into one of Scotland’s most admired and successful agencies. He puts this down to the quality of PRG’s staff, driving professionalism and ethics across every part of PRG, and a relentless desire to add value to clients’ businesses and candidates’ careers alike.

WHAT WERE YOU DOING BEFORE YOU STARTED PRG? I was in recruitment, an executive in a large American corporate in the recruitment sector.

HOW DID YOU RAISE THE START-UP FUNDING? I remortgaged my house and raised the same amount in borrowings.

WHAT WAS YOUR BIGGEST BREAK? I was lucky enough to attract some really talented staff from day one. Looking back we really punched above our weight, and I am pleased to say that they bought into me and my business plan and vision. Within months we secured a very large contract, worked extremely hard and delivered excellent results for the client, and haven’t really looked back.

WHAT DO YOU MOST ENJOY ABOUT RUNNING THE BUSINESS? Occasionally taking time out to reflect on our achievements and sharing well-earned celebrations with colleagues and family.

WHAT DO YOU LEAST ENJOY? In business, undoubtedly admin! And people who say one thing then do another. In life generally, being lied to.

Steve McCutcheon is founder and CEO of PRG

Someone told me a long time ago that businesses don’t stand still - they either grow, or shrink. That makes complete sense to me. PRG has never shrunk, so I know that whatever else the next 5 years bring PRG will be bigger and better WHAT IS YOUR BIGGEST BUGBEAR? The frustration of seeing clients making wrong purchasing decisions - when rules replace reason!

WHAT COULD WESTMINSTER AND/OR SCOTTISH GOVERNMENTS DO THAT WOULD HELP? Actually ensure banks released funding to business. Also (counter-intuitively), more and better regulation of the recruitment sector.

41

WHAT ADVICE WOULD YOU GIVE TO SOMEONE STARTING OUT TODAY IN RECRUITMENT? That it’s a great industry and a great way to make a living - if you take it seriously, take it personally and try your level best to deliver solutions and exceed expectations. Also, research the market, sub-sectors and players, take stock, be intellectually honest and decide where you fit best. Then work hard and with integrity and assertiveness.

WHAT DOES THE NEXT 5 YEARS HOLD FOR PRG? I wish I knew. Someone told me a long time ago that businesses don’t stand still - they either grow, or shrink. That makes complete sense to me. PRG has never shrunk, so I know that whatever else the next 5 years bring, PRG will be bigger and better.

And I know that in order to make that happen, we need to keep continually improving our delivery to clients and candidates across our specialist sectors, as well as to our teams of employees.

SHARE SOMETHING THAT PEOPLE DON’T KNOW ABOUT YOU? I am actually quite a good singer!

WHAT IS CURRENTLY PLAYING ON YOUR IPOD? Lots. Avicii, Andrea Bocelli, Dolly Parton and my personal favourite - a disk my wife and I had done to give as favours at our wedding (brilliant fun, I recommend it to everyone).

IN ANOTHER LIFE I WOULD HAVE BEEN? Definitely famous. Is there still time?

A PHRASE I USE TOO OFTEN IS? (When I do something clever but obvious)”That’s why I’m the boss!”.

If you would like to discuss the market generally, address a specific requirement or talk about your own situation, please contact PRG on 0131 550 1460 / 0141 331 9380 or visit www.prgrecruitment.com

BUSINESS QUARTER | SUMMER 14

ENTREPRENEUR

SUMMER 14

A golfing legend strips for action

Entrepreneur Stephen Tennent has invented and developed Scratch MacTee, a golfing cartoon representing the genuine spirit of the game and a route to merchandising millions. He talks to Kenny Kemp about its creative journey

It could have been Ganton in 1949 or perhaps Wentworth in 1953: the history books don’t quite tell us whether Scratch MacTee from St Andrews was in the running for the British golfers taking on the Yanks. But that’s probably where his spirit began to emerge.

The Ryder Cup 2014 in Scotland in September presents a host of outstanding opportunities for Scotland to show off its natural sporting assets. From 23 to 28 September, the teams from the United States and Europe will be battling it out in friendly and noisy competition over the course at Gleneagles. But it also opens doors for a wonderful cartoon character called Scratch MacTee and his creator, Stephen Tennent, who is an entrepreneur in the arena of advertising, marketing and sports management.

He was working as a golfing salesman promoting the Bobby Jones and Nicklaus sportswear brands across the UK and Europe and got to know everyone of any consequence in the golfing merchandising market.

His idea stemmed from walking around the exhibits at the PGA Show in Orlando back in 2000. On the flight home to Scotland he began to sketch out his thinking on an airline napkin, creating a craggy Scottish character who could be the heart and soul of what golf is really all about. It might have taken 14 years to perfect, but Scratch somehow manages to encapsulate the spirit of golf in a razor-sharp strip. Now Stephen and his team intend to build a global brand around the cartoon character.

BUSINESS QUARTER | SUMMER 14

With the golf equipment market valued at £9bn, and increasing by 3.5% per annum, with more than 60 million active golfers worldwide, the market is ripe for a homegrown Scottish hero of the links. Scratch is your no-nonsense Scot, a talisman standing for the amateur ‘play-the-game’ values of golf, moulded by the likes of Old Tom Morris and Willie Auchterlonie. Scratch is a native of St Andrews and in him we can see the strengths and weaknesses of the people we admire on the golf course.

“It’s been a fascinating process,” says Stephen, sitting in the clubhouse of the Renaissance Club at Direlton, North Berwick. “But I could not have done this without the amazing creative input of three other golf-mad Scots.”

When he returned from Orlando, he knew his original scribbles required a great deal of finesse.

“I needed to find someone who would bring Scratch to life and that’s where it all came crashing down. I went to various people over the years, but in my mind’s eyes what they produced just wasn’t right.”

Several artists tried to bottle the spirit of Scratch but Stephen was never quite satisfied.

He is a determined and demanding individual who was not only a former professional footballer and captain of the Scottish junior volleyball squad but completed an arduous 250km race through the Amazonian rainforest.

He is not a quitter.

“It was about creating a character who appeals across the generations. It’s important that a 12-year-old looks at Scratch and finds him funny, as well as a 40-year-old club golfer.

We’re creating a legend who is able to go around the Old Course with his hickory clubs and score well – so he’s got to know how to manoeuvre the ball. He’s got to have all the form and position of a good golfer.”

Stephen’s breakthrough came when he met the award-winning television director Norman Stone, the husband of television presenter and author Sally Magnusson, and this changed the journey for Scratch. Norman recalls: “My youngest son has a friend called Jason, and Stephen is his father. Our kids knock about with each other. Stephen would pick up >>

Scratch is your no-nonsense Scot, a talisman standing for the amateur ‘playthe-game’ values of golf, moulded by the likes of Old Tom Morris and Willie Auchterlonie

42

SUMMER 14

43

ENTREPRENEUR

BUSINESS QUARTER | SUMMER 14

ENTREPRENEUR Jason from our house and we would chat. He saw some framed prints of Christmas cards I had drawn and was fascinated by them.”

Stone was trained at the Royal College of Art in London and has a passion for the immediacy and humour of cartoon strips. While he has picked up BAFTA and Emmys for television and film projects, Norman agreed to do some sketches. Stephen was bowled over and knew this was Scratch, yet Norman was never going to give up his illustrious film-making career for a strip cartoon, so another illustrator was required.

Meantime, Norman and Stephen knew that he also needed a proficient writer to get the words and gestures of Scratch into a pithy set of frames. They managed to interest comedy writer Phil Differ, one of Scotland’s best-known writers and a friend of Norman, and got him on board. Phil, who has written scripts for Not the Nine O’Clock News, Chewin the Fat, Only An Excuse, was reticent at first but could see that there were genuine opportunities for humour with Scratch.

“The thing that really hooked me was that Scratch was from St Andrews – I went on my holidays to St Andrews from the age of two to about 20. I knew the people who lived there and I knew the people around the golf course, so I was instantly intrigued by the St Andrews connection,” he says.

There was also inspiration from Phil’s father, who was a greenkeeper at Dullatur Golf Club, at Cumbernauld, and he knew about the often-infuriating etiquette and rules of golf.

“I suppose Scratch is loosely based around my father, especially his cynical attitude to authority which my dad developed because of the rules associated with the golf club.

He found that stifling … he hated all that, although it gave him something to rail against.”

Scratch was now taking shape and the team took a trip to St Andrews, supping a pint or two at the Jigger Inn and walking through Granny Clark’s Wynd to soak up the ambience of Fife golf. They knew if they could find out what made Scratch tick, then he would be a much sharper and more believable character.

They nailed down his traits and back story.

Scratch was born around the First World War at 15 Golf Place, had five siblings and his first

BUSINESS QUARTER | SUMMER 14

SUMMER 14

It was about creating a character who appeals across the generations. It’s important that a 12-year-old looks at Scratch and finds him funny, as well as a 40-year-old club golfer word was ‘dram’. A lot of time was spent perfecting his grip, swing and stance. Once they had this all completed they required a real illustrator, and they approached Cam Kennedy, who for over 20 years had created the visually stunning cartoons for the likes of 2000AD, Batman and Star Wars. He now lives in Orkney and has recently retired but he was able to recommend a young local artist with plenty of talent. This was Alex Leonard, who has a cartoon strip in the local paper, and originally agreed to take on the task of ‘finishing artist’.

Now Alex is a fully-fledged member of the Scratch team bringing the old man to life on the page.

“Scratch MacTee might be a cartoon, but we want him to be accurate and real, so we want him to use the right kinds of club and have the right kind of swing. I’m like Stephen in that detail is a big part of the way I work. I always overwork things, so I don’t find it frustrating at all. It has to be just right.”

44

They are now all shareholders in Scratch MacTee Productions, a company set up to build the global profile.

“I would never have got this far without Norman, Phil and Alex. It’s been a lot of laughs refining our golfing character. We have a plan which includes global syndication, merchandising, publishing, licensing and digital media and even movie rights,” says Stephen.

They are even thinking about a golf tournament with Scratch as the character who oversees the play.

“The value of this business in 10-15 years could be substantial. Already the intellectual property has increased massively but the team wants to hold on to Scratch and see how far we can take it.”

It’s a lot of fun – and Scratch MacTee might well become a winner. In the meantime, BQ Scotland is pleased to showcase a special cartoon strip created for us to celebrate the Ryder Cup in September. n

SUMMER 14

45

ENTREPRENEUR

BUSINESS QUARTER | SUMMER 14

COMMERCIAL PROPERTY

SUMMER 14

Aberdeen leads the way in property returns, Ryden employees are upwardly mobile, full steam ahead for 575-acre regeneration project, youth charity on the move, Glasgow firm in £4.8m investment >> Oil and gas capital’s gain Scotland’s oil and gas capital continues to outperform the rest of Scotland in property returns. The Aberdeen office market is the top performer with annual total returns to the end of March 2014, pushing ahead of the 20% market, comparable to markets in the South of England such as Cambridge. Industrials in Aberdeen, at 18.8%, are not far behind.

Edinburgh offices are the only city sector that comes close to this level of performance, with an annual total return of 14.7%. However, retail across Edinburgh, Glasgow and Aberdeen is under-performing the all-property total return, with some variation between cities. Edinburgh with an annual total return to March of 9.3% is beginning to catch up with other sectors in Scotland, according CBRE. The all-property total return for the first quarter was 2.8%, down slightly on the 3.3% in final quarter of 2013. However, the annual total return through to the end of March was 10%, which is well ahead of the 0.2% at the same time in 2013. This level of performance is consistent with the economic and occupier recovery observed since spring 2013.

Scottish property continues to under-perform compared with the rest of the UK, although the gap is closing, particularly in the retail and industrial markets. Scottish retail is the closest to the UK, with an annual total return of 8.6%, compared with the UK’s 10%.

Across all sectors Estimated Rental Value (ERV) growth remained weak in the first quarter.

