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ISSUE TWELVE: SUMMER 2013

profit and moss account Door is open for the right kind of deal Voice of an angel Investor making a difference visionary developer Long and wynding roads HEALTHY OUTLOOK Swiss businessman Martin Velasco’s healthier world vision ISSUE TWELVE: SUMMER 2013: SCOTLAND EDITION

INNES BOOK OF RECORDS Amor Group tuned up for a challenge

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

SCOTLAND EDITION

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WELCOME

BUSINESS QUARTER: SUMMER 13: issue TWELVE Welcome to the 2013 summer edition of BQ Scotland. We hope that you find something interesting and worthwhile to read and enjoy in this edition. Once again we’re delighted to include a BQ2 Special Report, which looks this time at Scotland’s diverse food and drink industry. If you’ve room in your holiday luggage perhaps you can pack the magazine and enjoy it on the beach somewhere! There is a wider theme for this edition and it is about how companies in Scotland need to ‘scale up’ and grow faster into major international businesses. We have witnessed this working successfully in the North-East of Scotland in the oil and gas industry, now we need it to be countrywide. John Anderson, the chief executive of the Entrepreneurial Exchange, speaking at a Converge Challenge event in Edinburgh, reminded us all what being an entrepreneur is all about. He pointed out that the word ‘entrepreneur’ has become a catch-all for almost any kind of business venture. Taxi drivers, hair dressers with a single salon, life-style businesses, shopkeepers are all routinely being described as local ‘entrepreneurs’. And there was a danger of devaluing the significance of this important term. An entrepreneur, according to John and one on which BQ agrees, is someone who wants to grow a company of scale – to build either from scratch or from inheriting the family business and taking it to the next level. In this edition, we interview Sherry Coutu, one of the UK’s most prominent female entrepreneurs and angel investors, and someone certainly worth listening to. She says the UK – and Scotland - has a problem. While we have the same number of start-ups per capita as the US, when it comes to scaling-up we only managed to grow between a third and a half of those businesses. Something with our business ecosystems means we are failing to get SMEs from 20 to 500 employees. This will have long-term consequences for the economy. Meanwhile Finance Secretary John Swinney was welcoming the Global Entrepreneurship Monitor, produced by the Hunter Centre for Entrepreneurship at the University of

Strathclyde Business School, which shows Scotland now has more entrepreneurs than ever before. This boost to the Scottish economy follows the 2013 Ernst & Young Attractiveness Survey on foreign direct investment which describes Scotland’s performance in attracting inward investment as ‘sparkling’. John Swinney said: “Entrepreneurialism is a key driver in our aim of building a wealthier and fairer Scotland. It is fantastic news that Scotland now has more entrepreneurs than ever before.” Yes, this is excellent news. And great that Mr Swinney has allocated £2m for the Scottish EDGE Fund – a collaboration between Entrepreneurial Spark, RBS and public enterprise agencies that will invest into young Scottish businesses. But this kind of investment and support must deliver higher quality jobs and real economic growth. Scottish Enterprise posted figures showing Scottish manufacturing firms achieving a record £21m of business efficiency savings in the last year showing that our companies and our agencies are working hard to make our businesses as competitive as possible. “Within the current devolved powers the Scottish Government is already doing everything we can to deliver jobs and growth in our economy. However, it’s the powers of independence which are required to make the difference Scotland needs,” says Mr Swinney. That’s a compelling political point to make that independence will make a difference in helping Scottish companies scale up. This might well be true but scaling-up is far more than this, it is about creating a business culture and mindset, and applying processes on how to accelerate growth. At BQ Scotland, we will continue to celebrate the new and the established entrepreneurs but we’re also looking out for those who are building businesses of scale in Scotland that are sustainable and able to make longer-term contributions to the economy. We hope BQ offers valuable insights that might well apply to your own businesses. Let us know what you think.

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 Andrew Mernin Sub-editor e: andrewm@room501.co.uk Genevieve Robertson Editorial Karen Peattie Editorial Design & production room501 e: studio@room501.co.uk Photography KG Photography e: info@kgphotography.co.uk Chris Close e: cc@chrisclose.com advertising For advertising call 0191 537 5720 or email sales@bq-magazine.co.uk

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BUSINESS QUARTER | SUMMER 13

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CONTE BUSINESS QUARTER: SUMMER 13 Profit and Moss accounts

Features 24 INNES book of records Amor Group’s John Innes is tuned up for a challenge

32 Profit and moss Money talks: LDC’s Nigel Moss says door is open for right kind of deal

38 healthy outlook Swiss businessman Martin Velasco and a healthier world vision

BUSINESS QUARTER | SUMMER 13

48 Visions in view Property developer Chris Stewart and a Scottish renaissance

58 Legend at lunch Chris Tiso on his love of the great outdoors

76 voice of an angel Angelic investor Sherry Coutu on making a difference

Voice of an angel

TENTS SCOTLAND EDITION

54 commercial property

Key deals and developments shaping Scotlandâ&#x20AC;&#x2122;s skyline

The developer with A vision

62 wine Jamie Livingston shares the joy of quaffing

Regulars

64 motoring Nicola Taylor on a new Bavarian friendship

68 Equipment Sails making welcome return to the seafaring market

08 on the record Sir Tom Hunter on nurturing the entrepreneurial sparks

12 news Whoâ&#x20AC;&#x2122;s doing what, when, where and why, here in Scotland

22 as i see it On raising the game of the zap-happy crew

72 fashion

48 HEALTHY OUTLOOK

All shipshape with high fashion for the high seas

80 Bit of a chat Jock Yuler has the backroom gossip

82 events Gatherings, seminars and conferences that could boost your business

38 BUSINESS QUARTER | SUMMER 13

ON THE RECORD

SUMMER 13

>> Entrepreneurs urged to grasp opportunities In a keynote address, Sir Tom Hunter says small-to-medium-sized businesses are the lifeblood of the economy and that there is a transformational change in the support for entrepreneurs Scotland is on the cusp of getting the environment right for start-up and highgrowth business, says leading entrepreneur Sir Tom Hunter, speaking at the EIE conference in the Assembly Rooms, Edinburgh. “I believe we are very close in this virtuous circle of collaboration and we might even get Glasgow and Edinburgh collaborating! Maybe,” he joked in his keynote address. “Entrepreneurial Spark, the Entrepreneurial Exchange, the Saltire Foundation, it is all coming together. It is a truly unique public and private partnership. Alongside the likes of Sandy Kennedy, at the Saltire Foundation, and a Scottish Government that is listening to business needs. Make the most of the opportunity because I believe there is a transformational change in the support for entrepreneurs.” “When we set about Entrepreneurial Spark, led by Jim Duffy, many thought it was a non-starter. But here we are today, with Willie Haughey in Glasgow, Ann Gloag in Edinburgh, and myself in Ayrshire, we have the backing of universities, councils, colleges, Scottish Enterprise and even a bank: Royal Bank of Scotland.” He said he wanted the bank to put the managers into the hatcheries so they can understand entrepreneurs. “You’ve heard it here today: thank you Royal Bank, you’ve put your money where your mouth is, and as importantly, you’ve put your management in there too. That is going to pay off.” He also singled out John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable growth for his £1m Edge Fund, which has been doubled to £2m. SMEs provide almost half of the UK’s output and 60%of private sector job growth, but start-ups only get 6% of available finance. Sir Tom talked about BrewDog, which was started in 2007 and is now Scotland’s largest independent brewery. Its crowdfunding scheme, Equity for Punk, raised £3m from

BUSINESS QUARTER | SUMMER 13

There are brilliant things happening in Scotland. When supposed entrepreneurs blame others, I just don’t buy it. Entrepreneurs knock down the barriers, they don’t moan about them

SUMMER 13

6,500 investors in 27 countries: the smallest contribution was £95, the biggest £25,000. “The customers became the investors and 2,000 came to their annual meeting in Aberdeen, not to berate the board, they came for the free beer!” “The entrepreneurs in the room: those who start, build and grow your businesses, are quite simply, my heroes. Since I first sold Sports Division back in the ancient history of 1998, I’ve become what some describe as an entrepreneurial anorak. I just love entrepreneurs. I love trying to work out what makes you tick, how we can get more of you, and how we can support you, because we need you to succeed. If you succeed, Scotland succeeds. It is as simple as that.” He went back in time to 1998. He talked about a G4 Gulfstream private jet arriving at Edinburgh airport carrying Eric Schmidt, then head of Novell, now the chairman of Google, then one of the world’s best technology investors who had come to see a Scottish company. He reminded the audience, there was no Google (it started on 4 September 1998), there was no iTunes (started in 2003), nor Facebook (started in 2004). In this sector, things move very quickly. The company that Schmidt came to see was Orbital Software, a technology company which led to a FTSE listing, and made its CEO Kevin Dorren, the youngest chief executive to list his business on the London Stock Exchange. Sir Tom recounted the story because it highlighted the view that Orbital, which was subsequently bought out by a technology giant, was one that got away in Scotland. “That it was a failure in some people’s eyes, I don’t see it like that. I don’t think it is correct. Both Kevin and Calum Smeaton, the cofounder, stayed in Scotland – or rather came back to Scotland after travelling the globe and getting educated. But they came home to Scotland and brought their knowledge with them.” “These guys in essence are the serial entrepreneurs and investors building growth businesses. Kevin now runs the UK’s largest online diet business, while Calum went on to help David Sibbald at Sumerian Networks. Now he is running a TV metrics business called TVSquared.

ON THE RECORD

“Along the way, both have created hundreds of sustainable jobs here in Scotland. Yes, they sold out. They travelled the world, got educated and put their education to work back here. Small-to-medium-sized businesses are the lifeblood of our economy. We need to foster them, we need to nourish them and we need to help them build. Then maybe one day we will have our own Google or Facebook.” The Ayrshire businessman said selling out is not a bad thing because the entrepreneurs have it in their blood to go again and build again. “If one of the brightest men in Silicon Valley can jump in his Gulfstream and head to Scotland, why not? He will do it again. The global leader of IBM says she loves coming to

Scotland. There are brilliant things happening in Scotland. When supposed entrepreneurs blame others: there’s no funding, there’s no support, Scottish Enterprise are crap, I just don’t buy it. Entrepreneurs knock down the barriers, they don’t moan about them. We have a fantastic entrepreneurial support network.” He said four of Scotland’s universities are in the Top 200 in the world and for a country of five million ‘we are punching way above our weight’. He added: “Today we are faced with an unbelievable opportunity and an incredible chance to succeed.” See page 76 for How to Scale Up Business: Sherry Coutu interview.

BQ’s Hot Summer 13-companies to watch There is an exciting number of early stage and research-based companies emerging in Scotland. Here BQ selects our Hot Summer 13 – companies that are looking for funding with the potential to flourish. 1. Codbod: A low-cost cloud-based business that is helping environmental management, set up by Dr Michael Groves, an aerial geographer and environmental consultant. 2. Airborne Energy: Small vertical axis wind turbines, created by serial inventor Dr Howard Manning, who is based in Loanhead, Midlothian. 3. mLed: Set up in 2012 by Dr Jim Bonar, the Glasgow-based business is building a new generation of smarter light-emitting diode technology. 4. pureVLC: Experienced technologist Gordon Povey leads an innovative visible light communication business, an alternative to traditional radio communications. 5. BiogelX: Led by Dr David Lightbody, the company, set up in 2012, is producing peptide gels for biological research, reducing the need for animal testing. 6. Celtic Renewables: The firm, led by Mark Simmers, is commercialising a fermentation process which converts by-products of whisky into high-value renewable energy. 7. Mallzee: Started in 2012 by marketing man Cally Russell and his team, Mallzee says it is changing the way people shop online. 8. Tarangenyx: Set up in 2012, this company, with Iain McDougall at the helm, is developing new kinds of medical implants which heal faster. The business is already making a stir. 9. HoloXica: Already an award-winning start-up, featured on the Gadget Show, in the holographic 3D visualisation of technical and scientific data, helping surgeons visualise scans. 10. Marine Biotech. Scott Johnstone, also chief executive officer of the Scottish Life Sciences Association, is working with Alex Muhlholzl on the sustainable farming of American horseshoe crabs in the UK. 11. Kittyup: A financial website, founded by Roddy Hackland, a former Standard Life IT specialist, and based at the Tech Cube in Edinburgh. Its motto is: ‘Save together and spend together’. 12. Speech Graphics: Dr Gregor Hofer is looking at facial animation and next-gen realism for the mobile market. 13. Medicen Devise: Founded in 2012, Kanika Bansal and her team have designed a medical device which combats infections caused by catheters.