The slow rates of growth that emerged over the second half of 2013 have fallen back during the first quarter of 2014. As a result the all-property capital growth rate of 1.2% was exclusively driven by inward yield movement, caused by the weight of money seeking opportunities in the Scottish commercial property market. Nevertheless, this marks the third successive quarter of rising capital values, which will be only boosted further once more substantive rental growth begins to emerge.

On a quarterly basis, retail performance edged down a little in Q1 to post a total return of

BUSINESS QUARTER | SUMMER 14

Scottish property continues to underperform compared with rest of the UK 2.3%, down from 2.8% in Q4. Capital growth for retail was the weakest of the three main sectors, with values up just 0.8% since the start of the year. While all sectors have seen lower total returns in Q1 compared to the previous quarter, offices have been the most stable. The return in Q1 was 3.3%, down from 3.6% in Q4. As with retail, this performance has been driven by yield contraction alone.

Scottish industrials were again the strongest performing sector in Q1, delivering a total return of 3.9%, although down from 4.7% in the previous quarter. Compared with both offices and retail, industrial benefited from 0.3% of rental value growth during the

46

quarter, pushing capital values up by 2.2%.

During the first quarter, a total of £612m of investment transactions were recorded by Property Data in Scotland, over a third of the total for the full year 2013. Sales activity was broadly evenly split between the different sectors, with offices and retail taking the slightly larger shares.

Following the return of shopping centre sales in 2013, a further centre sold in Q1 has boosted the overall retail total during the quarter. Land Securities sold the Overgate Shopping Centre in Dundee to Legal & General for £125.3m, representing a 7.5% yield. Meanwhile, the sale of BP’s headquarters campus in Aberdeen for just over £68m (6.6%) led office market sales. Industrial transactions, always the smallest sector in terms of investment volumes given the lower average unit value, should push ahead in 2014 with almost as much stock sold in Q1 as during the whole of 2013. The key deal here was EPIC’s purchase of the Rolls Royce aerospace facility at Inchinnan, near Glasgow.

SUMMER 14

>> £14m deal concluded Aberdeen’s strength has been underlined by a £14m investment concluded by Dandara. The firm was represented by Knight Frank in the sale of a 68,000 sq ft unit on the Badentoy North business park, in Portlethen, to LaSalle Investment Management.

Schlumberger Oilfield UK is the tenant, on a 15 year pre-let lease,with an initial annual rent of £994,000, and the unit sits on one of the mixed-use sites at Dandara’s 40-acre development.

>> Team strengthened Barclays in Scotland has strengthened its Real Estate team with the appointment of Ross Mackay, who joins as real estate director,

COMMERCIAL PROPERTY

Sarah MacLean, as regional support manager, and Sachdev Singh as real estate manager.

Ross was a director in 2011 and worked previously in commercial property for Lloyds TSB from 2005, with responsibility for sourcing and structuring on and off balance sheet property transactions.

>> Business all wrapped up A surplus Royal Mail building in Edinburgh has been let to board manufacturing and taxi wrapping company First Display for 10 years on confidential terms by Shepherd Chartered Surveyors.

The 7,070 sq ft property is located on Gorgie Park Road, just off Slateford Road.

Niall Gunn, partner at Shepherd, said: “We are delighted to secure this letting

47

on behalf of Royal Mail to First Display, a company which is expanding into larger premises to accommodate its ambitious growth plans.”

Dennis McCafferty, Estate Manager North, Royal Mail added: “This is a successful conclusion that meets Royal Mail Group’s property objective to maximise revenues from surplus and vacant property assets.

Meanwhile, Shepherd has appointed Tom Reid as a commercial surveyor in its expanding Ayr office.

A member of the Royal Institution of Chartered Surveyors, Paisley-born Reid is an Aberdeen University graduate who began his career in Glasgow 10 years ago with a national multidisciplinary surveying firm.

BUSINESS QUARTER | SUMMER 14

COMMERCIAL PROPERTY

SUMMER 14

for our services, we are forecasting an 80 per cent growth in turnover this year.”

The company said it has outgrown its existing 12,000 square foot plant in East Kilbride’s Scottish Enterprise Technology Park.

>> Development opportunity A residential development site with planning permission for six private detached and semi-detached houses, adjacent to the historic Crook Inn in Tweedsmuir, Biggar, is up for sale. Comprising part of The Crook Inn’s former grounds, with views along the Upper Tweed Valley, the 1.52 acre site is situated off the A701, 1.5 miles to the north of Tweedsmuir, a small hamlet 16 miles north of Moffat within commuting distance to Edinburgh.

>> New home for Prince’s Trust charity

>> Ichor system expansion Ichor Systems, Scotland’s primary manufacturer in the global semiconductor equipment market, is set to create jobs and triple its capacity with a move to new 36,600 square foot premises at Hamilton International Park, near Blantyre.

The company, formerly known as Semi Scenic, was founded in East Kilbride in 2003 and was acquired by California-headquartered Ichor Systems, in April 2012.

Don Nicolson, managing director of Ichor Systems Limited, said: “We have recently secured a global product licence from industry giant Lam Research which means that in future we will sell specific licensed legacy products directly to end-users throughout the world to develop our Scotland-based operation in the face of tough competition from other locations.

“As a result, and with steadily increasing worldwide demand across the industry

BUSINESS QUARTER | SUMMER 14

The Prince’s Trust is set to open new headquarters in Glasgow at Cumbrae House, Carlton Court, after Ryden bought the property on behalf of the youth charity.

Built in 1938 and situated on the south side of the Clyde, the building extends to 2,513 sq m (27,051 sq ft) and has been converted into high quality open plan office accommodation.

>> Go-ahead for 25 year plan RBS Real Estate Management and Miller Developments have won approval to develop the next stage of Omega Warrington, a 575-acre regeneration project in Cheshire, expected to take 25 years. Warrington Borough Council has granted outline planning consent for the redevelopment of 2.1 million square feet of space called Zone 7. Andrew Sutherland, joint managing director for Miller Developments, said: “We

have been speaking to a number of potential occupiers over the last 12 months and the delivery of this consent, combined with the almost 1.75 million sq ft of development on site, will provide them with further confidence in our ability to meet their property requirements.”

The project has secured £200m of private sector investment. Brakes, Hermes, Travis Perkins and ASDA have all committed to Omega, a joint venture between Miller Developments and KUC Properties Ltd (part of RBS Real Estate Asset Management), in partnership with the Homes and Communities Agency and supported by Warrington Borough Council and the Cheshire and Warrington LEP.

>> Ryden staff on the rise Property advisor Ryden has announced a number of promotions, led by Charlie Lawrence, who becomes a partner. Ryden also announced that Andrew Smith, Aberdeen agency; Nick Armstrong, Edinburgh investment; Patrick Kilbane, Dundee building consultancy; and Andrew Brook, Leeds professional, have been made associates. Other promotions include Andrew McLetchie promoted to senior surveyor; Michelle Docherty promoted to senior planning consultant; and Natasha McDonald as assistant property manager, all in Glasgow. Linda Cameron, based in Inverness, was promoted to parasurveyor and Sharon Kirkland will manage office administration.

>> Maven’s £4.8m investment Glasgow-based Maven Capital has raised £4.8m for the purchase and renovation of Planar House, located in Marlow, Buckinghamshire.

Maven has purchased the 26,100 sq ft office building for £1.75m and is to spend £2m on its refurbishment.

ONLINE: More commercial property stories are available on BQ’s website www.bq-magazine.co.uk

48

SUMMER 14

COMPANY PROFILE

Co-location, Collaboration, Innovation Centered in Glasgow, ITREZ is the place for co-location, collaboration, and innovation in offshore renewables Scotland’s International Technology and Renewable Energy Zone (ITREZ) is an alliance of the public, private and academic sectors. It aims to stimulate co-location, collaboration, innovation, and investment in Scotland’s offshore renewable energy sector and its associated enabling technologies.

At its core are two purpose built new buildings: inovo (Scottish Enterprise’s £13M Industry Engagement Building) and the TIC (University of Strathclyde’s £89M Technology and Innovation Centre) acting as a hub for around 450 Renewables engineers / project managers and 800 Energy academics / researchers.

Locating within ITREZ, and inovo, offers the opportunity to be part of a high value, industrydriven cluster. With facilities, funding and expertise available, industry and academia can work more closely to create innovative products and services that are essential for the growing offshore renewables sector.

ITREZ aims to capitalize on Scotland’s wealth of expertise, resources and research pedigree in offshore energy and engineering. The location of inovo alongside the TIC is a major step forward in achieving this. Now 45% let, inovo allows SMEs to be located closer to larger industry players such as SSE, ScottishPower Renewables, Gamesa and Mitsubishi as well as the new Offshore Renewable Energy Catapult. SMEs such as Linknode are already seeing the benefits of taking up residency in inovo: “We relocated to inovo in October 2013, from Stirling. Working in the renewables sector, we had been searching for a location that would reinforce our close connections with industry as

inovo’s 5 floors can accommodate up to 450 engineers, researchers and project managers from renewable energy and technology companies

well as academic institutions – inovo in Glasgow’s ITREZ offered the best of both worlds. Being here is fantastic for our profile with visitors and has helped us to attract new staff and grow the business.” Crispin Hoult, Director, linknode. inovo, which was officially opened in January, will enhance Scotland’s reputation as a centre of excellence and innovation in offshore renewables.

It is the first Grade A (new-build) office in Glasgow to achieve an ‘A’ EPC rating and also recently clinched Scotland’s Best Commercial Workplace award. When the TIC opens in early 2015, inovo tenants will also have access to its facilities.

We relocated to inovo in October 2013, from Stirling. Working in the renewables sector, we had been searching for a location that would reinforce our close connections with industry as well as academic institutions – inovo in Glasgow’s ITREZ offered the best of both worlds. Being here is fantastic for our profile with visitors and has helped us to attract new staff and grow the business

49

Future phases of the 2.02 hectare site at inovo could provide a further six unique buildings, adding further capacity to the work being carried out to introduce efficiencies, reduce risk and drive down costs in offshore renewables.

We welcome enquiries from companies of all sizes looking to locate within ITREZ. For further information please contact carol.malcolm@scotent.co.uk. If you are interested in space within inovo, please contact our appointed property agents, GVA James Barr at alastair.cumming@gvajb.co.uk or visit inovoglasgow.com

BUSINESS QUARTER | SUMMER 14

BUSINESS LUNCH

BUSINESS QUARTER | SUMMER 14

XXXXX XX

50

SUMMER 14

BUSINESS LUNCH

Accounting for taste

Jann Brown, the new president of ICAS, the chartered accountant’s institute, has a full-on diary. However, the outgoing managing director of Cairn Energy and chair of Wood Group’s audit committee, finds time to have a working lunch with BQ’s interviewer Jenny Hjul

Jann Brown has described accounting as ‘an incredibly varied, creative, exciting job’, which might not fit everyone’s idea of the profession but is clearly her heartfelt view. She is finding time for lunch before an ICAS board meeting and I sense – though she is charming and courteous – that she can’t wait to join her colleagues and talk about more important things than her life story to date.

But while I have her attention I resolve to find out how a fellow history graduate managed to steer her career in the direction of high finance, oil exploration, global travel, and £1m-plus pay packets.

Hers is not the typical outcome of an arts degree, even from Edinburgh University, but to say it was all unplanned would not do her justice. Nothing about her appears random, from her elegance to the way she answers questions, carefully choosing her words.

But there is a slight problem. We have met in the Norton House Hotel, which she knows well, thanks to its location close to Edinburgh airport – very convenient for those early flights when your home is in East Lothian.

The restaurant is noisy and Jann, a feminine powerhouse in a man’s world, is softly spoken.

I ask a waitress to turn down the piped music and she warns me that a party of 60 is about to take over an adjoining room. Would we like to move somewhere quieter?

We end up in a lounge and prepare to eat

lunch off a coffee table but Jann seems undeterred and takes up where we left off.

“To be honest, a fair proportion of chartered accountants come from non-relevant backgrounds so when I decided I needed to go out and earn some money, it was a toss-up between law and accounting.”