BUSINESS QUARTER | SUMMER 13

ON THE RECORD

SUMMER 13

>> Call for more rigorous pursuit of savings The Scottish Government needs to show it can spend the £34bn it already receives annually more wisely, says CBI Scotland in its submission to the autumn budget With the Scottish referendum on independence looming on September 18 2014, John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, will be setting a September budget that will define the political and business agenda in Scotland. CBI Scotland says there ought to be a public debate about the role of the State, including whether the balance between current and investment spending is appropriate. “The Scottish Government has a substantial remit and over £30bn annual budget, and there are always ways of doing things differently and better. A bolder approach to making savings in devolved public expenditure would free up money for spending on more economically beneficial and growth-enhancing

areas of government policy,” it says. CBI Scotland says the Government must make Scottish Water less reliant on the public purse, contain the public sector wage bill, increase outsourcing, and introduce a graduate contribution to the cost of university education. The CBI’s submission highlights options for saving public money and reducing the cost of government. The submission calls for: • A more rigorous pursuit of savings so that money can be spent on economically beneficial measures; • Further effort to aid private sector investment, exports and job creation; • A tight lid on the costs of doing business in Scotland, including a moratorium on any new business rates levies;

• More use of independent providers and greater competition in the delivery of public services; In addition, the CBI’s submission urges a ‘longterm political consensus’ over the importance of economically beneficial infrastructure, and for a further injection of capital spending on roads and housing. It also calls for a new aviation strategy to assist exporters as well as Scotland’s tourist sector, and cautions against using the 2012 Scotland Act to introduce new taxes ‘which might make Scotland a more expensive and less attractive place to invest, live or visit’. More controversially, the ring fence on NHS’s spending needs to be re-considered. The health budget now accounts for 35% of expenditure and received

Total proposed budget for 2013-14 2013-14 Draft Budget

DEL Resource DEL Capital

£m

DEL Total

AME & Other

£m

Total

£m

11,469.3

408.5

11,877.8

100.0

11,977.8

421.0

111.1

532.1

2,827.6

3,359.7

Education and Lifelong Learning

2,496.5

108.8

2,605.3

289.8

2,895.1

Justice

2,466.5

80.1

2,546.6

480.1

41.0

521.1

Health and Wellbeing Finance, Employment and Sustainable Growth

Rural Affairs and the Environment

223.8

17.0

240.8

1,238.8

1,085.9

2,324.7

Administration

201.8

5.1

206.9

Crown Office and Procurator Fiscal Service

104.5

3.6

108.1

6,957.1

522.1

7,479.2

2,435.0

9,914.2

26,059.4

2,383.2

28,442.6

5,652.4

34,095.0

92.5

3.0

95.5

26,151.9

2,386.2

28,538.1

5,652.4

34,190.5

Culture and External Affairs Infrastructure, Investment and Cities

Local Government

Scottish Government Scottish Parliament and Audit Scotland

Total Scotland

The Scottish Government's Total Managed Expenditure (TME) amounts to £34,190.5m in 2013-14, including the Departmental Expenditure Limit (DEL) of £28,538.1m.

BUSINESS QUARTER | SUMMER 13

SUMMER 13

the largest increase in 2013/2014. “It commands a significant amount of money and the decision to ring-fence its funding has consequences for all other areas of devolved spending. The focus should shift to preventative spending, and the ring-fencing of health spending should end when this current 3-year Spending Review period concludes.” Every Scottish Minister and spending authority must ask six key questions about spending taxpayers’ money. • Is this something government needs to continue to do? • Does this service remain a priority given funding constraints, or could better outcomes be delivered if the funding was spent elsewhere? • Is this something that could be done more efficiently?

ON THE RECORD

• Is this something that could be delivered better by the private or not-for-profit sector? • Is this a service that can be re-engineered to deliver a better outcome? Is this service really necessary at all? • If this kind of thinking were applied across the public sector savings could be made while improving or maintaining the quality of services. “The use of private finance through the £2.5 bn NPD/PFI programme and the funding of further capital expenditure through Tax Increment Financing and National Housing Trust models is encouraging and represents investment that would otherwise not happen or not happen for a considerable period. It also helps unlock private investment. However, the Scottish Government should build on these positive developments by

seeking to spend a greater proportion of its budget on investments that support wealth creation and connectivity between our major cities, particularly to the North and North East. “The document said it should prioritise capital spending on smaller-scale projects including roads and affordable housing. It should also examine the scope to bring forward repair, maintenance and improvement works. On taxation, it said: “The Scotland Act 2012 gives the Scottish Government the power to introduce, with immediate effect, new devolved taxes in order to pursue desired policy outcomes or raise additional revenue. We would caution against introducing any new taxes which might make Scotland a more expensive and less attractive place to invest, live or visit.” n

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BUSINESS QUARTER | SUMMER 13

NEWS

SUMMER 13

TV turnaround star tunes out, Hester to step down as others look to the future, birthday bonuses all round, fast track for buses, and global seafarer sets its compass for further expansion >> A show of strength Economic growth in Scotland is relatively robust. The Scottish economy grew by 0.5% in Q4 2012, compared with the UK economy which contracted by 0.3% over the same quarterly period. Job creation in Scotland strengthened over the quarter, and the unemployment rate of 7.3% for the three months to the end of February 2013, was down from 7.8% in the previous quarter, and 8.3% at the same time last year. Unemployment in Scotland is lower than the UK average, which stood at 7.9% at the end of February 2013. Meanwhile the Bank of Scotland PMI (Purchasing Managers Index) has now been above 50 for six consecutive months (anything above 50 shows expansion and anything below shows contraction) which suggests the Scottish economy is continuing its slow recovery from recession.

>> Aggreko accolade Aggreko, world leaders in temporary power and temperature control services has had its UK operations certified as ‘world class’ through the ISO accredited CEMARS standard. In addition, the Royal Society for the Prevention of Accidents has recognised the commitment of Aggreko UK to attaining the highest health and safety by presenting it with a Gold award at the RoSPA Health and Safety Awards 2013.

>> TV turnaround star tunes out Richard Findlay is retiring from his position as chairman of STV and will do so on August 31 2013. Margaret Ford, the Baroness Ford of Cunninghame, joined the board on June 1 2013 as non-executive director and will succeed Richard as non-executive chair following his retirement. Mr Findlay was appointed to the board in February 2007 to oversee the Scottish Television’s turnaround. Since his appointment, he has presided over the successful transformation of the business. Margaret Ford has over 20 years’ experience as a non-executive director and is chairman of AIMlisted May Gurney Integrated Services plc, chairman of Barchester Healthcare Limited, the private healthcare provider, and is a non-Executive director of Taylor Wimpey plc, Segro plc and Grainger plc. From 2009 to 2012, she was a member of the Olympic Board and chairman of the Olympic Park Legacy Company. She was appointed to the House of Lords in 2006 as an independent peer.

BUSINESS QUARTER | SUMMER 13

>> Apollo mission Engineering design service company Apollo Offshore Engineering is expanding fast - doubling turnover and planning a major increase in staff. The company has moved to Aberdeen’s Waterloo Quay. The company employs 40 staff and revenue increased by 400% and is set to double to over £3m this year. The growth plan is to employ 100 staff and generate £10m by the end of 2015.

SUMMER 13

COMPANY PROFILE

Gaining a Strathclyde business masters in your own time Founded in 1947, the University of Strathclyde Business School (SBS) is a pioneering, internationally renowned academic organisation that shapes and develops the business minds of tomorrow. It offers the highest quality business education and management development for both inexperienced graduates and senior managers. Sue Garmany, who did a part-time MSc in Human Resource Management said, “I looked at various MSc programmes. Based in Edinburgh, I could have done it locally or via distance learning, but I wanted to go to the best provider and didn’t mind travelling to do that - Strathclyde is a CIPD Centre of Research Excellence. When other people have similar qualifications, you need to differentiate yourself and I wanted to do that by having the best Masters I could”. With experience of offering Masters programmes for over 40 years, coupled with its tripleaccredited status, Strathclyde Business School offers a quality, world-class, learning experience. Strathclyde is the only triple-accredited business school in Scotland and one of a small number world-wide. Accreditation is an independent and rigorous process that involves assessment of all aspects of the school and its programmes, carried out by teams of professional assessors assisted by senior management from other management schools. Strathclyde has successfully been assessed and gained accreditation from the three international accrediting bodies – AMBA (UK), EQUIS (Europe) and AACSB (USA). Strathclyde has also been named University of the Year by Times Higher Education for 2012-13. The business school also has a reputation for research excellence. Most recently, in the 2008 Research Assessment Exercise, Strathclyde was rated 7th in the UK for its ‘world leading and internationally excellent’ research, all of which feeds back into the teaching process across all programmes. Strathclyde Business School Masters programmes can be studied full-time, part-time or via flexible learning. Studying part time is a

Studying part time is a perfect way of gaining a prestigious qualification without sacrificing career and finance stability

Strathclyde Business School

perfect way of gaining a prestigious qualification without sacrificing career and finance stability. Part-time study is ideal for those who wish to progress in their chosen field, move into another area of business or want an understanding of all aspects of their business. While it may be hard work doing a Masters at the same time as working full-time, it demonstrates discipline, motivation and skills such as time management and team work. SBS currently offers the following part time programmes: • MBA • MSc Human Resource Management • MSc Business Analysis and Consulting • MSc Operational Research • MSc Applied Economics

• MSc Global Energy Management • Executive Masters in Hospitality and Tourism Leadership Classwork allows students to meet and work with other fellow professionals from different areas of business and many of those who have completed their studies via the part-time route point to the interaction with fellow students as one of the benefits of this means of study. Part-time study also allows the student to implement the skills and theories learned in the classroom direct into their work environment, benefitting both themselves and their employer. Many individuals now fund themselves through part time study and working throughout the period of study allows the student a continuous income flow which helps finance the degree. However, Strathclyde Business School recognises that self-funding can put a strain on finances and, for those in that category, Strathclyde has a number of scholarships on offer.

For more details on this visit www.strath.ac.uk/business.

BUSINESS QUARTER | SUMMER 13

NEWS

SUMMER 13

>> Funds for development Scottish technology start-up RelayMed has secured £300,000 in funding to develop software solutions for point of care testing and healthcare diagnostics in GP offices. Based at the TechCube in Edinburgh, the company has secured funding to develop their software, with £200,000 in Regional Selective Assistance combined with matching inward investment from partner company Goodmark Medical, based in Orlando, Florida, and a £100,000 SMART:SCOTLAND grant from Scottish Enterprise.

For such a small country we can be proud of our ability to continuously create and innovate >> Cash cloud SocialBro, an advanced cloud solution for the management, analysis and monetisation of Twitter communities by business users, has secured a £1.2m venture capital investment led by Scottish Equity Partners. This is the start-up´s first significant investment since initial seed funding. Since its launch in May 2010, SocialBro has achieved rapid growth, attracting more than 3,000 customers, and over 180,000 users from more than 100 countries.

>> Competition heats up A record number of 60 entries have been received from across Scotland’s university community, all seeking to land the £60,000 first prize of cash and pledged support package on offer in this year’s Converge Challenge. The importance of the Converge Challenge has been acknowledged by John Swinney MSP and Cabinet Secretary for Finance, Employment and Sustainable Growth, who

BUSINESS QUARTER | SUMMER 13

>> Hester to step down as others look to the future Stephen Hester, Royal Bank of Scotland Group’s chief executive, is stepping down later this year. The news sparked fierce debate among politicians and commentators about the future direction of the bank. The decision was taken to give a new chief executive time to prepare the privatisation process and to lead the bank in the years ahead. The search for a successor is being led by chairman Philip Hampton. Mr Hester will continue to lead the business until December 2013 to ensure a smooth handover, unless a successor is in post before then. He was appointed to the board in October 2008 and to the position of Group Chief Executive in November 2008. Since then he has led the rescue of RBS, its recovery plan and one of the largest and most complex company restructurings ever seen. Stephen Hester said: “It has been nearly five years since I joined RBS after the bank was rescued by the Government. In that time we have reduced the bank’s balance sheet by nearly a trillion pounds, repaid hundreds of billions of taxpayer support, and removed the imminent threat that this bank’s size and complexity posed to the UK economy. All the while we supported 30 million customers every day to help them manage their finances. “We are now in a position where the Government can begin to prepare for privatising RBS. While leading that process would be the end of an incredible chapter for me, ideally for the company it should be led by someone at the beginning of their journey … I thank all of the people of RBS for their support and wish them all the best for the future.” Philip Hampton, chairman of RBS, said: “I would like to thank Stephen for his leadership and dedication over the past five years. In the midst of a major crisis, he accepted the challenge of stabilising the bank, turning it around, and putting us in a position where we can begin to plan for returning the organisation to the private sector. His achievements have been considerable.”

will be the keynote speaker at the final held on 24th September. Converge Challenge Director, Olga Kozlova said: “The number of entrants reached this year has surpassed our expectations as Scotland’s universities and research community continue to unearth some fantastic business ideas, innovations and inventions among its students and staff. For

such a small country, we can be proud of our ability to continuously create and innovate.” The Scottish Funding Council has pledged £525,000 for the business competition over the next three years, in addition to Scotland’s eight research universities pledging financial support to the tune of £360,000 over the same period.

SUMMER 13

NEWS

>> Moving upstream Metis Partners, the intellectual property specialist, has been instructed to bring to market the IP assets of Dunfermlinebased StreamFlex, which has been providing solutions to the communications industry since 2002. StreamFlex, which also had offices in the Ukraine, has developed a reputation for its tariff simulation, optimisation and management software.

>> Birthday bonuses all round

>> Global seafarers Arnlea Systems, which supports North Sea companies working in hazardous environments, expects to increase its turnover by 60% this year through expansion in international trade. The firm is targeting a growth from £1.3m to more than £2m by the end of the year. Chairman Allan Merritt anticipates this major growth coming from South-east Asia. The firm, based in Inverurie, Aberdeenshire, is an asset management operator in the North

Glasgow Airport’s managing director, Amanda McMillan, was among Scottish business figures recognised by the Queen for their services to business in the 2013 Birthday Honours List. Ms McMillan, who was appointed managing director of Glasgow Airport in 2008, received an OBE (Order of the British Empire) in recognition of her success in steering the airport through the worst downturn in aviation history. She has succeeded in growing passenger numbers and fostering strong relationships with the airport’s city and national partners, with whom she has worked to further strengthen Scotland’s connectivity. This has included the introduction in June 2012 of Emirates’ second daily Glasgow to Dubai service. Others to receive Royal recognition were Richard Findlay, the retiring chairman of the STV Group, who was made a CBE for services to the arts and creative industries in Scotland, as was Ronnie Mercer, chairman of Scottish Water, for services to public utilities. While Prof Janice Kirkpatrick, co-founder of Glasgow design house, Graven Images, was also appointed OBE for services to graphic design, as was James Trail, managing director, Power and Control, Raytheon Systems in Glenrothes, for services to the defence industry, and Kenneth Macleod, Chairman of Stena Line (UK), for services to the shipping industry and charity. Craig Clark, chief executive officer and founder of Clyde Space, in Glasgow, was made a MBE for services to technology and innovation.

Sea and has supported companies operating in hazardous areas for more than 20 years. The company’s mobile and frequency identification tracking technology, used by the oil & gas, petrochemical and food & drink industries, allow users to manage and monitor their assets. The company has recently taken on five and now employs 17 people.

Arnlea Systems, expects to increase its turnover by 60% this year BUSINESS QUARTER | SUMMER 13

NEWS

SUMMER 13

>> Dairy review Muller Wiseman Dairies has started a review of the future of its distribution depots at Keith and Whitburn as part of a move to identify operational efficiencies across the business. It is consulting with employees and USDAW union representatives. 25 jobs at Keith and 116 posts at Whitburn are under review. If the depots are closed, some employees with be offered new roles in the Aberdeen and Cambuslang depots, which will create over 100 jobs. Carl Ravenhall, the managing director of Muller Wiseman Dairies said in the very competitive milk environment is was important that ‘our structure reflects the current and future needs of the business.’

>> Fast track for buses First Glasgow, the city’s leading bus operator, is spending £14.3m on 89 new single decker buses. The buses, manufactured by Falkirk based Alexander Dennis Limited, will support First Glasgow’s new network, SimpliCITY. This latest announcement brings First Glasgow’s investment in new vehicles to around £25m since November 2012; a total of 151 buses.

>> Farming growth Scottish Sea Farms is adding a third site at Loch Kishorn, where the company has been farming successfully for over 20 years. The £2m investment will mean a further four full-time jobs added to the existing team of eight. Scottish Sea Farms employs 16 in the greater Kishorn area.

>> Steeled for success Steel Engineering, undertaking an array of renewable contracts including a project to support Samsung’s offshore wind turbines, won the President’s Award for Outstanding Achievement 2013 at the Scottish Engineering awards held in Glasgow’s Marriott Hotel. UK Business Ambassador, Brian Wilson, a former Energy Minister, presented the award to the company based at Westway Park, Renfrew.

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(Back left to right) Edward Davey, Secretary of State for Energy and Climate Change, Jean-Marie Dauger, executive vice-president of GDF SUEZ, (Front left to right) John Robertson, managing director, Burntisland Fabrications and Jean-Claude Perdigues, managing director, GDF SUEZ E&P UK.

>> In Cygnus and in (good) health Burntisland Fabrication has won a major multi-million-contract from GDF Suez E&P for the construction of the Cygnus quarters & utilities platform. Edward Davey, Secretary of State for Energy and Climate Change, joined GDF SUEZ E&P UK in Aberdeen to witness the signing of the contract with the UK supply chain for the Cygnus project. The BiFab deal, to construct the accommodation platform of the GDF SUEZ operated Cygnus development, is one of several partnerships helping to deliver more investment and new jobs for UK companies. The contract covers the fabrication and construction services for the platform, including the design, procurement, pre-commissioning assistance, weighing and load-out. The project schedule sees completion by late 2014 and onshore commissioning complete by first quarter of 2015, with construction manpower estimated to peak at 320. Edward Davey said: “Cygnus is one of the most important projects currently being undertaken in the Southern North Sea and clearly demonstrates the ability of the UK supply chain to compete on the global stage.” Greg McKenna, regional director of Centrica Energy Upstream, said: “Cygnus continues to create significant new job opportunities for the UK …. For Centrica, this £1.4bn investment represents a critical part of unlocking the Southern North Sea basin, which enables us to secure more UK gas for our customers.”

ONLINE: For the latest breaking business news from Scotland and the wider UK visit BQ’s website www.bq-magazine.co.uk

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COMPANY PROFILE

Winds of change for angel investors Seasonal change is in the air at last – summer is starting to make an appearance after what seemed like an eternal winter and we are firing up the barbecues with enthusiasm. So too, I have seen a stark shift in the sphere of Scotland’s business angels. Where once they were resolute, I now sense a fundamentally different stance. Five years ago I attended an event in Edinburgh, to hear one of Scotland’s most prominent business angels address the issue of “how in the current climate, does one successfully attract an angel’s interest?”. He promised an attentive audience five top tips on how to stand out from the crowd of the thousands of hopeful, investment-hungry businesses. His five top tips were great, and to be honest, I’ve been putting them into successful use ever since. His sixth, bonus tip he delivered as a severe warning: “Never talk about exits”. His point was that plans for exit were irrelevant at the point of investment; rather, the fundamentals of the business had to be in place: a good product; a clear market; a screaming customer need and a strong management team. With these in place, and adequate angel investment secured to fund growth, the exit, he argued, would take care of itself, whether it be via a management buy out, a trade sale, or some form of public offer. Making hollow references to these theoretical possibilities, as many business plans tended to do, only served as an irritant to the angels. So what has changed? If I were attending the same event now, I am in no doubt at all that his sixth point would be: “Most certainly do talk about exits!” All of a sudden, exits are essential. For any angel pitch to be successful, businesses

now need to be addressing how leading US angel investor, John the promoters and angels will Huston, of Ohio Techangels, and achieve a successful exit to Chair of North America’s secure their target financial Angel Capital Association, return. This is not take the message a step simply a whim. Angel further. Identifying your investment in Scotland first customer has always is maturing. Scotland’s been a fundamental most prominent requirement for syndicates have now attracting angel been active for almost investment. Huston twenty years. We have points out, however, that an angel network, structure successful US pitches now not and co-investment model that only identify their first customer, is the envy of other jurisdictions. but have an eye to the exit from the Other nations are seeking to replicate outset. They are identifying the most Gareth Magee, Corporate the model that we have. Whilst the likely buyers for their businesses. Advisory Specialist angels have achieved outstanding Might they be customers or suppliers? success, and have been instrumental These are the people with whom to in lobbying for, and creating this model structure, forge relationships right from the start. what they now need are more successful exits in For the many businesses seeking angel sufficient volume to validate the model that has investment, an awareness of this sea change is been created and to replenish the syndicate pots essential intelligence. to fund future investment and growth. This is And as for the other top tips - they remain, and even more critical in the current climate, where still hold true. angels are often the only show in town. Exits are now top of the angel agenda. These winds of change have reached American shores too. At a much more recent event, I heard

For any angel pitch to be successful, businesses now need to be addressing how the promoters and angels will achieve a successful exit to secure their target financial return

Gareth Magee is a corporate advisory specialist with an active involvement in the Scottish angel community. gareth.magee@scott-moncrieff.com

NEWS

SUMMER 13

>> Glasgow gets smart Alistair Buchanan, chief executive of Ofgem, has opened a head office in Glasgow for pioneering smart grid technology company, Smarter Grid Solutions. The Glasgow company, based in Corunna House, Cadogan Street, has grown rapidly to become one of the UK’s leading dedicated smart grid

technology companies since it was set up in 2008. It now has over 35 staff, with an office in London and one planned in New York.

>> Feeding off new deal International energy consultancy Xodus Group, launched in 2005 and with over 600 people and a turnover of £62m, has

secured a £1.3m contract to deliver the subsea Front End Engineering Design (FEED) study for the Premier Oil Catcher project in the Central North Sea. Xodus will develop and engineer field and subsea architecture, flow assurance processes, subsea control systems, pipelines and tie-ins, as well as providing technical safety and risk support.