Accounting won because the route for a post-graduate was straightforward and, after completing a conversion course, she landed a training contract with KPMG. She was in her thirties by then, having married and started a family young, but her stay at home days had come to an abrupt end.

“My husband had cancer so the breadwinner baton passed to me,” she says. Low paid, part-time work was not an option and nor, at that stage, was jumping on and off planes.

“I quickly realised that the default route for progress was audit, and that involves a lot of travelling. That wasn’t going to fit into the domestic circumstances, so I moved sideways into tax, which was one of the best things I could have done.”

The tax exams were ‘the hardest exams I’ve ever done in my life’, she says. It involved lots of studying at the kitchen table alongside her daughter, who had started school, and her son, still in nursery. But it was worth it.

“I really loved it; it combined a bit of law and business, it was really interesting and it automatically exposed me to the corporate

51

finance transaction work, so it was perfect and there was no travel.”

It does seem ironic now that someone with a ‘bus pass to Delhi’ and a suitcase permanently packed once insisted on staying put. Even when she first went to Cairn Energy, after 10 years at KPMG, she didn’t want to be away too much.

“My husband still laughs like a drain about this because when I was talking to them about taking on the job, the biggest point of discussion was about how much travel I’d do.”

By then she was married to her second husband, Tony, whom she met at KPMG. He was in the publishing business and was able to work from home and look after the children.

“Up to 1997 his career was more prestigious than mine and then I was offered a move and we sat down and decided, right, okay we’ll switch... so that was the point I really put my foot on the gas.”

It’s an appropriate metaphor for the next stage in her career, which saw her catapulted from tax manager at Cairn to the boardroom, as finance director, and eventually as chief financial officer and managing director.

This might sound daunting but she talks about her achievements, not just becoming one of the most senior women in finance but also in the oil and gas industry, as if it’s been a hoot. From Cairn India’s flotation on the Indian Stock Exchange in 2006, raising $2bn >>

BUSINESS QUARTER | SUMMER 14

XXXXXXXX

BUSINESS QUARTER | SUMMER 14

SUMMER 14

52

SUMMER 14

in record time (‘amazing’), to criss-crossing the globe (‘fascinating’), to handling meetings of 50 to 60 people (quite fun!), she seems to have relished every challenge thrown at her.

“I think what I liked in particular,” she says, “was seeing how very different the approach to business was in different cultures and the speed that you’re moved through from the social to the business. In New York, it’s five minutes flat, whereas you go to India and the first two hours of any meeting are spent chatting and drinking tea before you finally get down to it.”

Didn’t she find this frustrating?

“Oh no,” she laughs, “I really enjoyed it. I actually think it makes for better business relationships in the long term. You build up rapport…and I found out lots about cricket!”

Our food arrives and Jann watches her salmon get cold as she poses for photographs. When she is in East Lothian, she says, her husband ‘drags’ her out of her office for lunch.

“When I started not exactly scaling back but working more from home, I asked him if we should have any reallocation of responsibilities and the first thing he said to me was ‘I still want to do all the cooking’!”

She doesn’t say if this was a reflection of her culinary skills but laughs at her ‘reallocation of responsibilities’ to use managerial speak.

She was once advised to adopt a sober, ‘schoolmarmish’ approach in her presentations but she wears her seriousness lightly.

“We have to be very organised and plan in advance, ” says Jann, the eldest of three sisters, who inherited the planning gene from her father. Her husband, she says, is far more spontaneous (‘but then you can’t get into the restaurant you really wanted to go to’).

She describes her marriage as ‘a successful partnership’ and credits Tony for forcing her to take time off when she’s in India. He retired when she was commuting to the subcontinent so he could accompany her on longer trips.

She is looking forward to going there as a visitor ‘without thinking business’. India, she says, ‘gets under your skin’.

Her wanderlust may not be indulged in the coming year, though, as she works out her notice at Cairn, trying to resolve an ongoing tax dispute in India, and takes the helm at ICAS for the next 12 months, only the third

BUSINESS LUNCH

Norton House Hotel: A handpicked country oasis The Norton House Hotel is set in its own grounds, up a leafy avenue, off the busy A8, half a mile past the airport and 20 minutes’ drive (depending on traffic) from Edinburgh city centre. Built in 1840, the house was owned by the Usher brewing family until the 1950s, when it was sold and turned into a hotel. It’s a tranquil country setting where busy business people meet and greet. It is part of the Handpicked Hotels group, whose chairman and chief executive is Julia Hands, the wife of the leading private equity investor Guy Hands, former chairman of EMI Records.

The Brasserie boasts an ‘informal and relaxed atmosphere’ and it was certainly both informal and relaxed where we ended up, in the lounge.

The ‘traditional Scottish cuisine’ tag should be loosely interpreted. After skipping starters, I had tuna steak and nicoise salad, the tuna, as requested, not as rare as the chef advised, but tasty nonetheless. Jann chose seared salmon with celeriac, confit cherry tomatoes and citrus lentils, and found the celeriac slightly underdone but the salmon and lentils ‘really nicely’ cooked.

The Crooked Mick Viognier was recommended – ‘fruit salad in a glass’, according to the wine list, which sounded like a greedy accompaniment to tuna, but then I could have had the Zinfandel Rose (‘strawberries and cream in a glass’) or even the Spy Valley Sauvignon Blanc (‘James Bond in a sheepskin coat’). Jann, mindful of her meeting, stuck to water and pronounced it ‘nice’!

The Norton portions were on the large side, we both agreed, and I was defeated by the pile of greens on my plate. So we didn’t feel too bad about foregoing desserts of the sticky toffee pudding, chocolate tart and white chocolate brownie variety, all served with ice cream. Perhaps the other lunch guests had worked up appetites in the hotel’s luxury spa. A typical dinner a la carte is £25 per head, though our less than lingering lunch came in at under £50.

The Norton House Hotel, Ingliston, Edinburgh, EH28 8LX.

female president appointed in the institute’s 160-year history.

She has also joined Wood Group as chair of their audit committee but insists there are still more ceilings she’d like to break, including chairing a company. One of the most interesting cultural shocks of her travels, she says, is that ‘you’re more likely to be sitting opposite a senior woman in India than you are here’.

“The heads of the Reserve Bank, lot of heads of corporate finance houses, the head of the

53

Stock Exchange…it was all women,” she says.

It could be the ‘much closer family ties’ that affords their female executives free child care and allows them to pursue their ambitions, she suggests. She thinks British businesses could make more of job sharing opportunities, but confesses it would have been difficult to share her responsibilities at the height of her involvement in India – ‘it would have taken me longer to extract what was in my head and write it down on a piece of paper’.

She thinks she has been fortunate in the >>

BUSINESS QUARTER | SUMMER 14

BUSINESS LUNCH past couple of years, being involved in lobby groups such as the Thirty Per Cent Club, set up by Helena Morrissey, City supremo and mother of nine, and meeting ‘some fantastic female role models’.

More than a role model for her own colleagues, she sounds like their big sister, advising women not to ‘cry in front of the blokes because they can’t handle it’. Instead, she invites them into her office, where she keeps a box of tissues, and closes the blinds.

I can’t imagine you crying in the office, I say, and she laughs. ‘Well, I’ve had my moments!’

She describes herself as ‘definitely an introvert’ and thinks powerful women are ‘maybe a bit more low key’ so you have to go out and look for them. As ICAS president will she be popping up on Newsnight?

“Certainly not!” she says, but quickly defends the recent ICAS concern over pensions if Scotland were to vote Yes on September 18.

The public have ‘responded very positively’ to the paper the institute put out in February.

“Our job is not to second guess what the general body of our membership would think – only about half of whom are in Scotland – but to make sure that the facts and figures that are coming out into the public arena are clear and understandable and that there’s enough information. We haven’t got long.”

And nor have we. There is no time for dessert but before Jann heads off she gives a glimpse of life beyond the boardroom. There is a house in the Trossachs, ‘big enough for the entire family’, including her grandchildren, where there is no mobile reception and where she can completely switch off.

Her career has been in two distinct phases and as she enters a third – ‘a watershed’ – she acknowledges she is lucky to be able to choose what components she wants to discard and what she wants to keep.

She adds: “If personal circumstances had been different I might never have gone into accountancy, but you can never predict anything. I always thought I’d go to work when the children were a certain age. I had delusions of grandeur – doing a PhD and then becoming a lecturer.”

Her family, she admits, are slightly stunned by how it’s all turned out…and sometimes she sounds as if she is, too. n

BUSINESS QUARTER | SUMMER 14

SUMMER 14

More than a role model for her own colleagues, she sounds like their big sister, advising other women not to ‘cry in front of the blokes because they can’t handle it’

54

SUMMER 14

Strathclyde Business School’s triple accreditation and international rankings place it in the top echelons of global business schools.

XXXXXXXX

Strathclyde Business School. Internationally focused. Internationally accredited.

Internationally ranked. How better to broaden your business horizons?

Our central Glasgow location means you don’t have to travel far to get a world class education and, with our wide range of specialised Master degrees – including our acclaimed MBA – available on a part time or flexible learning basis, it means you don’t have to give up the day job either.

What’s more, we have a range of scholarships on offer - to see what’s available, just go to our website.

55

BUSINESS QUARTER | SUMMER 14

INTERVIEW

SUMMER 14

GIVING CREDIT WHERE IT’S DUE Marlene Shiels has been a driving force behind the growth of credit unions in Scotland.

She explains to Steve Briggs why the mutual financial movement is filling a much-needed gap and coming of age around the world

BUSINESS QUARTER | SUMMER 14

56

SUMMER 14

Over the last two decades Marlene Shiels has become a leading figure in the worldwide credit union movement. Since 2000, Shiels has been chief executive officer of Edinburghbased Capital Credit Union (CCU) with more than 18,000 members and has devoted her time to driving forward the credit union movement in Britain and around the globe.

Already a major player in personal finance in the United States, credit unions in Britain have been emerging as challengers to ‘traditional’ high street banks over the last few years.

The financial crash of 2008 was a gamechanger that damaged the public’s trust in high street banking, and led to massive regulatory changes and attitudes to risk with repercussions that are still being felt. Into this void came the shocking rise of pay-day lenders preying on the poorer and indebted in society.

There was an acute need for ethical financial organisations for ordinary people, and credit unions are bridging some of this gap, gaining more power, authority and national credibility.

Even the banks have been sitting up, recognising the strengths of the credit union model with some, such as Barclays, beginning to adopt and adapt some of their ethical traits.

Shiels is delighted that credit unions are on the rise. She says her own ‘light bulb’ moment came in the United States while attending her first World Council of Credit Unions (WOCCU) six-day ‘boot camp’ in 2000 where she met people from tiny US credit unions as well as some of the US’s largest.

“I realised the only limit on what we could achieve was the limit of our imagination. If we thought big, we could become big. It has all been about planning and ensuring everything we do is for the good of the members.”

Evidence of the growing clout of credit unions made headlines in January 2014 with the appointment of Hector Sants, former chief executive of the much-maligned Financial Services Authority, becoming the unpaid head of the Archbishop of Canterbury’s finance taskforce. Sants is leading the church’s involvement with credit unions.

Shiels is passionate about what credit unions can achieve. “I have been fortunate in that no matter where I go, I will always meet people in credit unions that I can learn from.”

That early boot camp in the US taught her to

If we want to get bigger and better, and serve our members, we’ve got to change hearts and minds think more strategically about what might be achieved in Scotland – and the best conditions to grow the movement.

“It is clear, if we want to get bigger and better and continue to serve our members better, we’ve got to change hearts and minds. We’ve got to fight for the law to be changed to enable that,” she said.

Shiels’ earliest encounter with credit unions came in 1994. A native of Northern Ireland, of Scottish and Irish descent, she had moved to Glasgow in the mid-1980s to take up a temporary job with Glasgow Old Peoples Welfare Association, a post sponsored by Strathclyde Regional Council.

“I had a lucky break. A council official told me that I had come first in the running for two posts, and it was up to me to choose. I chose the job that appealed to me most, but he gently persuaded me to take the other one. I think he realised that although I had grown up in Belfast in the 1970s, where I’d learned how avoid the sectarian in-fighting, I wouldn’t have lasted five minutes in Glasgow.”

57

INTERVIEW

Interestingly, the first credit unions in the UK emerged in Northern Ireland, in Derry in 1960, coming across the border from the Republic where they have had a long tradition. When the Glasgow job ended, Shiels relocated to Edinburgh for a secretarial post with Lothian Region, ending up as personal assistant to the council’s personnel director. “I remember the council’s leader John Mulvey issuing an edict to senior staff to devote whatever resources were needed to get a region-wide credit union off the ground. Some of the leading councillors had been to a conference in Sheffield where they’d heard about Sheffield’s city-wide credit union, and they thought it was a great idea.”

“I ended up typing the minutes of the credit union board meetings. Then the secretary [of the credit union] fell ill, and I was asked to go along to the board to take the minutes on top of typing them. After a few months I was asked if I’d be willing to take on the role of secretary, and I agreed, thinking I was agreeing to a secretarial role. It was only when one of the board members explained that the secretary’s duties were much more than secretarial that I realised what I’d done.”

She spent a year on the board before plucking up the courage to ask a question. By then, she was fully versed in credit unions and their activities. She remained a board member for around nine years, moving her day job to a post with Edinvar, now Castle Rock Edinvar, one of Scotland’s largest social landlords.

Both the credit union and Edinvar helped her financially to gain a variety of qualifications, in marketing, finance, and administration, >>

BUSINESS QUARTER | SUMMER 14

INTERVIEW

SUMMER 14

which then led to an MBA. In 1998 Shiels was appointed to a business development post with CCU, and in a few months took over as acting general manager after the departure of the previous incumbent.

“Credit unions moved slowly then. In 1999 I had to apply for the permanent general manager position. The decision after the interviews took a week, and it was the longest week of my life. Late that Friday evening a board member rang to say she was taking me out for a drink. I didn’t know how to interpret that and thought she was preparing me for bad news. Then I got an official call telling me I’d got the job. I was thrilled. By that time credit unions were in my blood, and I knew I was facing the biggest challenge of my career.

It was a job made for me, but I was sure they would appoint someone with more experience in banking or accountancy.”

The following year she attended the boot camp where she forged strong friendships which persist to this day.

“I learned that all you need to change things is determination and endurance. We’re still doing that; we’re still lobbying the UK Government and regulators to enable credit unions to compete with the banks on a level playing field. When I started out in CCU, credit unions weren’t allowed to have more than 5,000 members. Now we can have two million. In 2000 we weren’t allowed to lend a member more than £5,000 above what they had in their savings account; now CCU can lend a member up to £300,000.

“We developed what we call our five ‘C’s: Character, as in moral fibre – will this member honour a loan from us, especially because they know they’re borrowing other members’ savings; Capital – their track record of saving with us. We believe that people who are already committed to the organisation are more likely to repay a loan; Credit-worthiness – meaning is the member a good risk, and, if not, we look at ways in which we can help them become a better risk; Collateral, which involves a broad concept of investment. It includes ‘real’ capital in the shape of bricks and mortar, it includes their savings with us, and their partner’s income, where appropriate.

And Character – so important that we decided to include it twice!”

BUSINESS QUARTER | SUMMER 14

I learned that all you need to change things is determination and endurance

The credit unions are coming of age in Britain. While there are fewer as the small ones merge there is an increasing economy of scale. There’s a single credit union for NHS Scotland, which can also offer membership to one region south of the border. There’s a credit union for Police Scotland. And the Church of England is setting one up to cover all of its parishes. That credit union is being piloted in three areas at present, which is where Archbishop Welby and Hector Sants come in. In Scotland, the Church of Scotland has discussed the issue in a series of reports on pay-day lending and loan sharks.

The organisations might resemble the high street banks but they are clearly not banks.

The business model has been changing and they can offer current accounts, online banking, debit cards, and mortgages. But the mutual co-operative ‘not-for-profit’ nature of the unions means that the ‘surpluses’ are ploughed back in to keep the overheads down. There are no investors other than depositors and credit unions are not allowed to ‘buy’ money on the money markets.

Furthermore, the management of cash reserves and loan-book defaults represents a specific challenge to ensure the continued liquidity of the organisation. Interest rates on loans are set at levels nothing like the ‘usurious’ rates of pay-day lenders, while dividends are paid to savers at commercial rates. Increasingly, credit unions have also had to prove they have the independent supervisory systems in place and robust procedures to protect their capital.

Shiels was part of the push to get the FSA, (now split into the Prudential Regulation Authority, part of the Bank of England, and

58

the Financial Conduct Authority), to regulate and authorise credit unions, and helped push for official accreditation by the Scottish Credit and Qualifications Framework (SCQF) of courses and qualifications designed to meet the needs of credit unions.

CCU is still a small organisation with 25 staff - indeed the Glasgow Credit Union remains the largest in the UK with 32,000 members and Shiels knows that there is an uphill battle against the major financial institutions and the new challenger banks. Add to this the high profile, near-collapse of the Co-operative Bank which shone a light on the risks of having part-time trustees and ‘do-gooders’ without the knowledge to see when things are going badly wrong.

“I depend heavily on my colleagues and board members to keep my focus on our day-today business. What gets me out of bed is the knowledge that what I’m going to do that day can make a real difference to someone’s life.

How many people who work for a traditional bank can truly say that?” she asks.

A visitor to CCU’s Stockbridge office in Edinburgh may well presume they are in a modern bank. There’s a customer service area with space for three simultaneous, confidential discussions; a glass walled office for longer private discussions, and pods of telephone advisors in the background. On the wall there’s what appears to be a typical call centre display screen showing how the team staff are doing that day. But the point of the display screen is not to urge staff to work harder and faster in Stakhanovite fashion; it’s there to keep the whole team focused on doing their best for their members.

“Staff are not set individual call targets.

Instead, they’re encouraged to spend the time required to give each member a truly personal service. The organisation learns from itself what it’s doing well, and where it could improve. And our word of mouth marketing is reflected in our internal learning process.”

Shiels was the first person from Britain to sit on the WOCCU board; a body which acts in the interests of more than 200 million members worldwide. She’s also the first nonmainstream banker to sit on both the council and the executive of the Chartered Institute of Bankers in Scotland (CIBS). In 2012 she joined

SUMMER 14

INTERVIEW

I grew up with an inbuilt horror of injustice, irrespective of who was on the receiving end the Scottish board of StepChange, the UK’s largest not-for-profit debt counselling agency.

In early 2013 the Duchess of Cornwall asked her to become her advisor on credit unions and financial inclusion – not that the Duchess needed personal advice on debt management and financial exclusion! The invitation came after the Duchess stopped off at the credit union’s office in Edinburgh’s Stockbridge while on royal walkabout. “She dropped in for what was supposed to be a few minutes, and ended up staying for ages,” says Shiels.

Shiels says a career highlight included chairing Gordon Brown’s first public appearance after leaving Downing Street, when he addressed the WOCCU annual conference in Glasgow in early 2011. The following year she introduced Lech Walesa as keynote speaker at the council’s conference in Gdansk.

So what is it that drives a woman like Marlene

Shiels? “Growing up in Northern Ireland, in a mixed community which became steadily more divided, meant I grew up with an inbuilt horror of injustice, irrespective of who was on the receiving end. People on both sides of the divide were treated badly. My mother drummed it into me that people were people and entitled to be treated as such regardless of what are, ultimately, superficial differences.”

She grew up with armed British troops on the streets and learned about where the boundaries were between entrenched communities. She understood what happens when a sense of hope is replaced by despair. It is this sense of fairness and justice which drives her ambition for credit unions in Scotland.

A long-time professional colleague and friend, Rod Ashley, chief executive of Airdrie Savings Bank, says she is whole-heartedly dedicated and committed to the credit union movement,

59

and its development. “I know she uses a lot of her own holidays to run additional credit union development courses in different parts of the world. And I know that if I ever needed her at any time, I could call on her, and she would make the time, and I’d do the same for her.”

As this interview was concluded, Shiels was setting off for Nairobi, in Kenya, to work alongside seven US colleagues, preparing for Africa’s first WOCCU boot camp, to give a kick-start to African credit unions. She won’t be paid for her time and is using annual leave to cover her absence. But she doesn’t do the job for money in the first place. Her salary, reviewed every four or five years, is benchmarked against her equivalents in the credit union movement. And it is fair to say she will not be living the highlife on massive banking bonuses – and that’s the way she prefers it. ■

BUSINESS QUARTER | SUMMER 14

WATT ON WINE

SUMMER 14

VOYAGES OF DISCOVERY

Ed Watt, the shipping and marine partner with Scottish law firm HBJ Gateley, evokes the spirit of Marcel Proust with his memories of lost time well spent with wine glass in hand

BUSINESS QUARTER | SUMMER 14

60

SUMMER 14

A neighbour once described to a client of HBJ Gateley that the stack of empties outside our house on recycling day was a well-known local landmark. The announcement of our one year old little boy, only just beginning to speak, spontaneously saying “Majestic” as I drove past the Causewayside branch might be consistent with this heinous allegation.

So when asked to write a, preferably witty, piece on wine for BQ it seemed to me that the editor had the wrong man – I was known in a former life as ‘Serious Ed’ – but might just find something to say about the demon grape.

In fact, all this time I have been selflessly researching a quite drawn-out geography project. And so it was in the spirit of such research that I agreed to skip into the historic and yet timeless vault of Whighams wine bar, Scotland’s oldest wine cellar and a veritable Edinburgh institution.

As a trainee in Henderson Boyd Jackson, I signed my first mortgage in this ancient basement, beneath the pavement of Hope Street. In those days it was narrow and conspiratorial. Now, almost 20 years later, it is much expanded but retains the enticing smell of pulled corks. One of my brothers has made a career from writing surprisingly readable books about Marcel Proust and À la recherche du temps perdu (In Search of Lost Time). Most sensible people know about this only from pop-culture references to the famous madeleine moment, perpetuated much to my brother’s annoyance as if the other 3,000 pages contained nothing remarkable. I think the idea of a morsel of food taking one back in time is true enough – yet for me stronger still is the ability of the taste and smell of drinks to evoke an instant memory of scattered places around the world. Professionally I deal with the legals around ships, which happily enough allows me to put these theories to the test. Vodka and pickled gherkins in Almaty. Mimosas in Milan. A cold and viscous Chardonnay during a transaction completion meeting in Buenos Aires. Vintage champagne on Red Square. A hasty Becks in Bremen. Raki with octopus, afloat on the Bosphorus. Iced Ayran in Baku. Attempting (and failing) to

WATT ON WINE I once read that one might judge a fish restaurant on whether they had Picpoul de Pinet on their list

look masculine while sipping a predictable eponymous sling in Singapore. All these hardships have befallen me during ship sale and purchase transactions, visits my wife refuses to allow me to call ‘work’ trips.

I certainly wouldn’t be so smug or so crass as to recount the tale of being left with a whole bottle of Dom Perignon on my tray table during a flight to Kuala Lumpur, to save the stewardess some shoe leather after she realised that I was the only non-Muslim in the cabin needing to be served that particular refreshment. Refreshing it was.

These bibulous journeys into flavours and tastes encourage me always to try something new but also emphasise the reminder of a place. The French call this terroir – the combination of soil, climate and aspect, which makes wine unique to its geography.

The lazy recourse to sauvignon, cabernet or blanc, when presented with a wine list or at the supermarket aisle to me is like going to a specialist real ale pub and asking for a pint of indigenous cooking lager. Variety is the spice of life, from Albarino to Zinfandel. One such discovery is a lesser known varietal called Picpoul from Languedoc in the South of France – I have never been, but imagine bright whitewashed walls and terracotta tiles, seaside and shellfish.