>> BQ people on the move Grace Kennedy has been appointed managing director of Triage Central Ltd. She takes over from Kate Carnegie MBE, who founded the company in 1998 that delivers welfare to work programmes. Grace Kennedy joined Triage Central as operations director in December 2012. Tracey McNellan has become managing director of Your Radio, an independent radio station owned by Romanes Media Group, serving the Firth of Clyde transmission area. Tracey spent 20 years with Radio Clyde, latterly as head of the station. Maclay Murray & Spens, the commercial law firm, has announced 13 internal promotions, including two new partners. David Cruickshank, head of renewable energy practice, becomes a partner in the capital projects group and Ross Nicol, an intellectual property specialist and life sciences lawyer, becomes a partner in the IP & technology group. Also in the legal field, Wright, Johnston & Mackenzie have promoted of Stuart Gibb to Associate. Stuart is a key member of WJM’s highly regarded Agricultural, Rural & Sporting Property team, while Sally Jones has joined MacRoberts as chief operating officer. She joins from Thornton & Co, a London firm of patent attorneys. Four head-hunters have launched a company with the aim of becoming major players in the UK market. Aspen, headquartered in Glasgow, has been set up by Ken Dalgleish and three

partners, Donogh O’Brien, Catriona Mackie and Nigel Fortnum, all were former directors in Munro. The Aberdeen office of Colpitts World Travel has appointed Anne Beniston who joins as a Business Development Consultant focusing on oil and gas clients. She joins from Lufthansa. Scottish surveying firm Graham + Sibbald has announced a major restructure with Iain Leighton becoming senior partner, based in the Inverness office. Les McAndrew becomes the new managing partner in Edinburgh. These appointments follow the retirement of Ian Gillies. Meanwhile Shepherd Chartered Surveyors has launched a specialist building surveying service to the Highlands with the appointment of Andrew Clark. Bob Shaw has been appointed vice president to lead greenfield project division of oil group Aker Solutions in the UK, as the company looks to expand. Energy firm Harkand has appointed three senior figures. Kevin Gorman joins as vice president of HR, while Colin Forbes joins as group general counsel and John Ewen as general manager for Harkand ISS, which serves Europe, Harkand’s largest region. All three will be based in Aberdeen. Bank of Scotland Commercial Banking has strengthened its operations in Glasgow and the West of Scotland with the appointment of Pete

Flockhart as area director. Based in Glasgow, Pete Flockhart leads 16 corporate bankers to provide expert advice and funding solutions to businesses with a turnover of £25 million and above. Also on the banking front, Dave Walton has joined Tesco Bank as Operations Director (Insurance). He was previously with Vodafone and American Express. Meanwhile FWB, the executive search company, has announced the following: Hazel McIntyre has been appointed finance director of Green Highland Renewables which specialises in the development of small scale hydro electric scheme. She joins from Giles Insurance. Johnstons of Elgin, known for its cashmere and fine woollens, has appointed Tom Syme as Operations Director while Devro plc, one of the world’s leading manufacturers of collagen casings for the food industry, has appointed Jayne Patterson as Head of Human Resources. Exova, one of the world’s leading providers of testing, calibration and advisory services has appointed Stephen Donnelly as commercial finance manager and Derek Montgomery as head of European HR. Simon Plevin has joined MacFarlan Smith – a world leader in production of alkaloid opiates and other controlled drugs – as its senior sales business manager – Europe. He was previously with Glaxo Smithkline. Mairi Nicol-Wood has been made technology manager with Cabot Norit, the world’s largest producer of activated carbon. She joins from BASF.

If you’d like to include someone on the move, please email editor@bq-scotland.co.uk

BUSINESS QUARTER | SUMMER 13

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COMPANY PROFILE

Choosing the right adviser Forbes magazine recently ran a survey of 20 entrepreneurs asking them on average how many hours they worked in a week. The numbers ranged from 50 to more than 100, with the majority stating at least 60 hours. These are well known facts and, as any entrepreneur will testify, are simply part of the job. However, with so little time left, personal financial management and ongoing planning is likely to be pushed to one side. The obvious route therefore is to use professional advisers, a team who can guide you along the path, saving precious time by raising the important issues and highlighting the opportunities that should not be missed. If this holds true, the advisers you choose become vitally important. Choose the wrong people and not only will you lose valuable time, you may also miss fundamental opportunities. Choose the right advisers and you’ll receive the best advice at the right time, throughout life. This is why our client advisers are experts in understanding the areas that are most important to our clients, and why our clients continually choose UBS to fill the role of their trusted adviser. A role we pride ourselves of fulfilling for all our clients. Our mandate is to talk to our clients about key areas which are likely to cause issues and opportunities they do not have the time to seek out or require advise upon. These key areas include: • Financial health and Estate planning • Understanding and addressing risks • Structuring and managing investments • Utilising tax shelters • Monitoring investment performance Understanding these areas means that we continually consider the intricacies associated with in-depth planning and the issues faced by our clients and their family. Changes in legislation affecting gifting allowances, investment options and exit strategies are considered in relation to each individual’s situation and appropriate action taken before any adverse effects can be felt. One of the most important areas we consider

Forbes magazine recently ran a survey of 20 entrepreneurs asking them on average how many hours they worked in a week. The numbers ranged from 50 to more than 100, with the majority stating at least 60 hours. These are well known facts and, as any entrepreneur will testify, are simply part of the job

Jeffery Gash, Director of Chartered Financial Planner Wealth Management

consistently for our clients is how our advice could be affected by tax. Whilst tax is an unavoidable part of life, controlling when and how it is paid using well-known tax wrappers is a vital part of investment planning. Investment wrappers would include pensions and ISAs, which can be effectively used to hold a wide array of assets. Understanding the options from both an investment and a strategic point of view is vital if these wrappers are to be successful. We believe that good performance can only arise with a structured, robust and disciplined investment process. For us the process begins with our Wealth Management Chief Investment Office where our strategists analyse global data from a network of economists and researchers to compile our house view. This filters to our local investment management teams who align these views within our clients’ portfolios. By starting

with a big picture view and drawing on our global capabilities, we are able to apply diversification across asset classes, regions and sectors. Expertise in these areas is vital. Building successful long term planning takes time, so we ensure that we are talking to our clients and future clients today, tomorrow and over the long term. It is also our responsibility to remind you that the price and value of investments and income derived from them can go down as well as up. You may not get back the amount you originally invested. Past performance is not a reliable indicator of future results.

For further information please contact any member of our local team on 0131 247 2923. You should seek professional advice before making any investment decisions.

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The Advanced Forming Research Centre With productivity in the manufacturing sector vital to the process of economic growth, Scotlandâ&#x20AC;&#x2122;s world-class research base for forming and forging techniques is set to play a leading role in the competitiveness of the industry The University of Strathclydeâ&#x20AC;&#x2122;s Advanced Forming Research Centre (AFRC) is a collaborative venture between the University, Scottish Enterprise, the Scottish Government and leading multinational engineering firms including Aubert & Duval, Barnes Aerospace, Boeing, Rolls-Royce, Titanium Metals Corporation (known as TIMET). Established in 2009, the centre aims to drive innovation and improved competitiveness across a broad range of industrial sectors including aerospace, renewable energy and automotive. Located in a bespoke facility next to Glasgow International Airport, the AFRC focuses on developing forming and forging technologies to support the design and manufacture of products, including components and structures for aircraft, cars, ships, medical devices, power generation and wind turbines. It is the sole Scottish representative in the High Value Manufacturing Catapult, and is also part of two other global networks of industrially-focused research centres: AxRC and GlobalNet. The AFRC is now set to double in size, following a multimillion pound investment from the UK Technology Strategy Board and Scottish Enterprise. The extension of the facility and increased staffing levels will ensure the centre remains at the forefront of international engineering technology. Researchers and engineers at the University of Strathclyde work on a core research programme established in collaboration with industrial members. Contract research and development work is also undertaken, commissioned by member and non-member companies from around the globe. Projects at the AFRC are specifically designed around the business needs of industry and range from utilising cutting-edge forming and forging technologies to developing new highly innovative and commercially relevant products, and troubleshooting established industrial processes.

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The AFRC welcomes enquiries from companies large and small that are interested in collaboration and need its expertise and resources in forming and forging. For further information, please contact us. E: info@afrc.org.uk W: www.afrc.org.uk

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Collaboration is vital to global success The new Technology and Innovation Centre in Glasgow will revolutionise how business and academia work together. Steve Graham tells us more The University of Strathclyde is building a fantastic new facility to enable us to work more closely with industry partners. The Technology and Innovation Centre is currently under construction and is due for completion next year. The new Centre will transform how academia and industry work together. Working in partnership, our skilled teams will find solutions that are vital to economic regeneration in Scotland and further afield. All this will happen in a state-of-the-art building in the heart of Glasgow – developed with industry, for industry. Researchers, engineers and project managers from academia and industry will work side-by-side, on projects spanning energy, health, manufacturing and future cities. Commercial partners and funders SSE, the Weir Group, ScottishPower and Technip are some of the major partners the Centre has already attracted. And while large corporations are important, we’re also looking to attract small and medium sized partners who embrace innovation. At almost £90 million, the project is the University of Strathclyde’s single-biggest investment in research capacity. The Centre has attracted financial backing from Scottish Enterprise, the Scottish Funding Council and ERDF. Glasgow is renowned for its roots in engineering and energy. Today it is carving a global reputation as a creative and pioneering city. The Technology and Innovation Centre is the cornerstone of Scotland’s new International Technology and Renewable Energy Zone. This global economic hub brings innovative businesses to the heart of Glasgow, and sits alongside the University of Strathclyde. The landmark building will house specialist,

shared and flexible laboratory facilities. Here, world-class researchers respond to real problems in partnership with industry, government agencies and other organisations. It’s also informing the development of research and education across the Strathclyde campus. Multidisciplinary teams are being brought together to combine strengths in engineering, science, business, humanities and the social

sciences. Steve Graham is the Executive Director of the Technology and Innovation Centre at the University of Strathclyde.

Partnering with our researchers and academics could transform the way you work. If you have an interest in health, manufacturing, future cities or energy and would like to find out more about how the Technology and Innovation Centre at the University of Strathclyde could work with you, please contact us.