I once read, Jancis Robinson perhaps, that one might judge a fish restaurant on whether they had Picpoul de Pinet on their list. I would say one might judge a wine bar on whether

61

they also serve seafood. Whighams, under the guidance of James Greenhill, achieves both perfectly. The menu matches the wines and the bar staff are like good sommeliers, knowledgeable but not pushy. The Picpoul I tasted was a 2012 Beauvignac, offering aromas of lime zest and fresh apricots, rather delicate but as such very quaffable and unquestionably the perfect partner for scallops or mussels.

For red, to follow, I sampled a 2011 Hunter’s Pinot Noir from Marlborough in New Zealand.

It was smoky with black pepper notes yet also felt summery, not a winter warmer or a bold statement. This is far removed from a blockbuster Shiraz or a velvet aged Margaux, rather an unobtrusive and refined companion, not braying in corduroy at the bar. So if a meal without wine is like a day without sunshine, take your research to these foreign fields, with light food rather than heavy dining. To me, these are lunch rather than dinner wines. Two more green bottles for the cairn at the end of the driveway. Of course, I could take them to the recycling myself instead of leaving them on the pavement, but the locals might lose their way. n Special thanks to James Greenhill and the staff at Whigham Wine Cellar, 13 Hope Street, corner of Charlotte Square, Edinburgh, EH2 4EL. 0131 225 8674.

These wines are available from Whigham Wine Cellar, the Pinot Noir sells for £29.95 while a bottle of Picpoul is £19.95.

BUSINESS QUARTER | SUMMER 14

MOTORING

SUMMER 14

IT GOT ME DANCING IN THE STREETS 62 BUSINESS QUARTER | SUMMER 14

SUMMER 14

63

MOTORING

BUSINESS QUARTER | SUMMER 14

MOTORING

SUMMER 14

The car Jennifer Connolly drove was a Maserati Quattroporte 3.0 V6 Diesel with an on the road price of £80,173.

Jennifer Connolly, director of sales and marketing for Fraser Suites in Scotland and a part-time dance teacher, found a partner that swept her off her feet

It’s seldom that an object like a motor car would move me to compare it with a great night on the dance floor. Nonetheless, when asked by BQ if I’d like to do a car review, I jumped at the chance. While I have always liked cars, and posh shiny ones at that, I don’t get too emotional about the experience.

Although I distinctly remember growing up around the new cars that my dad would get and I always loved going for a spin around the block in his latest polished and pristine vehicle when it arrived.

When I found out I’d be driving a Maserati, I was over the moon. Even the name is so evocative of Italian style and panache. Arriving at the Park’s showroom on the day of the test drive I was glad I’d brought my passport as ID as I thought I’d need a ticket to board, it was huge! The car I was driving was a gorgeous, Maserati Quattroporte 3.0 V6 Diesel. Quite a

BUSINESS QUARTER | SUMMER 14

bit larger than my 118D BMW Coupe which I drive just now. I jumped in and did a quick safety check, advised my envious husband where the nearest exit was and we were off.

As we cruised away I could feel how powerful yet smooth this car was: a motor for those definitely with comfort and luxury in mind.

The walnut dash board, the soft leather seats, the extensive onboard computer all worked to build a very pleasant experience on the road. As an automatic, it made it even easier to drive – almost like you were chauffeuring yourself around.

What I really wanted to do was put my foot down and see what this car could do – so we headed to Loch Lomond and I hit the sport button. Now, this was my kind of car. Far more responsive, I could feel the tyres gripping the road and a quick tap of the accelerator to the floor dropped a gear and you heard the

64

engine growl, a fantastic rib-rubbing noise.

I was just disappointed there were no Grand Prix tunnels to drive through en route to get the fully sensaround experience.

We stopped for a coffee as I wanted to inspect the car a little more. My first thought was ‘must check the boot. Could you fit two big bags of pom poms in there?’ Seems like a strange question, but when you teach up to 100 pupils to dance in a week you need a boot that will fit these needs -– no matter how fancy the car.

My full-time job as director of sales for Fraser Suites Glasgow and Edinburgh, doesn’t call for anything quite as exciting but I do need a car that will take me on sales trips and get me there in one, comfortable piece. Frasers Hospitality is a global chain of serviced apartments offering comfort, ease and a home from home for our clients. This car actually fits the same kind of bill. I often need to drive to meetings and arrive fresh, relaxed and on time. I imagine this car would do all of the above as well as put a smile on my face every day! And I’m sure it would get a few admiring looks from customers and colleagues.

The boot space was more than adequate for all my dance gear! The back seats came with fold down tables and USB points. The front with all the mod cons, sunroof and the allimportant cup holders!

If I had a spare £80,000 to buy this car would I? The V6 diesel starts at £69,230 and this version with its various options is listed at £80,173. At this stage I think I still prefer the smaller sports convertible that was sitting in the forecourt but I can totally get the appeal of this amazing car. Maybe in a few years – when the business has delivered the returns to give me a cracking bonus – this could be one of my ‘must-haves’. Certainly, the sound and style of a Maserti could definitely get me dancing in the streets. n

SUMMER 14

MOTORING

Thanks to Lee Martis, general sales manager, and his team at Park’s Maserati, Almada Street, Hamilton, ML3 0ET. www.parks.uk.com/maserati

I often need to drive to meetings and arrive fresh, relaxed and on time. I imagine this car would do all of the above as well as put a smile on my face every day! And I’m sure it would get a few admiring looks from customers and colleagues

65

BUSINESS QUARTER | SUMMER 14

EQUIPMENT

a naim worth investing in

Attention to detail and a willingness to embrace the digital future of audio delivery has enabled an established, yet little-known, brand to flourish in an increasingly competitive market Paul Stephenson remembers his first encounter with a company that has gone on to become one of the greats of the largely unsung British audio equipment industry. He ran a hi-fi retail business and was looking for new brands to fill his store. “I came across Naim and it seemed as though it had no real sales or any marketing in place – they were all engineers, beards and weird guys. It was just totally product-oriented, which is fine, but it doesn’t get you much business,” he recalls. So he joined as sales manager and, by 2000, was managing director. Now, he is proud to say, the company has 1000-plus accounts, even if it remains what Stephenson calls a “fairly unknown brand”.

Indeed, its reach is good going given that

BUSINESS QUARTER | SUMMER 14

Naim is, Stephenson suggests, one of a small band of companies operating in their own small sphere of audio experience. “In fact, I think we’re part of a market of audio specialists that is only just emerging, offering something that is very different to, say, the more commercial take of Japanese makers.

Theirs is a commodity approach – it’s not about using your ears to decide if something sounds good. The way people listen to music at home is different to what engineers think they’re making out of electronics at a workbench. It’s about sensitivities and emotional values, not what you see on an oscilloscope.”

The Salisbury-based company has just celebrated its 40th birthday so, beards aside, it must be doing something right. Founded by

66

the late entrepreneur Julian Vereker – who, frustrated by his own experiences of listening to recordings of live performances decided to experiment building his own amplifiers and loud-speakers – Naim can count itself a twotime Queens Award for Enterprise winner, and has the contract to supply stereo systems for Bentley, the “technically challenging, noisy environment that is the inside of a car,” as Stephenson notes. In 2011 Naim grew considerably when it merged with French loudspeaker manufacturer Focal. But it has also grown, Stephenson argues, because of people’s increased attentiveness to the audio experience – a surprise perhaps given these so very visual times.

“The internet has provided a platform for >>

EQUIPMENT

67

BUSINESS QUARTER | SUMMER 14

EQUIPMENT Paul Stephenson current MD, Julian Vereker Founder

The changing landscape of audio is challenging.

Five years ago we would have been afraid of the idea of streaming, and would have regarded streamed music as the lowest common denominator way to listen

BUSINESS QUARTER | SUMMER 14

people to find out about us, and also to be better informed about audio generally,” says Stephenson. “But, more than that, we’re seeing a big change. Typically when people buy their computers and X-Boxes, hi-fi is about no.282 on their list of priorities – but audio is becoming fashionable again. People care about sound.” Indeed, remarkably – given the oft-discussed demise of the CD – it’s not even MP3 where audio is at: already some 35% of Naim’s business is in products to stream music direct from the internet.

“The changing landscape of audio is challenging. Five years ago we would have been afraid of the idea of streaming, and would have regarded streamed music as the lowest common denominator way to listen,” says Stephenson. “But coming out of that you realise that millions of people are listening that way, millions more are going to, and what they are out there looking for is a way to do that with quality. Thankfully Apple has done a great job. Without their efforts what we do would come across as pure geeksville. But consumers now are much more advanced than their parents in terms of understanding tech and their willingness to invest in it.”

Most of Naim’s products are now connectivityenabled although, Stephenson notes, “you still need speakers and amplifiers – streaming technology has been the carrot to pull people in to buy other products.” That might include CD players, but not often. They now

68

account for just 17% of sales, with much of those going to China, where there is still a preference for what Stephenson calls “the physical manifestation of music. Vinyl has the tendency to sound better than CD and offers a different, mechanical experience. But a CD is this little plastic box with a bit of silver metal in it – it’s just not very sexy.”

Streaming, on the other hand, may be unnervingly intangible to anyone over 30, but it is, Stephenson assures, the future operating with a higher fidelity than CD, with a solid state back-up solution and software upgradable – and a future Naim wants to be a leader in (even, that is, while operating a service department busy looking after machines now older than the first home computers). For anyone under 30, there is another factor that the company must prove itself a leader in. “Style is becoming extremely important,” says Stephenson, “though maybe not for the audio aficionado. The fact is that most people don’t want audio equipment that looks out of fashion in a year, or, for that matter, dominates a room. We’ve always tried to take a form-follows-function approach which doesn’t work for some markets – they want machines that light up like Las Vegas, and every man and his dog has tried to outZeppelin Zeppelin in the way some systems look. But I think we’re shifting back from such extreme styling now.”

There is, in this, also a kind of green thinking,

EQUIPMENT

moving away from the consumerist habit of frequent upgrading (and consequent dumping of the perfectly serviceable but now seemingly outmoded kit) with audio equipment that lasts, both in use and looks, for perhaps a lifetime. Stephenson concedes that this is probably to cost the company revenue – a quick modification to a stock product remains an easy way for more mass-market manufacturers to make a quick sale. But that is not what he, or Naim, are about. Suffice it to say that the company’s last big launch was in 2008 and the next is due this year, but still under wraps. Its most recent launch was certainly big in scale and sound: this spring it released its Statement speaker, with all of its 746 watts of power – or one horsepower – and projected $200,000 price.

“Well,” says Stephenson, “we’re a British company and we make everything in Britain.

To be able to make here taps into long traditions of engineering and design and craftsmanship and puts your products in a higher league, even if it doesn’t always put them at the higher price point too.” Not always at least. n

Every man and his dog has tried to out-Zeppelin Zeppelin in the way some systems look...we’re shifting back from such extreme styling

69

BUSINESS QUARTER | SUMMER 14

FASHION

LOOK WHO’S WEARING THE TROUSERS

BUSINESS QUARTER | SUMMER 14

70

FASHION Trouser suits – much maligned during the Thatcherite era – are making a comeback, but not at the expense of femininity, writes Josh Sims

“Power”, Giorgio Armani recently announced, “can be feminine.” Look to the catwalks, and power is certainly in play. If the 1980s saw women embracing the sober tailoring of their male counterparts – all the better to play them at their own corporate game – then so-called power dressing is back: the middle line of soft mixed separates, as espoused by Michelle Obama – not an unpowerful woman after all – has given way to a revival of the office style that some women working the greasy pole in big business once felt compelled to wear in order to be treated as equals to the pin-striped men.

Now the likes of Gucci, Yves Saint Laurent, Christian Dior and, of course, Armani are back with those trouser suits for women – but this time with a softer, slender, more feminised silhouette than the broad shouldered kind of 30 years ago. The power shades are still there – the black, navy and charcoal that look right around the boardroom table – but now too are more gentle, pastel shades of metallic neutrals, which can carry the look away from the office and

into eveningwear. The style is not so rigid either – jacket and trousers may well now be co-ordinated separates rather than stiffly matched.

That the new power suit is a softer affair is just as well – figures suggest that the first women to buy into this more formal style are young enough not to have remembered power dressing the first time around, and are perhaps excited by the crisp air of authority and grown-upness that it brings; but of course the big fashion brands also need it to appeal to the wealthier, older customers for whom the power suit – as the makers of 1980s satirical puppet show ‘Spitting Image’ hyped in their Churchillian portrayal of Margaret Thatcher – often suggested a more overt masculinisation that was not always that appealing. Today the power suit may be right for a more serious, postcrash working world, but women are, all the same, not quick to dress with androgyny in mind.

That was not always the case. If the sight of a woman in a trouser suit is unlikely to upset the

horses these days, recall that it was enough to see women barred from entry into certain private establishments within the last three decades. The first power suits, indeed, very much had in mind the agency of the provocateur.

It was bold for any woman to play with gender stereotypes through their clothing during the 1920s and 30s. The exceptions perhaps were Hollywood stars the likes of Marlene Dietrich, who wore trouser suits by Elsa Schiaparelli, or Josephine Baker – a regular at the Parisian men’s bespoke tailors Cifonelli – or later artists the likes of Frida Kahlo or Lee Miller.

Their celebrity and/or avant garde lifestyle somewhat permitted it.

Certainly, society has long held deeply-cultural prohibitions against women dressing as men, sometimes, as in the late 18th and early 19th centuries, even proscribing it in law. It was only from the early 1890s through to late in the first decade of the 1900s that women were permitted to wear trousers in public for, by turns, horse-riding and bicycle-riding.

This was not, however, an issue for most >>

Certainly, society has long held deeply-cultural prohibitions against women dressing as men, sometimes, as in the late 18th and early 19th centuries, even proscribing it in law

71

BUSINESS QUARTER | SUMMER 14

FASHION

Katharine Hepburn, Annie Lennox, Margaret Thatcher and Madonna knew how to play the power suit fashion game

women. And fewer still would even have considered wearing what was strongly defined as a man’s two-piece suit – the choice of some early women’s rights campaigners during the 1920s precisely because of its scandalousness and bohemianism. This was dressing as politics. In contrast, up until World War Two,

BUSINESS QUARTER | SUMMER 14

most women who did wear trousers did so purely for acceptable reasons of practicality – for ranch or factory work, or because one happened to be an adventurer-aviator the likes of Amelia Earhart. But this was a trend that the War made much more commonplace, such that throughout the 1940s trouserwearing by women became fashionable – again ably assisted by the endorsement of ‘slacks’ given by Hollywood stars the likes of Katharine Hepburn (whose characters often played on her supposed ‘mannishness’).

Trousers were worn for sport and leisure. For most the tailored suit, however, remained an outsider proposition – the stuff of theatre and androgynous play, and perceived as such.

It was a perception that would last, as with Julie Andrews in ‘Victor/Victoria’ (1982), The Eurythmics’ Annie Lennox or ‘Vogue’-era Madonna. Certainly the new, more flattering power suit appears to be conscious of one lesson fashion history has offered: what suiting would become accepted by society and fashion alike was a much softer, feminised version popularised through Anton Courreges’ and Yves Saint Laurent’s women’s tailoring of the mid-1960s – most notably the latter’s ‘Le Smoking’ of 1966, a velvet and wool dinner suit reinterpreted for the female physique which both helped revolutionise attitudes to women in trousers, and scandalised society in the process. When singer Francoise Hardy wore it to the Paris Opera, “people screamed and hollered,” she recalled. New York socialite Nan Kempner was refused entry to upscale restaurant La Côte Basque in 1968 wearing hers – so she removed the trousers and wore the jacket alone as a kind of impromptu minidress. She was then admitted.

Through the 1970s the trouser suit was taken on by American designers the likes of Ralph Lauren, Bill Blass and Calvin Klein. The fabrics used may have been traditionally masculine – flannel, tweed – but the cut was more fitted in the body, looser in the leg and altogether less manly. By the end of the decade – and in no small part thanks to the wardrobe of Diane Keaton in Woody Allen’s ‘Annie Hall’ (1977) – the wearing by women of what a few decades perviously would have been considered masculine clothing had entered the mainstream. Power dressing, in its harder

72

edged 1980s incarnation, was just around the corner.

What, in 30 years, will women make of this latest round of sharply tailored style? Perhaps, in another three decades, the notion of a woman’s attire seeking to evoke anything perceived to be a masculine trait will have been consigned to history too. A trouser suit on a woman will be no more cause for discussion than one on a man. n

FASHION What, in 30 years, will women make of this latest round of sharply tailored style?

Perhaps, in another three decades, the notion of a woman’s attire seeking to evoke anything perceived as masculine will have been consigned to history too

73

BUSINESS QUARTER | SUMMER 14

HOW THE FIFTH ESTATE SURVIVED THE ECONOMIC STORM

BUSINESS QUARTER | SUMMER 14

74

SUMMER 14

INTERVIEW

In recent years, the UK’s major landowners have become more entrepreneurial in how they develop their assets. Buccleuch Property, the commercial property arm of The Buccleuch Estates, has been leading the way under the direction of David Peck. Kenny Kemp, BQ Editor, talked to him about investments and developments in Edinburgh, York, and in central London It was skilled colliers at Sheriffhall mine in Dalkeith who hewed the seams of coal for the domestic hearths and smoky foundaries which gave Edinburgh its nickname: Auld Reekie.

In 1805, 111,799 cartloads, selling at £10,309, brought in net proceeds of £1,789, while the annual output from 1804 to 1808 ranged from 8,000 to 13,000 tons. The mine owner was the Duke of Buccleuch. More than 200 years ago, Scotland’s landowning elite were making tidy sums from the abundance of coal in the Lothians and in Fife. Today, Scotland’s coalfields have been largely worked and exhausted, and a new kind of commercial enterprise is required to keep the grand estates of Scotland in shape.

David Peck, the managing director of Buccleuch Property, sits in the modern board room of his Silvermills courtyard office in Edinburgh. He is a chartered surveyor by profession but he is responsible for the commercial property wing of Buccleuch. On the wall is a portrait of Walter Francis, the 5th Duke of Buccleuch, from 1806 to 1884, who was responsible for the building of Granton harbour on the Firth of Forth in 1836. It is a wonderful reminder of the continuity of an aristocratic family that has played a central part in the economic history of Scotland.

Today, near the former mining sites in Dalkeith, Buccleuch Property is involved with the creation of a new community at Shawfair, in the south-east of Edinburgh, with plans for 4,000 new homes, a million square feet of commercial development and three new schools. The company, in conjunction with housebuilder, Mactaggart & Mickel, have bought the land from Edinburgh and Midlothian councils. It is one of a number of projects undertaken by Peck and his team.

He is responsible for what was once known as the ‘Fifth Estate’. In modern parlance, this title is given to the bloggers and social media

commentators who fill the ether with their views. But in the days before the worldwide web, it represented the commercial property interests of the Duke of Buccleuch, head of one of Scotland’s most prominent dynasties.

Three of the Duke’s landed rural estates are at Bowhill, coupled with Dalkeith Country Park in Midlothian; Drumlanrig Castle and its Queensberry estate, and Eskdale and Liddlesdale on the tributaries of the River Tweed. These estates represent some of the finest upland and treasured landscapes in the south of Scotland and the Borders.

The 3rd Duke (1746-1812) made the grand tour under the tutelage of Adam Smith and created the Dalkeith Palace, which required local coal to keep its home fires burning. The present Duke, Richard Buccleuch, was Earl of Dalkeith, until his father died in 2007. The fourth estate is Boughton House and Gardens, near Kettering, in Northamptonshire, home since 1528 to the Montagu’s and the Dukes of Buccleuch. These are the four landed estates.

For the Duke, the ‘Fifth Estate’ was a miscellany of property assets which brought in valuable rental revenue, helping with the long-term upkeep of the other estates, but required a more methodical full-time approach to investment. In October 2003, David Peck was brought in to winnow and cultivate the commercial portfolio of what became Buccleuch Property, with a current market exposure of around £250 million. It has been a

challenging decade for Peck, steering through the worst property collapse in recent history, but Buccleuch Property has now emerged as a strong, standalone investment division within the larger organisation.

“The investment portfolio at the time was around £100m. We probably doubled that and then brought the investment portfolio back down again to around £120million now on the investment side. What we have done is significantly grow all the other ventures. The current scale is a reflection of the de-leveraging over the recession. We’ve been investing new money into other ventures.”

Some of these are more diverse than many might imagine and include a portfolio of retail assets in Germany, a now sold business park in Sydney, Australia, and a joint venture with Vantage, a Texan-based property company.

“We even had a mis-adventure in Moscow but managed to get all of our money back with only a few roubles to spare!” he recalls.

The recent announcement about the acquisition of the land in Edinburgh and Midlothian’s south-east wedge is symbolic for the Capital. With huge pressure for more housing, both private and affordable, and the imminent arrival of the Waverley Line with a new station at Shawfair, the development will create a new town centre for a 21st century community, all built inside Edinburgh’s bypass. The work follows on from Buccleuch developing the SQA’s nearby headquarters. >>

We’ve had a very challenging few years. We could see that we were in for some form of correction. But given that we were long-term investors, we would ride the storm

75

BUSINESS QUARTER | SUMMER 14

INTERVIEW

SUMMER 14

There are other significant projects, including the West Offices, an award-winning redevelopment of York’s original railway station, chosen by the ‘Railway King’ George Hudson and opened in 1841. A joint venture between Buccleuch Property and Yorkbased Harrison Developments has created a spectacular £32million 150,000sq ft complex that is now home to the City of York Council.

Alongside is a new Hampton by Hilton hotel.

The involvement of Miller Construction (UK) as main contractors, working in harness with English Heritage, makes this a multi-award winning project with a strong Scottish input. [“It was a very challenging project built through the recession.”]

While, at East Kettering, near Boughton, in Northamptonshire, Buccleuch Property is involved with a sustainable urban expansion of the town, creating 5,500 new homes and a new community adjacent to a major ‘energy park’ being developed by GE. “This is a very similar situation to our proposals in south-east wedge of Edinburgh. We have an existing strategic landholding and are in another joint venture. We are tendering the first stages of infrastructure and finalising negotiations with major house-builders. Given

BUSINESS QUARTER | SUMMER 14

it is only an hour’s train journey from London and house prices are below £200 per sq. ft, it is a good place to be putting housing for commuters, while also creating sustainable local employment,” he says.

David Peck has been in the property industry all of his adult life. Originally from England’s smallest county, Rutland, he studied Land Economy at Aberdeen University. He graduated in 1988 when the market was flying, and landed a job as a chartered surveyor on the Drivers Jonas training scheme in London. His first job was managing the Crown Estates’ Victoria Park in Tower Hamlets.

He worked as a management surveyor before joining the investment team in the City of London. But development dried up with the recession, and so did job opportunities.

Then Peck did something adventurous. He quit his job, bought a Land-Rover and with a male friend and two female friends, all surveying people, took a year off and drove overland to India, driving through Iran, into Pakistan, via the Khyber Pass and on to Bombay.

“I don’t know if this was a reflection of my views of the property market at that time, or that I was footloose and fancy free. But it was a great adventure. We did a lot you wouldn’t

76

be able to do in today’s political climate.”

“The Land-Rover was pretty reliable but it was the wrong vehicle, because you should buy a Mitsubishi or a Toyota when driving through the wilds of Iran, it’s easier to get spare parts if things go wrong.”

Back in London, he then worked for Taylor Woodrow Capital Developments and even took a job in a wine bar to fund renovation on a home he had bought when interest rates hit an eye-watering 15%, before deciding it was time to head north to Edinburgh.

More than many other professions, surveying and commercial property is about long-term relationships. And a key figure in Peck’s professional life is Alasdair Nicholls, then the managing director of the Taylor Woodrow division. Alasdair is now chairman and chief executive of Native Land, a specialist residential development company, based in central London. More of which, later.