BUSINESS QUARTER | SUMMER 13

AS I SEE IT

SUMMER 13

Zap happy: Let’s get smarter on the games front

The computer games industry in Scotland has only been around for 25 years, yet the rate of change it has undergone would challenge the skills of the most experienced business leaders. Developing games for the console market was the norm and Scottish companies flourished on the back of worldwide bestselling titles such as Lemmings and Grand Theft Auto. (GTA is probably the most significant franchise in the industry and GTA V is currently in production in Edinburgh). Scotland developed a reputation as a developer of high quality, creative games. However, the real value in the industry resided with the games publishers; Scotland was, to some extent, the factory. At the outset, games consoles were the disruptive technology within the wider entertainment industry. Now with the internet and mobile technology, smart phones and tablets are the next disruptive technology to the console market. With this move to mobile, games companies are again having to adapt their business models. The good news is that developing games for mobile platforms can be achieved in much shorter timescales - weeks and months, rather than years for some console titles. At a recent Ludum Dare event over a 48-hour period 2,347 games were created. Routes to market are also simpler – at the most basic level all you need is a website. Making games is one thing – but how do they make money? Where will developers generate revenue or ‘monetisation’? While some developers will still attract development fees from publishers, this is becoming the exception. There is a growing expectation that games for mobile platforms should be very cheap, if not free, to begin with. There is no doubt that Scottish games companies have a worldwide

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Steve Cartwright says Scotland’s highlyrated computer games industry has to raise its own standard to meet the global challenges of the smart-phone revolution reputation for excellence in design and creativity, supported by games courses in the higher education sector at establishments such as the University of Abertay, Dundee, which has established a dedicated Institute for Arts, Media and Computer Games and is responsible for the ‘Dare to be Digital’ contest which attracts teams from across the globe. However, the skills being taught are largely technical, design, programming, art and graphics. Frankly, these are not enough to compete in a market growing exponentially and becoming more and more crowded with cheap content. The market for games grows each year; many kids that grew up playing games don’t stop when adults; the tablet market has spawned a host of new games that target children as young as three. Recent research shows there are now more females playing games than males and let’s not forget the emerging world economies. There is a window of opportunity for the Scottish games industry to continue punching well above its weight on the international

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AS I SEE IT

stage, creating a real competitive advantage, but to achieve this the industry cannot rely on its reputation for design and creativity alone. It must enhance this skillset with broader strategic business skills, including finance, marketing and sales. A number of things need to happen. Firstly, the games community needs to raise its profile, nationally and internationally. Scotland has always been an innovator, but we don’t shout about it. We must. For example, Yoyo Games in Dundee has developed GameMaker, which is the fastest and easiest to use cross-platform game development platform and since its launch has had over five million downloads. Secondly, there needs to be more effective ‘joined up’ working between the agencies that support the industry. Creative Scotland, Scottish Enterprise, Scottish Development International (SDI) and the Business Gateways all play a part, some more than others, and it is not always clear where boundaries lie. The support these agencies offer the games industry is definitely there, but it needs to be easier. SDI recently supported 30 Scottish games-related businesses at the Games Developers Conference in San Francisco, a great example of facilitation. Thirdly, further and higher education bodies must develop the broader business and entrepreneurial skills critical to success. Abertay has started down this path with initiatives such as Dare+ and post-graduate courses linked with its Business School. Then, we need the European Union to approve the tax breaks proposed by the UK Government for the UK gaming industry and which the two main trade bodies, TIGA and UKIE, have worked hard to promote. Lastly, more games companies need to remove their blinkers. Some of the technology developed within the industry has many applications beyond games. ‘Gamification’, as this is known, is now happening; some companies are now looking at new ‘non-gaming’ markets such as 3D visualisation of building projects and training simulations. This is why developing broader strategic business skills within the sector is of fundamental importance, as it will enable those currently based in the Scottish games industry to extend their influence and generate significant revenue from a wider range of sectors in our rapidly changing digital age. n

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The Innes Book of Records The Amor Group is an ambitious technology company rooted in Scotland – and investing in smart young people. Its Aberdeen-born boss John Innes – a former singer in a New Romantic band - wants to create a quarter of a billion pound turnover business by 2016. Kenny Kemp meets a man who is tuned up for a fierce challenge >>

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ENTREPRENEUR It is 3am and John Innes is sound asleep in his Glasgow bed after another hectic day. His vibrating mobile phone wakes him and he clicks it on to read a text message from one of his sons, who is travelling in South America. ‘Hi Dad Guatemala isn’t really well set up for tourism. Hope all well.’ Thanks for keeping in touch, son, thinks John. While he could have done without this morsel of information at this particular time, he is not unhappy – indeed he’s relieved to hear that his son is safe and that he is making the most of his experiences. John Innes is chief executive officer of the Amor Group, one of Scotland’s fastest growing and determinedly ambitious technology businesses, a firm with offices in Aberdeen, Glasgow and Edinburgh, that is working furiously to scale up and employ more talented young people. John, who hails from Bucksburn, on the outskirts of Aberdeen, where his father worked in the paper mill, places a great deal of store in young Scots – like his globe-trotting son – in finding the solutions to tomorrow’s problems. He singles out the young Amor recruits who have recently come out of university and are bringing new skills and solutions as the glue that binds his business. “We hold them in such esteem that we crowd-source our technology strategy from them. If I want to understand trends and what is going on next, we consult them and give them responsibility. It’s wonderful watching our younger folk taking things on.” An example is Neil Rogan, Amor’s chief technology officer, who, as a self-confessed twenty-something geek at heart, ‘eats, breathes and sleeps technology.’ “Our technology approach is built up from the bottom up, with the 21-year-olds who can contribute from the day they arrive. People such as Neil are simply brilliant. The average age in the business is 28 years old,” says John, who is in his 50s. The Amor Group is voracious for success. In its recent results, the culmination of its first threeyear plan, Amor posted revenues of £57.2m, with profits of £8.1m. On his webcast, Innes says: “I’m pleased to report that 2012 represented another excellent year of progress. It is a tremendous achievement against a

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It was getting people in the Outer Hebrides to throw away their pencils and start using the system

backdrop that continues to be challenging.” He makes a robust statement of intent. “Today, we are publicly committing, as a business, that by the end of 2016, our revenues will be £250m with profits of £40m. That’s quite an ambitious target.” That’s an understatement. Scottish companies in the past making such predictions of hitting a quarter of a billion in revenues have been badly burned. Who remembers Kymata, and its prediction of £1bn valuation for that opto-electronic company in 2001? John Innes is unapologetic and clear in stating his case. “We are in the right places. We serve the energy, transport and public service sector. We provide business technology solutions. Those sectors afford us tremendous growth potential, both on a national and international level. What do we do? We provide stuff that really matters to our customers, services and products that are non-discretionary, that are essential to run efficient airports, learning establishments and offshore oil and gas operations.” Simply put, Amor’s services are not nice to have – they are must have. The company’s clients include Skills Funding Agency, the Scottish Government and Office of Rail Regulation in the public sector; Dubai International, Manchester, Toronto Pearson airports and NATS in the transport sector; and Scottish Power, ASCO and Sparrows in the Energy Sector. As John might say in his Doric accent, ‘a nae bad roster of clients’. “We’ve won contracts off the big boys, which includes our ‘purchase to pay’ contract with the Scottish Government. We won it 18 months ago against the incumbent who was Cap Gemini,” he nods with pride. Amor has also been winning key projects in the oil and gas sector against bigger more established players – and that’s

where the opportunities lie. “If you are going to ask me, what is the best information management product on the market? I’m not really interested. But if you ask, how do we run a more efficient and safer offshore platform, or a better educational service, or a more effective airport? Then that’s the kind of conversation we want to have.” For Amor, the technology is a given. It’s making it work on time and within budget that matters more. “For the Scottish Government contract, we didn’t want to provide them with a new procurement system. They had one that worked already – what they wanted to do was get more public sector buyers working electronically. It was getting people in the Outer Hebrides to throw away their pencils and start using the system. It was an enrolment and process challenge rather than cutting new code.” For years, public sector procurement has been traumatised, says John, by over-charging, over-promising and under-delivery from large system integrators. “We all know the quantum of public money that has been wasted. We’re seen as people who come in, charge a fair price – and get the job done.” John wants to share his ambition, extending into Scotland’s public services and he wants private sector people to stop knocking public servants. “Our business is headquartered in Scotland and I pay my tax and National Insurance here – and so does our business. I’m encouraged by the quality of many of customers we have engaged with in the public sector. I think we are all getting our heads around what technology can do in Scotland. There is a lot of shared ambition. I know that sometimes the public sector is not characterised by this, but I have met a lot of very, very dedicated public servants who understand

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the importance of this stuff.” “In 2009, we were the best kept business secret in Scotland. I don’t think many people knew about our heritage. You can perhaps say our name emerged from a passionate love affair with a glamorous woman, but really it’s more prosaic. When we were doing the deal it was called Project Roma, and because it was a reverse takeover, well, we

ENTREPRENEUR

called the company Amor!” Amor was created by a management buy-out, led by John; David Blyth, a Glaswegian charted accountant who has been in the tech industry for 20 years, and Scott Leiper, the chief operating officer, in May 2009. The deal was Business Insider Deal and Dealmakers MBO of the Year in 2010. Two businesses were bought out of Sword Group: one was Pragma, based

in Aberdeen and well-known in the oil and gas sector, the other, Real Time Engineering, based in Pollokshields in Glasgow. An earlier deal to take-over the highly-rated Graham Technology led to Amor inheriting a wonderful Grade A-listed India Tyres building at Inchinnan at Paisley. “I like the sector spread that we have: energy, transport and public sector. This is a nicely balanced portfolio. This is what attracted me and it ticks a lot of the investment boxes too.” Along with recruiting young technology blades, the Amor Group has also been investing heavily in sales people. “It was one of the first things we did.” Early in life, John was trained in sales in a high street employment agency, so he knows what to look for. “I used to smile at myself in front of a mirror with a well-thumbed copy of the Yellow Pages, just making the cold calls. My attitude was ‘Never Say Die’ and that’s how I learned my trade. The guys that do most well in Amor are those who understand what their customers are trying to achieve.” The Innes viewpoint is that sales people must form a deep working relationship and become a part of a customer’s business. They should not be deflected by technology because that is what the technologists do, but they must understand how it applies to a customer. “It’s a seamless relationship. Sales people who think like that do well with us at Amor. I never see the cars of those guys in the car park because they are with their customers the majority of the time trying to solve the problems. They believe that sales is a contact sport.” “We brought in a lot of big beasts and some of them turned out to be little beasties,“ he says with a Doric smile. “We’ve made the investment in sales people and processes at the time when most of our competitors were reining in.” So in the teeth of the credit crunch, Amor was investing to become a bigger player. He is satisfied that Amor has created 400 knowledge worker jobs, with the majority in Scotland, 50 in England and 20 internationally. But more must follow. “We wanted to get the message out that Amor was a strong, quality, >>

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BUSINESS QUARTER | SUMMER 13

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headquartered Scottish business and we wanted to solve customers’ business problems. So organically, we’ve doubled the business from 2009 through to 2012. Our simple plan is to double it again by 2016. The reason we think we can double it is that we have good markets and we sell stuff that customers need not just want. On top of this, if we re-finance this year we will be able to buy and build capacity, so we will be able to do the acquisition growth. It will be about getting more boots on the ground in United States and the Middle East.” His success rate in hiring sales people is 50-50. The ones who do most poorly coming from large organisations: typically from large systems integrators. “I don’t read their CVs now. I used to and I was struck by how much they sold and how valuable the contracts were, but only to discover when I hired them that they were one of a team of 50 people, rather than the person who delivered the deal.” Selling remains at the heart of John’s colourful career. After studying at Aberdeen University, he undertook a post-graduate diploma in personnel at Robert Gordon’s Institute of Technology. But as a singer and guitarist in a band called Dekka Danse the bright lights of London beckoned. “We went to London in the back of a van in 1980. We got signed by Muff Winwood, brother of Steve Winwood, at CBS, and succumbed to becoming New Romantics when actually we were a wee punk band from Aberdeen. Muff told us to get our hair dyed and wear appalling clothes. “It was very hard work and I did it purely for the money.” Despite spending a packet in the recording studio and touring Europe and United States, the band never achieved the kind of acclaim achieved by Spandau Ballet, Human League and Kajagoogoo. So John, under pressure to settle down, joined Playboy Casinos in London as a personnel manager which taught him how to deal with Bunny girls, over-excited punters and manage the cash. He was part of a management team that attempted a buyout of the casinos, but lost out when it was sold to Brent Walker. Now married, he returned to the Granite City as personnel officer of Aberdeen Journals,

ENTREPRENEUR

For me there is nothing quite like the buzz of building a business. I want Amor to be recognised across the UK as a brilliant success story owners of The Press and Journal, where Michael Gove, the education minister was a young reporter. [“I think I gave him a job. We all make mistakes!”] He joined the oil industry working with Seaforth Maritime, a well-established logistics firm, which was part of the booming North East industry. They were bought by Brown & Root, and then Halliburton, which he says taught him some painful lessons about business culture and acquisitions. The experience persuaded him to move into IT, so by 2001, he was working with Pragma Systems, an information services business, which grew from £600,000 to £7m in revenue before it was sold to the Sword Group in 2005. This was where John first gained an equity stake. He remained with Sword, completing ten international mergers and acquisitions in four years. Then, with £27.8m of private of equity from Growth Capital Partners, the management team bought out the Sword Group’s UK business in a £30m transaction. Growth Capital’s managing founder Bill Crossan, a former 3i and Close Brothers executive, and James Blake, a partner, were involved, while Scottish Enterprise has also taken a 5% stake. “I’m conscious that I have taxpayers’ money in this business and they have been supportive from day one. Scottish Enterprise has been great and has helped us out when looking for talent, R&D grants and international development.” Senior debt came from the Clydesdale Bank, support which was in place before the private equity money. Amor has to keep moving upwards and has doubled in size since 2009. “The private equity company retains its

investment for between four and six years. When you are PE backed it is a hard pedal – you spend a lot of time serving debt. However, we are a very cash generative business with 97% of what we do turning into cash. The PE boys will tell you they are getting a good return. At some point we will want to scale the investor, so that we can go for growth. Our target is £250m with over 2,000 employees by 2016.” While Amor needs this cash to fund its growth, John Innes believes this is an easier challenge to resolve as his management team enjoys a strong reputation among the Private equity community. “We can get the capacity because there aren’t enough fantastic assets around. “The big one is finding the talent and finding enough people to run a business that is twice this size. “That’s a tougher nut to crack. We need talent at the top – and I don’t know where they are. We need help from the government. “Where are all the leaders we need for tomorrow in this business?” John Innes is clearly a charismatic leader who obviously loves a good laugh, but there is no doubt that serious expectation has been thrust on his shoulders. “I’m enjoying building this business. I’ve watched people who’ve sold out when I’ve handed them a cheque and their reason for working is gone. For me, there is nothing quite like the buzz of building a business. I want Amor to be recognised across the UK as a brilliant success story.” While this challenge is personally sustaining, you also feel he wants this for the next generation of young people who might well have been back-packing in Guatemala, returning to Scotland to find work, and following in his footsteps. n

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COMPANY VIEWPOINT

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Anytime Anyplace Anywhere With more than 30 years’ experience in the technology sector, Alan Turnbull recently took over as TSG’s regional managing director for Scotland. With developments in the consumer market and the 24/7 mindset continuing to drive expectations around business technology it’s essential for Alan to ensure that his team practice what they preach and stay at the leading edge. In a series of regular features, Alan will work with experts at TSG to illuminate how technology can address the common issues faced by businesses of all sizes. As the holiday season approaches and with mobile devices and tablets now commonplace in SMEs, connectivity and availability become increasingly critical, as Alan explains. The days of the annual family holiday being an escape from everything back home are history. For those who want, and need, to stay connected, thanks to technology, the possibilities are endless. It’s not that long ago that going on holiday meant you really did escape. The nearest anyone got to being able to contact you was via the hotel reception. Calling home from the United States took twice as long while you waited for the delay on the line to catch up, and going anywhere remotely exotic meant you really were ‘unavailable’. Nowadays, there’s no getting away from it all. It’s even possible to send an email or make a mobile phone call from the summit of Everest. Wherever you are is never far enough, and if the office wants you, they can get you, thanks to technology. Many of us have become so attached to our mobile devices that we feel lost without them. When holiday time comes around we’re as likely to pack them as we are the factor 50. For some it’s a

Alan Turnbull, regional managing director, TSG Scotland

necessity, even a perceived expectation. For others, keeping up with workload is a deliberate choice to avoid a mountain of work when they get back. A high proportion say they can relax better if they stay in touch, while others say they love their job so much they don’t want to switch off. Mike Tudor, technical escalations consultant at TSG (Technology Services Group) explains: “The concept of the ‘worliday’ has been around for while but the technology that’s available now means you genuinely can create an office environment on the beach.” Mike recalls an example from his own recent holiday. “It started with an innocent beep on my phone.

Nowadays, there’s no getting away from it all. It’s even possible to send an email or make a mobile phone call from the summit of Everest. Wherever you are is never far enough, and if the office wants you, they can get you, thanks to technology.

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My line manager had emailed to ask if I’d finished a report for a customer. Although it wasn’t urgent and could wait until I got back, I knew I had a copy of the report on my laptop at home ready to go.” “There was no wi-fi so I set up my mobile phone as a wireless hotspot and created a VPN (virtual private network) connection to my home network from my tablet. Using a so-called “magic packet” to boot up my laptop remotely, I logged-in via my remote desktop and emailed the document to those who needed it.” Working for one of the country’s leading technology service providers means that Mike, a self-confessed geek, is no stranger to gaining remote access. In fact, TSG SystemCare relies on remote access to provide monitoring and live-fix services for thousands of IT systems, with a team of specialists resolving issues before users are aware of them. This type of technical solution has been commonplace for a while, but the idea of any time, any place access to business data will become a reality for many more thanks to the launch of powerful Cloud-based applications such as Microsoft Dynamics NAV and CRM with Sage 200 2013 due to be available soon through the Windows Azure platform. For those who plan to holiday at home but want to stay connected, Mitel technology creates an “in office’ experience anywhere, on any device. So if an important client calls your desk at work, the call can be transferred via broadband to an internal extension in your house. Microsoft Australia recently held a ‘Freaky Friday’ which began with the managing director sending out a group-wide notice advising staff: “Don’t bother coming in.” The aim was to show clients how it was possible to carry out all their business duties without physically being in the office; that work is an activity, not a place. I know that Mike and others at TSG are confident that pretty much everything they do on a daily

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basis could be carried out on a phone or tablet as long as there is a decent data connection. However, there is still some suspicion surrounding the Cloud within the business world and that’s something that TSG’s Applications Product Director, Paul Ince is keen to turn around, “Much of the concern appears to be fuelled by fear or perceived security issues but if you think about how much we use the Cloud already for personal use, we seem to have already accepted it in our daily lives without any worries.” Paul is part of the company’s team entering Trekfest in the Peak District in July, and has been using a fitness app on his smartphone to monitor his step rate, training routes and heart rate. The data is captured on his phone, synced and stored automatically against his account in the Cloud. He can analyse the data on his laptop later to review progress and, if he chooses to, share it with others. These are all tasks that could apply equally in a business context using technologies such as

COMPANY VIEWPOINT

Microsoft SharePoint and it’s all possible to do on holiday too, of course. Paul says: “I’ve made sure that my privacy settings are set correctly and I’m confident that any reputable data centre will have robust disaster recovery models, redundancy and resilience.” “Whilst I understand the concerns, the security requirements and standards around business data are even tighter and Cloud providers are under pressure to deliver against their availability promises and 99.9% service level agreements.” “If anything, it’s the personal devices that people use to access business data while they’re on holiday that have the potential to cause problems and it’s certainly worth ensuring you have an IT security policy that takes into account BYOD – or ‘bring your own device’.” For businesses that find and work with a trusted partner Paul is confident that the Cloud has a lot to offer, “At TSG we see the Cloud as simply another deployment choice that sits alongside on-premise

or hybrid solutions. The key is to match the solution to the business requirements but there’s no doubt that those with multiple locations, a high level of mobility or a distributed workforce have the potential to gain significant advantages by adopting Cloud-based technologies.” “It’s all about finding services that make life better, whether at work, at home or on the move,” he adds. So this summer, closing down your device might be the only switching off you need to do.

For more imformation please call 0845 111 1888 or visit www.tsg.com

BUSINESS QUARTER | SUMMER 13

INTERVIEW

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Every business deal is different. The management buy-outs, the buy-ins or the trade sale are times of high-wire tension and stress. The deal involves human beings with different aspirations and backgrounds. The deal involves expectation, emotions and egos. Nigel Moss has been around the table at such times, and wears some of the scars too from a rocky spell with Bank of Scotland Corporate, and sees there is a common thread. Moss, the managing director of LDC, formerly Lloyds Development Capital, in Scotland, knows that the difference between success and failure is a good management team. Sitting in one of the modern board rooms in Quay 2 at Fountainbridge in Edinburgh, overlooking the Union Canal which joins Edinburgh and Glasgow, Moss is on the look-out for Scottish companies who are consistently making profits of over a million – companies with the potential to scale-up. “We are seeing companies all the time and

we’re always looking for the up-and-coming ones too, even though some might be a bit away from us at the moment. We are keen to speak to any good management team regardless of exactly where they are. Hopefully, their business is going on an upward trajectory,” he says in his Ayrshire drawl. “We are looking at backing good management teams. So LDC is a generalist private equity house, which means we don’t have any specific sector focus. We believe that if we are working with good management teams, who are the best in their sector, then we should be well positioned to find the right companies. We are helping firms on their journeys of three, four, or five years or more, helping these teams reach their goals.” LDC was created in 1981 and its first chairman was David Horne who worked with Lloyds Bank and he was one of the driving factors that persuaded Fred Crawley, the Lloyds Bank deputy chief executive, to help companies

with development capital. It was originally called Pegasus Holdings and run by Bob Hamilton, based in Queen Victoria Street in London. Within a decade LDC had over 150 investments and at its 20 anniversary had invested £100m. Over the past five years the investment exceeds £1.5bn in over 80 businesses. “It’s been a phenomenal story. Thirty years makes it one of the longest running private equity houses in the UK. During the 1980s and into the 1990s, LDC was learning all the time about different ways to structure deals. Then we were putting hundreds of thousands into deals, whereas now the smallest cheque we will do is £2m. While the size and scale has changed, the philosophy hasn’t changed at all,” says Nigel. Since its start, it has exited about 300 businesses across the UK, building up an ‘alumni’ network of connections who understand how LDC operates. Today >>

Nigel Moss is building LDC’s private equity presence and strength in Scotland. The former Bank of Scotland Corporate financier says his door is open for the right kind of deal where the managers know exactly what they are doing and where they are going. He spoke to BQ Editor Kenny Kemp

A profit and Moss account

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INTERVIEW

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the chief executive is Darryl Eales, who appointed Moss giving him the remit to grow the Scottish operations. Private equity for LDC is about finding Scotland’s good management teams, helping them to grow their businesses, through either organic growth or further funding for acquisition. “The person who does the deal with us tends to stay with the company going forward. This is important for the management teams because we get to know them well during the deal process. They like to have that consistency of person as the touch point for the private equity house. We also like to introduce a chairperson and we work with the company to find that right person. It can be someone who has done private equity before or someone who can open up a different part of the industry for them.” Nigel Moss says one of the most satisfying aspects of deal-making is bringing in someone who can augment the board, although in some of LDC’s 85 companies the chairperson stays on. “Often we see it as a chance to make changes to the board. We will then work with the company and the management team. Because we are generalist in nature we don’t profess to know how to run the day-to-day business or tell them which sector to focus on. While we do a lot of diligence going into a deal, we back the management team because we believe they have the ability to grow the business.” One recent example of LDC’s flexibility is the re-investment finance for MB Aerospace, headquartered in Motherwell, which has just bought Delta Industries in Hartford, Connecticut. The Scottish company, with operations in Derby, Detroit and Burnley and supported by Arlington Capital Partners, needed to expand its presence in the commercial and military aero-engine market in the United States. LDC’s new funding enabled the aviation company, led by Craig Gallagher, to expand revenues by 35% to more than $160m, with now over 550 employees. “LDC is entrepreneurial in this regard. Re-invest isn’t something we do often, but we are flexible. The sector is rationalising and size does matter. So MB Aerospace acquired a significant business in the United States.