“Alasdair is a great friend and a long-term venture partner with Buccleuch. I worked for about nine months with Alasdair and always hoped our professional lives would cross again despite the move north. David Peck started work with Iain Wotherspoon at his property consultancy RJ Wotherspoon & Associates,

SUMMER 14

which became the Kilmartin Property Group in 1995. Kilmartin became closely linked with the Bank of Scotland’s corporate team, involved in a number of high-profile joint ventures.

“I remember once going through to Iain’s office and saying nobody knows whether we are a consultancy or a property company: I think we should be a property company. We got the map out and chose the name from a village on the west coast,” he laughs.

David Peck worked with Kilmartin for nine years, including being responsible for acquiring the site of the old Edinburgh Royal Infirmary, which was a joint venture in 2001 between Taylor Woodrow, Bank of Scotland and Kilmartin. “We acquired the site in competition with Miller and Grosvenor, securing planning consent for pretty much the development as it is today and re-branded it Quartermile.”

In October 2003, he was headhunted to join Buccleuch, interviewed by the current Duke and Michael Clarke, at the magnificent country home and estate, with its famous art treasures, in Drumlanrig. “Things were looking very interesting at the time. In terms of career progression, it seemed good to be moving into a managing director’s position.”

While the setting was grand, the property business started operations in a Portakabin in the middle of a farm yard on the Bowhill estate, near Selkirk.

“The family decided to recruit somebody for the role because it reached the stage where there was a critical mass of investment stock that had been managed on a part-time basis.

The business was being managed part time by two people while also doing their days jobs as factors on different estates in the business.

One, Nick Waugh, is a fellow board member and our investment director. The other still acts as a consultant to the East Kettering project.

At the time, the Buccleuch Property strategy was buying secondary investment stock for the arbitrage between the rental income and the cost of financing the borrowing. This provided additional revenue for the Estate to maintain its landed portfolio but did not involve longerterm development projects.

“It was a fairly blunt policy and it had a limited lifespan as a strategy. What it needed was some finesse because there was ambition to do other things. The Board realised it was getting

to a scale where it needed proper full-time management,” he says.

Buccleuch Property was given the scope to release value through development and joint ventures with other organisations.

A proper company infrastructure was established, including buying the courtyard office in Edinburgh and moving operations to Silvermills. Neil McGeoch, then a surveyor from Culverwells, and now managing director of MEG Renewables and an Ayrshire farmer, was recruited along with Sandy Smith, a colleague at Kilmartin, who joined as development director, while James Macleod took up the role of finance director. Buccleuch also opened a

INTERVIEW

strong in recent years despite the larch disease decimating some woodlands. Compared to the prime urban real estate in central London of the Duke of Westminster with his Grosvenor Estates, Buccleuch is a commercial minnow.

Then in, mid 2007, as the raging recession began to howl, Buccleuch battened down its hatches and considered a major restructuring.

“We’ve had a very challenging few years. We could see that we were in for some form of correction. But given that we were long-term investors, we would ride the storm. While we hadn’t been acquiring much in the lead up and had made one or two strategic disposals to take some profit, the revenue stream was a

Our objective is to feed in profits to the rest of the group. This helps keep it ship-shape

London office, in Charles Street, and appointed Bob Bowden, former investment director at British Land, as non-executive director.

“We now have a settled team of around 14,” he says. In the early years, the Duke chaired the board of Buccleuch Property and took an active part. When Michael Clarke retired after almost 20 years at the helm, John Glen, who had been chief financial officer with Air Liquide, took over as Group chief executive, and now takes the chair.

“When John took over, the family wanted to have a re-think and take a step back from day-to-day activities of the property company.

The Duke works more closely with John on the rural side and I report into John. Other than that, we are in a ‘quasi-autonomous’ position with a corporate governance structure. We have a separate business plan and balance sheet. Our objective is to feed in dividends and profits to the rest of the group. This helps keep it ship-shape.”

Buccleuch’s rural estates include a range of tenanted farms but they are in some of the wildest and weather-battered parts of the Borders, where arable farming is never an easy task. The forestry business has been

77

sound one and we took the decision to work our way through the dip.”

Nobody knew how deep and hard the recession was going to get. David Peck says the assets were always cautiously valued but even this battered the portfolio.

“We looked at the fall in our asset value of between 30-35%. If we’d been more aggressive in a ‘top-of-the-market’ valuation then this might have been 45-50%, which is where the majority of the market went.”

Over the last eight years, Buccleuch has spent time de-leveraging over £120m of its bank loans with the Royal Bank of Scotland.

This represents a halving of its bank debt.

Here the Duke’s status might have helped as his forebears where among the founding signatories of the bank in 1727. Although, even in today’s harsher commercial world there is no guarantee of any favours unless the business plan and revenue projections are solid. [“I’m sure that helped – but were we granted special favours? I doubt it.”]

“We have a shareholder – as the Buccleuch family – who are pretty unflappable. The view was we had to face the financial crunch as a business. There was no pretending or >>

BUSINESS QUARTER | SUMMER 14

INTERVIEW

SUMMER 14

hiding from what needed to be done and how we were going to tackle the problem. It’s a real team effort as a business,” he says.

One of the real success’s stories has been the collaboration with Native Land, which has been at the forefront of the prime residential market in central London. The London billionaire boom has played its part. According to the Sunday Times, in 2012-13, sales of prime homes in the boroughs of Westminster, Kensington and Chelsea generated £708m of stamp duty. That is £73m more than the receipts for Scotland, Northern Ireland, Wales and the north of England combined.

“It’s been a boom to us during that period because it is a market that has sustained itself handsomely,” he explains.

Native Land, in which Buccleuch has a shareholding and co-invested in every project to date, buys and develops significant sites, such as NEO Bankside in Southwark, which has a gross development value of £400m, and another in Chelsea worth £200m and due for completion this year. “The scale for these projects is far too much for us alone, so we tend to bring in a consortium of like-minded

BUSINESS QUARTER | SUMMER 14

co-investors and align ourselves with another major partner, such as Grosvenor or more recently, well established Asian investors. That’s the way to get into these schemes.”

David Peck is a non-executive director of Native Land and works closely with Alasdair Nicholls.

“We rekindled the relationship when he was still at Taylor Woodrow and I was at Kilmartin, when we successfully acquired the Quartermile site in Edinburgh. We secured the original planning application and brought in Foster + Partners to do the master plan. We named it and then this was the point when I left to join Buccleuch and Alasdair set up Native Land.”

In Peck’s view, Quartermile was a very challenging site with remediation work – including the delicate removal of tonnes of asbestos - and he says he would be surprised if any of the developers has made real money as yet. [Taylor Woodrow’s stake was sold to Gladedale, which became part of Lloyds Banking Group’s battered property assets, while Kilmartin collapsed in 2010. The site and some outstanding residential development and offices, was sold last year to Moorfield.]

“I would contest that it was sold cheaply as some critics maintained. Barry Sealey, who was chair of NHS Lothian University Hospitals Trust, came in for a lot of flak at the time and unfairly so. I think he drove a hard bargain and did a good job in getting the deal over the line.

It is to his credit. No one made a lot of money.

One of my regrets is that I was never able to see that site all the way through.”

However, the strong working relationship with Alasdair, co-director Jonathan Mantovani and Native Land is more than a compensation.

“Native Land really established itself as a development management business. I was new into my position at Buccleuch and suggested a structure where we could feed capital into the business and really make it a development business. It very quickly morphed into what it is today. They have done an amazing job.”

Outwith London, Buccleuch has been entrepreneurial in buying ‘unloved’ investments which can then be improved through asset management and traded on the market. In mid-2010, it also saw an opportunity in northeast Scotland with the Aberdeen Science Parks, which it bought from Scottish Enterprise.

“They were definitely a little unloved but

78

it wasn’t a distressed purchase. Scottish Enterprise had taken a view that they needed a private sector partner and we bought into this. It came with a real mix of ground leases, existing accommodation and development land. The buildings needed refurbishment and there was a lot to do. We’d love to do more.”

Buccleuch has been able to build three new properties on the now rebranded Energy & Innovation Parks and this investment asset is now on the market with Knight Frank.

In Edinburgh, Buccleuch and Cruden have re-awoken a dormant joint venture called Queensberry, and we are looking to grow this business significantly into the mid to upper end of the market across Scotland; they are partnering Telereal Trillium, in a £50m prime residential development known as Woodcroft in the prestigious Grange area of the city, on the former site of a BT telephone exchange, and have also acquired the former Edinburgh Academy boarding houses. Nick Waugh looks after this relationship for Buccleuch.

“One area we do see potential is the retirement market which as an industry is woefully under-provided for and we have an established relationship with Audley Retirement to develop their assisted living concept in Scotland and hope to bring forward a site soon,” he adds.

“While we’ve had our problems to manage at Buccleuch, we’ve been very active. We are focused on delivering value and finding the opportunities. While there are 14 of us here, indirectly we have been employing hundreds of people in Scotland and across the UK. These strategic projects have significant overheads in terms of the teams of architects, surveyors, engineers and builders. The spin-off is massive,” says David Peck.

Our politicians and perhaps the public at large, underestimate the value and the multiplier impact of developments by companies such as Buccleuch. Big strategic projects are vital to maintain the multiplicity of skills required to keep the property sector moving. David Peck and his team are also playing a key part in ensuring the wider business continues to invest in their rural assets and help sustain the communities that are fundamental to its existence. In all, not an inconsiderable task. n

FUNDING SEARCHES (£49)

TENDERS & CONTRACTS (£149)

Bespoke report containing all grants, loans and equity schemes that are suitable for your company. Suitable for all types of businesses.

Bespoke searches for business opportunities automatically sent to you daily. Over 8,000 new tendering opportunities added every week. Suitable for all types of businesses.

INTELLECTUAL PROPERTY LANDSCAPING SERVICE (£300) Analysis of relevant information from patents, revealing valuable information about your competitors and markets.

VIRTUAL OFFICE AT NETPARK (FROM £199) Let us handle your business post and phone calls. Discounted prices for meeting rooms equipped with state-of-the-art presentation facilities.

These are just some of the many great quality business support services you can access with us.

Talk to one of our Innovation Development Executives about these services and for details on how NETPark NET can help your business!

03000 265 505

www.uknetpark.net

Travel the

NETPark NET NETPark Thomas Wright Way Sedgefield TS21 3FD

World

Celebrate in

Glasgow

Congratulations to the winners of the

0141 420 5008 www.glasgowsciencecentre.org

at

BIT OF A CHAT

SUMMER 14

>> Is Terry’s fictional tale a little too close to home?

with Jock Yuler >> Moving up a gear Delighted to hear that Sir Chris Hoy’s business is already free-wheeling. Sir Chris was asked about his busy schedule since retiring from competitive cycling at the Winning Scotland Foundation’s Be Your Personal Best event in Clydebank. He is embracing the ranks of entrepreneurship with his HOY range of bikes, with Evans Cycles, named after special places where he honed his bike skills. The range for kids includes the Napier Runner Bike, the Bonaly kids bike, the Meadowbank track bike, and the Cammo road bike. His top end adult race-ready bike is the Sa Calobra .0004 Road Bike at £1,350. At the modern and welcoming St Peter the Apostle High School, over 30 Scottish athletes joined in workshops, sponsored by Weir Group, for 150 pupils aimed at inspiring their personal bests in life. Another 1,000 pupils watched the Winning Scotland workshops live online. Sir Chris and Katherine Grainger were then involved in a special Q&A with Sir Bill Gammell, who set up the Foundation. Inspiring stuff. (Note to Editor: Recommend Sir Chris as a future BQ business interview.)

>> Coach’s proud record I also caught up with Tommy Boyle, the inspirational coach who trained Scotland’s leading athletes, Yvonne Murray, Olympic bronze medalist in Seoul in 1988 and Commonwealth Gold in the 3,000m, and

BUSINESS QUARTER | SUMMER 14

My old friend Terry Murden, the business editor of the Scotsman and Scotland on Sunday, is a well-known and respected journo. Yes, he has a gruff exterior and has upset many a business figure with his probing pen over the years, but he’s a really decent Yorkshire cove. He’s just written a self-published book called Invisible Lies, a ‘story of deceit and revenge that weaves two stories of PR, journalism and organised crime’.