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Working with the main engine companies going forward, such as Rolls-Royce, Pratt & Whitney, the company needed to have more exposure to the US. It’s very exciting.” He also cites the example of the LDC office in Hong Kong, which was opened seven years ago, and is being used as a conduit for private equity supported companies to get into the

Far Eastern and Chinese market. LDC sent Scotsman Craig Wilkinson to set up the office. “We knew that a lot of our businesses wanted to export, set up manufacturing, and import from China. Yet it is not always easy for a £30m turnover company to find the right connections. It is not efficient for them to set up an office simply to find their feet. We

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went out there and built up the connections, which included employing Chinese nationals. This gives us a unique insight into the Chinese market - it helps a lot of our companies who are moving into Asian and Chinese markets.” For example, this has helped Ramco Oil Services in Aberdeen, a recent £50m secondary buyout supported by LDC, who have used the Hong Kong office to support opportunities in China. “The Midlands has been the bedrock of LDC’s regional business model with a major office in Birmingham since 1987. Our core culture is still there, and is embedded throughout the company. It is not the investor who makes the difference, it is who you are investing in that is the key. That has held up well for the past 30 years.” “We want to maintain a big footprint across the UK. We don’t want to be far away from any deal and, if something is happening, we don’t want someone who has to fly in from America or get on a flight. You want someone who is available regionally to work with the company.” LDC’s footprint extends from Aberdeen to Bristol, through Leeds, Nottingham, Manchester and Reading, with 50 execs who can write the cheques, and this gives them an accurate view of businesses across the UK. “We will see about 95% of what is going on in mid-market private equity throughout the UK, which helps us to chase those deals with the greatest potential. We know what the debt market is like, and the prospects for exits and what the competitors are like around the UK. Our footprint, availability of funds and appetite to transact allows us to do the volume. In terms of number of deals we are the highest volume private equity house in the world.” Nigel Moss says this gives more comfort on pricing and in relationship when delivering a deal. “One dramatic change in the last five years is that deals are taking a lot longer, so you want to work with an investor who can deliver and is proven over time. People are far more cautious. The past five years have been important for LDC because we have invested through the cycle, because 2009 and 2010 were good years to invest in.” Naturally, the macro-economic conditions of

INTERVIEW

Our footprint, availability of funds and appetite to transact allows us to do the volume. In number of deals we are the highest volume private equity house in the world meltdown in the Eurozone, an acute lack of liquidity in the debt market, and the doubledip recession, which heralded a spate of business failure, have made investors far more leery about funding medium-sized companies. However, LDC has stuck with it. But LDC had a hole in its network. It was underrepresented in the oil and gas market, with limited exposure through its connection with the Epi-V fund. So expansion in Scotland has been fostered by the need to move especially into Aberdeen and the North East of Scotland. Before Nigel’s arrival in June 2012, LDC had a lone wolf in Scotland who was expected to cover a lot of ground. Clearly, that had to be changed. “I was involved with LDC before 2012 in the strategy of the business. I recruited Mark Kerr in Aberdeen. Mark used to be co-head of oil and gas at 3i. He knows the sector extremely well and he lives in Aberdeen. Mark brought in Kevin Binnie, a former KPMG chartered accountant and corporate adviser who worked for SCF Partners, so we now have the coverage that we needed.” The new hires made immediate hits with three direct investments in oil and gas with Ramco Oil Services, and investment support for Bifold, the wellhead and subsea hydraulic and pneumatic valve business, based in Manchester, and Rimor, a precision oil and gas engineering business, based in Hampshire, which was concluded in early June. “For me, the real excitement of having Mark and Kevin in Aberdeen, who are steeped in the knowledge of the sector, is that if any of the large majors decide to divest of businesses, it allows good local management teams to take over. Aberdeen has been very good at allowing businesses to grow that have come out of majors. PSN, now part of the Wood Group, is a classic example. Being close to the

management teams and key people, with our ear to the ground, remains our goal.“ LDC now has a team of five trying to originate deals in Scotland, where there is real opportunity. So how does an ambitious management team – with no substantial access to equity – make sure they are getting a good deal when they sign on with LDC? “While there is a blank sheet of paper for every deal, what it looks like in the end is that LDC has to be aligned with the company. This is alignment of wealth with the management team incentivised to share in the success. We do a lot of primary buy-outs from plcs and often the management team will invest some of their savings or gear up based on their salary. We structure the deal so they can see their upside and that they get an appropriate stake in the business.” In secondary and tertiary buy-outs, management teams might well be rolling over millions of pounds in pursuit of even greater returns. Ramco is a typical secondary buyout involving LDC’s Mark Kerr, who has joined the board. “We are backing Malcolm Edward and his team; they are market leaders in their field. Malcolm was backed previously in 2005 when Sir Fraser Morrison and his family took a stake and there was an equity roll-over from this. The team believed there was still a lot of international work to take on. They are now going into new territories, such as China, which we’ve mentioned, but also into Brazil. They have operations in Romania, and large operation facilities in Norway and in Aberdeen at Badentoy Park at Portlethen, where they have a 48-acre pipe cleaning and blasting site.“ LDC’s financing, with additional debt provided by Clydesdale Bank, has helped recruit more international sales and development >>

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INTERVIEW

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people into the business. The firm has stateof-the-art pipe cleaning equipment that can be mobilised into a set of large containers and shipped around the globe. One of LDC’s hidden gems is that it also has a ‘Chairman Network’, run by Hazel Cameron, a well-kent Scot who is a deal-maker in her own right, having spent 20 years in private equity in the UK and in the United States, with 3i Group, Bowman Capital, and Cross Atlantic Partners. For Ramco, LDC suggested David Williams, who has both specialist pipeline engineer experience and worked in 3i and other private equity firms, as the chairman. “David has great insight into the niche pipe business and the customers which the management team were interested to have, plus he had worked in private equity before. Ramco is a business that is transitioning with Malcolm taking over as

chief executive,” says Nigel. LDC is separate from Lloyds Banking Group in terms of debt funding. Most of the staff come from private equity rather than banking backgrounds. LDC’s annual investment of around £400m is financed by Lloyds Banking Group, although LDC is not tied in terms of which bank its portfolio companies raise debt from and in line with the acquisition finance market around 30% of the portfolio is banked by LBG. “If it is a £100m deal, we would not put in more than 50% of debt. The reason we have had fewer business failures in the past five years is debt gearing is lower than our competitors. So the equity tranche we do ourselves and with management. We occasionally work with other private equity houses, but that is deal specific.” LDC does not like to take on extra gearing,

so there is rarely mezzanine finance from other banks. It is typically a senior acquisition finance facility from any of the usual banks. Changes in the debt marker has also brought in ‘unitranche’ facilities which are senior debt funds being set up by institutions, such as the £800m BlueBay Asset Management fund, part of the Royal Bank of Canada, who are seeking a return from private equity. As an asset class, there are changes in the market. “We need these new type of facilities because this year, next year and in 2015, we will see a lot of debt needs for re-financing across the UK. Bluebay and Haymarket are coming in doing unitranche facilities. This does create liquidity.” Nigel Moss says he is burning the shoeleather to find the right management team in Scotland. If he knocks on your door, make sure the kettle is on. n

Nigel Moss Born in Prestwick in Ayrshire, Nigel Moss attended University of Edinburgh, trained as an accountant with Ernst & Young in Glasgow, where he ended up doing corporate finance with some of the emerging band of technology and ecommerce entrepreneurs in the late 1990s. He worked with Douglas Nisbet, who was a mentor, and with Gillian Hastings. He worked on BP’s acquisition of Arco. After five years, he moved to Bank of Scotland Corporate, which was growing its private equity through its Integrated Finance department, in New Uberior House, in Edinburgh, and in London. It was a heady time and the deals flowed. He worked with Peter Cummings, who many now feel was unfairly maligned as the HBOS scapegoat. When Nigel joined there were eight people and it grew to over 120 people. “The first few years were very exciting when we were controlling which deals we wanted to do. Then the size and the scale was appropriate for us to handle and we were rolling out into the regions. Where it changed course was when there was a desire to do much larger deals, taking larger listed companies back into private hands, and that was a change in strategy. That’s when I moved on working directly with some of the companies.” Viewed as a safe pair of hands, he moved from the deal-making arm of the bank to helping some of the straitened assets. In late 2006 he worked with Charles Wilson, who was brought back into logistics and food retailer group, Booker Group, which had de-merged from Big Food group plc. Nigel, who represented the bank’s investment, worked alongside Wilson and the Booker team as it was reversed onto an AIM listing and then moved on to a full stock market listing. While its turnover was £3bn, the margins were very tight.

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“The learning for me was the attention to detail and getting every single part of the business supply chain right at the same time as getting the customer proposition spot on. I learned a great deal about stakeholder management. We were transforming the business by taking it back on the market.” After Booker, he was involved with the housebuilder Crest Nicholson, based in the south-east of England, which was on the main market from 1968 until 2007 and then taken private. It was re-floated on the market 2013. He helped restructure this over-leverage business, which has over 60 banks involved with it, preparing it for its return to the market. After this, he was asked to review the portfolio of 180 hammered assets inherited by Lloyds Banking Group from the HBOS merger. Among the sales was the Garden Centre Group to Terra Firma, and Mint Hotels to Hilton Group. “Of the 180, over 100 have been sold over the past four years. The market has improved and a lot of it was commercial property in the London market, which has bounced back. Residential is up 17% from peak and 48% from the trough. The main thing was keeping cool and working with the companies and deciding what to invest in. The market could not have taken massive disposals, it had to be orderly. The main thing was to be up-front and honest about how you deal with people.” Over this time, he got to know Darryl Eales, the chief executive of LDC, who asked him to come and join LDC. “It was the trading arm that was interesting for me. I’d been able to watch LDC closely and I was really impressed by the investments and the companies they have backed. So with a young family [he and his wife, Lynsey, have a two and four-yearold] living in Edinburgh, looking for deals in Scotland, it was an exciting prospect.”