Terry tells me it is pure fiction, but I can’t help but wonder if he drew some inspiration from a very personal and embarrassing case which saw him in the dock at Edinburgh Sheriff Court.

He faced charges of stalking the glamorous public relations person Nicki Sturzaker, head of the Edinburgh office of BIG Partnership, the mega-influential Scottish PR firm run by Alex Barr. Terry and Nicki had become intimate friends and then fallen out. When Nicki lost her job with BIG, it all got messy and escalated into a court case with Terry facing charges. This is sad because all parties have been rocked and damaged by the fall-out. Happily, Nicki is now working elsewhere.

Terry’s safety valve was to turn to writing a book. Perhaps there are some hidden clues, perhaps not. You can download the book, Invisible Lies, on Lulu.com.

Tom McKean. Let’s recall that McKean, who is now a policeman, was world champion at 800m in 1993, but sadly missed out on an Olympic gold. While coaching these two greats was an undoubted highlight for Tommy, his day job was as the factory manager of the Hewlett-Packard plant in Livingston producing personal computers. He told me his biggest achievement was taking production from 1,500 PCs a day to 5,000, to become the best in the world. A manufacturing record that few Scots will ever rival.

>> Star turn on top form The glamorous Colette Grant, of the Entrepreneurial Exchange, was a very pleasant drinking companion when we both sat down for a personal audience with the top-drawer comedian Michael McIntyre, who

had been the star turn at the Scottish Business Awards. At the after-show party in Lulu’s, we found him in sparklingly witty form – just as funny as he was in front of the audience.

Indeed, the awards in the cavernous EICC were a fun-filled night. Was the 1,900 attendance really the biggest dinner gathering since the Battle of Bannockburn’s celebration luncheon?

Not so, says reader Tobias Smollett, who says Glasgow pipped this in 1759 for the Tobacco Lords convention. Organiser Josh Littlejohn did an amazing job and his not-for-profit business, Social Bites, helping the homeless get work, is a touch of genius. However, newsreader Alastair Stewart’s pressing of Sir Richard Branson on the Scottish referendum question was pretty dumb stuff: Branson rightly said it was a matter for the Scottish people. Why didn’t Stewart simply leave it at that?

>> AND A PARTING SHOT

According to the Sunday Times, only three of the wealthiest 20 UK billionaires are British and only one of these is self-made – the publishers and property tycoons Sir David and Sir Frederick Barclay. Surely as twins born to Scottish travelling salesman Fred Barclay in1934, that makes two?

80

MADE

The Entrepreneur Festival: Sheffield

24-25 September 2014

madefestival.com

Doug Richard Why start a business? Given the choice I’d rather be a failure on my own terms than a success working for someone else

JOIN US FOR THE UK’S MOST INSPIRING FESTIVAL OF ENTREPRENEURSHIP The Sheffield College

Event Sponsors:

MADE brings together the UK’s most successful entrepreneurs, business owners, incredible inventors and magnificent makers. Be inspired, share insider tips, gain practical support, network, meet funders and investors and promote your business.

• PAUL MCKENNA • LEVI ROOTS • DOUG RICHARD

SHEFFIELD CITY HALL Wednesday 24 September 5.00pm – 7.00pm Thursday 25 September 9.30am – 5.15pm Tickets £48 / £24 Concessions

(price includes VAT)

• SHAA WASMUND • JAMAL EDWARDS • NIGEL RISNER

A major event to inspire, motivate and share business success Partner Sponsors:

Supported by:

Book your place online: www.madefestival.com 0191 426 6333 @MADEfestival #MADE2014 Delivered by:

facebook.com/MADEFestival

EVENTS

SUMMER 14

BQ’s business events diary gives you lots of time to forward plan. If you wish to add your event to the list send it to editor@bq-scotland.co.uk and please put ‘BQ events page’ in the subject heading 19 NLP Business, Sales and Personal Training Workshops, from 09:00. Location 28 Future of Finance Lunch ‘n’ Learn, 11:45 - 14:00 Aberdeen & Grampian TBCThe - www.dundeeandanguschamber.co.uk 01382 2022- 8545 Chamber of Commerce, The Hub, Exploration Drive, Aberdeen Energy Park, 25 FSB of at Don, Borders Agricultural Show Park, Scottish Borders Bridge Aberdeen, AB23 8GX--Springwood www.agcc.co.uk.

01224 2034 3900 www.fsb.org.uk 0141 221 0775

JUNE 17 BQ Scotland Emerging Entrepreneur Dinner, Glasgow Science Centre, Glasgow, Tuesday 17 June 2014. For sponsorship and tickets contact Kirsty@room501.co.uk or Rachael@room501.co.uk or call 0191 426 6300 www.bq-magazine.co.uk/bq-events

AUGUST

17 Wind Energy Seminar - Perth & Kinross, 09:30 - 16:00. Hilton Dunkeld House, Dunkeld, PH8 0HX. www.renewableuk.com 020 7901 3000 18 Curriculum for Excellence - Improving Learning, Skills and Links, 12:00 - 14:00.

Carnegie Conference Centre, Hallbeath Road, Dunfermline, KY11 8DY. www.fifechamber.co.uk 01592 2064 7740 19 Stick or Twist: The Referendum Debate, 18:00 - 21:00 - Aberdeen Exhibition & Conference Centre (AECC), Bridge of Don, Aberdeen, AB23 8BL. www.agcc.co.uk 01224 2034 3900 19 Getting the Most from Your People - Discipline and Grievance, 07:45 - 10:00 Rothes Halls, Rothes Square, Kingdom Centre, Glenrothes, KY7 5NX. www.fifechamber.co.uk 01592 2064 7740 25 FSB East of Scotland Committee Meeting, 18:00 - 20:30 - C B C House, 24 Canning Street, Edinburgh, EH3 8EG. www.fsb.org.uk 0141 221 0775 26 Women Mean Business, 11:45 - 14:00 - Ardoe House Hotel and Spa, South Deeside Road, Blairs, Aberdeen, AB12 5YP. www.agcc.co.uk 01224 2034 3900

6 Professional Services: IBM, 08:00 - 10:00 - The Royal Scots Club, 29-31 Abercromby Place, Edinburgh, EH3 6QE. www.thriveforbusiness.co.uk.

0131 526 3104 13 FSB West lothian Committee meeting, 19:00 -21:00. Cairn Hotel, Blackburn Road, Bathgate, EH48 2EL. www.fsb.org.uk 0141 221 0775 29 Save the date: Site Visit to Pelamis Wave Power, 10:00 - 13:00. Pelamis Wave Power Ltd., 31 Bath Road, Leith, Edinburgh EH6 7AH. www.wirescotland.com 0141 337 8144 19 The Disney Creative Strategy; and Conflict Resolution, 09:30 - 12:00. DACC Meeting Room, 27 City Quay, Camperdown Street, Dundee, DD1 3JA. www.dundeeandanguschamber.co.uk 01382 2022 8545 20 Networking Lunch at Double Tree Hilton, 12:30 - 14:30. Double Tree Hilton, 34 Bread Street, Edinburgh, EH3 9AF. www.edinburghchamber.co.uk 0131 221 2999

26 CROWD: Hard Boiled Business Breakfast - Venue TBC www.glasgowchamberofcommerce.com 0141 204 8319

20 90 Days to Business Growth, from 10:30. The Scottish Council for Voluntary Organisations, 51 Wilson St, Glasgow, G1 1UZ www.scvo.org.uk 0131 474 8000

JULY

21 Thrive Development Workshop: LinkedIn, from 09:00. The Royal Scots Club, 29 - 31 Abercromby Place, Edinburgh, EH3 6QE. www.thriveforbusiness.co.uk 0131 526 3104

1 CfD: Eligibility Event, 09:00 - 13:30 - Thistle Hotel, Cambridge Street, Glasgow, G2 3HN. www.scottishrenewables.com 0141 353 4980

21 Wine Tasting at the Hotel Missoni, 18:00 - 20:00 - Hotel Missoni Edinburgh, 1 George IV Bridge, Edinburgh, EH1 1AD www.edinburghchamber.co.uk 0131 221 2999

2 Tourism business Breakfast, 07:00 - 09:00 Hilton Aberdeen Treetops Hotel, 161 Springfield Road, Aberdeen, AB15 7AQ. www.agcc.co.uk 01224 2034 3900 2 International Trade with Nairn’s Oatcakes, 10:00 - 11:00, Edinburgh Chamber of Commerce, 40 George Street, Edinburgh, EH2 2LE. www.edinburghchamber.co.uk 0131 221 2999 3 Resilience and Wellbeing Workshop, 09:30 - 12:30 - Kinnoul Room, Kings Cross, Hospital Street, Dundee, DD3 8EA. www.dundeeandanguschamber.co.uk 01382 2022 8545 10 Discussion Club on Lessons Learned: Oracle Corporation & Telefonica 02, 17:00 - 19:00 - The Royal Scots Club, 29-31 Abercromby Place, Edinburgh, EH3 6QE. www.thriveforbusiness.co.uk 0131 526 3104

25-28 Offshore Northern Seas, Stavanger, Norway. The biennial event alternating with Offshore Europe in Aberdeen. Includes Elon Musk, of Tesla cars, and Trevor Garlick, president of BP North Sea, among the speakers. Contact ons.no 27 FSB Independence Debate, 18:00 - 21:30. Dynamic Earth, 112-116 Holyrood Gait, Edinburgh, EH8 8AS. www.fsb.org.uk 0141 221 0775 27 FSB East of Scotland Committee Meeting, 18:00 - 20:30. C B C House, 24 Canning Street, Edinburgh, EH3 8EG. www.fsb.org.uk 0141 221 0775 29 The Crown Estate: Energy Club, 08:00 - 10:00. The Royal Scots Club, 29-31 Abercromby Place, Edinburgh, EH3 6QE. www.thriveforbusiness.co.uk 0131 526 3104

10 Inspiring Women in Business Networking Lunch, 12:30 - 15:30 - The Caledonian, A Waldorf Astoria Hotel, Princes Street, Edinburgh, EH1 2AB. www.edinburghchamber.co.uk 0131 221 2999 10 FSB Scottish Borders Branch Committee meeting, 17:30 - 20:00, Buccleuch Arms Hotel, The Green, St Boswells, Melrose, TD6 0EW. www.fsb.org.uk 0141 221 0775 13 Confidence for Business Owners: the Key to Success, from 10:00 - Badenoch & Clark, 3rd Floor, The Capital Building, 13 St Andrew Square, Edinburgh, EH 2AF. www.badenochandclark.com 0131 524 9020 17 Squareknot Crowdfunding Event, 17:00 - 19:00 - The Royal Scots Club, 29-31 Abercromby Place, Edinburgh, EH3 6QE. www.thriveforbusiness.co.uk 0131 526 3104 17 Effective Business Writing by Aberdeen Council, from 09:00 - Third floor, 4/5 Union Terrace, Aberdeen, AB10 1NJ. www.qa.com 0845 704 7845

BUSINESS QUARTER | SUMMER 14

The diary is updated daily online at www.bq-magazine.co.uk Please check with contacts beforehand that arrangements have not changed. Events organisers are also asked to notify us at the above email address of any changes or cancellations as soon as they are known.

82

038

Protecting your network even when you’re out of office.

TSG SystemCare - IT System Management 24/7 Even in the depths of the night, it’s reassuring to know that TSG SystemCare is working non-stop to ward off unseen threats. Capturing 72 million logs every day to fix more than 22,000 issues proactively each year, few if any could match such heroics. Your systems run smoothly. Your people remain productive. Your investment in technology protected.

To find out more, call 0845 11 11 888 or visit www.tsg.com/protected

03897 TSG BQ-Scotland-Ad.indd 1

28/05/2014 13:26