ENTREPRENEUR

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On a mission to create a healthier world

Martin Velasco is the Swiss businessman who has the long-term interests of two Scottish companies at heart. He talks about how the country can leverage its lead in Big Data IT and healthcare to build more world-class companies, such as Aridhia and Sumerian. He speaks to BQ Scotland editor Kenny Kemp Martin Velasco believes that Scotland has a lead in tackling global disease. He’s not a doctor nor a professor of chemistry, but a European business figure and an angel investor. He has an impressive CV. He is an engineer with an MBA from INSEAD who is chairman of AC Immune, a Swiss drug development company and one of the leaders in innovative therapies fighting to combat Alzheimer’s Disease; the founder and chairman of the Infantia Foundation, an organisation aiding children in the developing world; he’s also involved with In Vivo Fertilisation to help couples have safer babies. If that was not enough, he is also the chairman of two of Scotland’s most scalable companies in the sphere of Big Data analytics, now a hot topic for business. These companies are Sumerian and Aridhia, based in Edinburgh. Martin Velasco feels strongly that it is imperative that Scotland, which is already a hub for outstanding life sciences, flexes its muscle on the global stage. “Where is Scotland going to build its

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competitive advantage? Where should we [referring to Scotland] develop leadership in the market? If you analyse this, there are not many areas where countries have a natural advantage over others. For example, Switzerland has finance and insurance, with UBS and Zurich, pharmaceuticals, machine tools, but if the country wanted to enter, for example, nano-technology, this is very specific, and it costs a lot of money and investment.” “When you think about what Aridhia is doing, which is bio-informatics, I believe there are the inherent skills, expertise and capacity in

Scotland in terms of healthcare and clinical work. There is the medical side and the IT side, so combining the two is a natural path for Scotland to develop this new and important industry. When we want to do something with a purpose, it is not just about making money but bringing something to society in terms of building strength and becoming world leaders. This is something that we want to apply to both Sumerian and Aridhia,” he says. Asked about the importance of building companies of scale in Scotland, Martin Velasco is clear that Europe is different >>

When we want to do something with a purpose it’s not just about making money but bringing something to society in terms of building strength and becoming world leaders

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from the United States. “You invest so much energy and emotion when you’re building a company for a purpose, and you want the company to continue to grow and develop. Trade sales are natural in Europe because it is difficult to grow. Speed is the essence when you are growing. Yet, if you want to develop something rapidly internationally, you need a lot of funding. Whether it is Switzerland or the UK, it is not easy to raise £250m to do a massive deployment. In the United States, it is much easier. Instead, in Europe, we develop good companies with good technology and sometime down the road there is a trade sale. Now we don’t want to do that with our Scottish businesses this time: we want to build Aridhia as a company that can become one of the world leaders. David Sibbald [Aridhia’s co-founder] and I are very much aligned about that. We want to give something to society and provide value. There are not many opportunities to make something different, that is lasting and competitive. Here we have an opportunity.” “We think Aridhia is going to be a major Scottish company, reaching the very top, but progressively. It is very difficult to grow a standalone with organic growth. It is important to have the right partner. There is more co-operation and collaboration going on now. Nobody has the whole thing alone. We need partners and this will help speed up the process. But it is important to identify your core skills.” His first involvement in Scotland was with David Sibbald and Atlantech Technologies in 1997. He became an early investor in Atlantech and David asked him to join the board because of his experience in telecommunications. Originally from Bilbao, Martin Velasco went to study in Ecole Politique in Lausanne in 1972. He has lived there ever since. He completed an engineering degree and took a job in industry for four years. He then went to INSEAD to undertake an MBA before joining McKinsey, the consultancy. “I’m from the Basque country, which is why I feel comfortable in Scotland. In the Basque country people put a great deal of store in family, friends and community,” he says. He felt comfortable in Switzerland, making his

ENTREPRENEUR

home on the shores of Lake Leman, with its snowy Alpine peaks in the distance. The two-hour EasyJet flight from Geneva to Edinburgh is a perfect route for spanning his business interests. At McKinsey, he worked on a variety of strategic projects from banking and telecoms through to cement manufacture. He quit McKinsey and decided to run his own consultancy where focused on telecommunications and the emerging internet.

The Jolie effect The decision by the American actress Angelina Jolie to have a double mastectomy was a courageous and brave one. It has also raised massive public awareness about the emergence of genetic testing – and here there are opportunities for Scotland with its leading life scientists and industry. Genetic testings can now detect more than 2,500 medical conditions, making more than 500 treatable. Today’s scientists have the ability to search all 21,000 human genes to find the mutations that increase the risk of diseases. Detection is aided by faster technology and IT systems that can scan patterns more effectively. Some diseases are caused by a single mutation while others, such as cancer, involve a combination of genes and environmental factors. But it is the chromosome abnormality that has such an important part. For example: Alzheimer’s disease: Chromosome 1, 14, 19, 21, Cancer: Chromosome 5, 13, 17 and Diabetes: Chromosone 6.

“I became very interested in innovation and helping start-ups as a business angel. I’d made some small investments before I came to Scotland in 1997 and had a meeting with David. It was supposed to last 30 minutes, and we spent almost four hours discussing Atlantech and the strategy. A few weeks later I made an investment in the company and joined the board. Since then David and I have

become very close friends. When you are in start-ups together, there’s a moving and often emotional element. You go through good and less good times and this builds a great bond.” When Atlantech Technologies was sold to Cisco in March 2000 for £120m, it was one of Martin’s most successful exits, and the timing was perfect. Armed with several million, the pair began looking for something to do next, and they realised in 2002 that the massive hype over the Y2K issues, where a mass collapse of computer systems was predicted as the time and date changed from 99 to 00 created an opportunity. The much-vaunted collapse never came but companies had purchased new systems and were not clear what to do with them. With David Sibbald, as chairman and chief executive officer, and Martin as co-founder playing an active role supporting the company and meeting potential customers, they saw an opportunity. “The corporations and industries invested a tremendous amount of money in terms of security and capacity and telecommunications. We said that IT was not managed like a normal factory production. So there might be something we can bring to IT. Then David had the idea of looking at data analytics. The company was set up in April 2002. Very rapidly Sumerian specialised in the arena of Big Data analytics. David stepped aside for Calum Smeaton to take over as CEO, while remaining executive chairman, and today the company is run by Bryan Clark, a former KPMG partner and its chief information officer, who spent eight years previously at EDS. Today Big Data is the smart play. It’s the term on everyone’s lips and there are plenty of theories about how it should be used. However, a decade ago, it was in its infancy and Sumerian was able to develop its own systems. “We increased levels of transparency, linking each transaction with IT consumption, performance and latency. It’s about technology being better aligned to work with the business. It was about capacity planning to provide data for management to make far more informed decisions. We were not even calling it Big Data at the time. This is a term that is at the forefront of all kinds >>

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ENTREPRENEUR of businesses today as they strive to become more efficient and use the data that they have more productively. We called what we did IT analytics and step-by-step industry leaders started to refer to it as Big Data analytics. We’ve been doing this since the beginning.” Martin Velasco is clear that both companies have a strong ethical ethos - and that it does good things. “Of course, we want the company to be successful, but we have a purpose with what we are doing at Sumerian to provide the capacity to reduce costs and manage risk for businesses. When companies need to manage a very complex IT environment, and IT is more and more important for the business, then we are able to step in and take the temperature and make recommendations.” Specifically, he talks about Aridhia’s prospect and its ability to provide far-reaching patient care improvement for the health sector, something close to Martin Velasco’s heart. “Aridhia brings something that is unique to health care management. I’m active in the field of life science in Switzerland so I can see the wider horizon. There are a lot of major life science and medical device companies there and the environment is very vibrant. A firm that can slice and dice all the complex data and deliver business efficiencies is going to have a good future.” His involvement with Anecova, an in-viro fertilisation company which is able to place fertilised human eggs back into the womb for a more natural human development, and work in the treatment of Alzheimer’s with Ac Immune, provides a unique insight into similar markets in Scotland for the likes of cancer research and diabetes. David began discussions with Professor Andrew Morris, who is dean of medicine at the University of Dundee, and they knew that the challenge with chronic diseases, and in predicting how care and medical resources might be better deployed, could be met more easily using shared technology across industry and medicine. “Then we were all talking about managing healthcare information more efficiently because we knew there was the possibility of developing new applications. However, there

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A firm that can slice and dice all the complex data and deliver business efficiencies is going to have a good future was a problem that it might become a ‘usine gaz’ [gas factory or talking shop], when you are trying to grasp something very difficult. So our idea was ‘why don’t we extract existing data’ and use this more coherently.” Aridhia takes existing data and puts it onto a platform. From this, it becomes possible to see the clinical path of the patient, from one end to the other. This, in turn, allows medical professionals, often specialist in their own fields but unable to see the wider picture, manage health in a much more efficient, overarching way. “We are specialising in the chronic diseases such as diabetes, cancer, cardio-vascular and acute respiratory problems. And also neurological diseases. The reality is that these diseases are concentrated in elderly people, often they have multiple problems, yet there has been no real transparency or integration of this information and so the care might not be optimal. “This is 65-70% of the costs of the NHS. So there are many elements that make this combination useful because it allows clinicians to become more efficient and effective. It is better for the patient and for the cost of the service. If we can provide early warnings by identifying the best treatment because today we have ‘average for average patients’ yet there is no such thing as average. Everyone has their own genes and one profile and it might be better to have treatment A rather than treatment B. So this is something that can be done.” Aridhia has recently agreed a partnership agreement with Pibotal, a company which was part of EMC and in the area of Cloud computing. “This is good common sense for us. When Aridhia implements a platform somewhere the data streams in from all the patients and this requires huge amounts of

server capacity and infrastructure storage.” Turning to Sumerian, which has been established for longer than Aridhia and has a larger profile, he explains and the launch of a new software-as-a-service application for firms to unlock their own ‘Big Data’. Sumerian Workbench is a Cloud-based app which is a fresh departure for the Scottish firm. It is in beta program with some interesting developments still to come. “We are very excited about Sumerian Workbench. We’ve a mountain of experience on this score and a world-class team working on this software. “We are very excited about Sumerian Workbench. We’ve a mountain of experience on this score and a world-class team working on this software. One of the key elements of Sumerian is that we are able to extract data from very different sources within an organisation, whether it is a monitoring tool or applications log file or other types of data. Our clients now need to integrate this data onto a platform where it can be modelled and then analysed. We build that for clients, using their own specific data, and make the model work and this allows us to have very reliable data for forecasting. We’ve now taken another step forward. Now, a client can access our Sumerian Workbench in the Cloud, upload their own data and start doing some of the analytics themselves – we can then add the value down the line if necessary.” While Scotland has done much to promote its global Scots, who live and work beyond often dreich and windy nation, Martin Velasco represents another group of pro-Scottish business leader who are born elsewhere but are well disposed to Scotland, its way of business and the success of nation. We should salute this group too. n

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SPECIAL REPORT

How Scotland will face a stricter fiscal future in Europe Business people are keen to look at the possible scenarios if Scotland votes ‘Yes’ to independence next year. There will be immense repercussions for a smaller member state within Europe, as Kenny Kemp found out on a visit to Brussels >>

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An independent Scotland would not be able to approach the European Union about official membership until after it became a sovereign state. The EU's job is to deal only with member states and this, in the first instance, means the UK, although it includes Scotland’s interests as part of the UK. Forty years ago, when Scotland, as part of the UK, joined the European Economic Community (EEC) in January 1973, The Scotsman stated that ‘a united, federal Europe is a worthy ideal which could evoke the loyalty of Scots without detriment to our attachment to our own land and to the partnership with England’. But, reported the paper, there was little widespread celebration or spontaneous joy; more doubt, resignation and apathy. The UK, together with Denmark, Norway and Ireland, expanded the EEC from six to nine member states, and the European Parliament increased in size to 198 members. Today, Scots are still tepid in their responses to Europe, but do not appear to share the same Euro hostility as South-of-England Conservatives and Nigel Farage’s UKIP. Today, the EU has 27 member states with

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others awaiting the opportunity to join. So what is likely to happen if Scotland votes ‘Yes’? Sources familiar to constitutional law say that the EU could not begin any kind of pre-entry negotiations, although Scotland is not an ‘unfamiliar alien’ country and has a European Union history and a recognised track record among Eurocrats in Brussels. Nevertheless, an independent Scotland would need to gain the approval of the member states and it might take a few years to gain full rights because this can only be ratified by an EU Treaty, which changes the relationship. Germany had to wait for a treaty to change its status from West Germany when it was unified with the East in 1989. There might even be some Real-Politiking involving Scotland as larger nations, such as Spain, facing their own separatist regions, might make mileage out of Scotland’s new status. While full membership is possible, there could be several more years of uncertainty and new member states are expected to be prepared to join the Euro. Alyn Smith, one of Scotland’s two Nationalist MEPs, and one of our six Scottish MPs, does not foresee any major constitutional hurdles

that cannot be overcome if Scotland vote ‘Yes’ next year. “The end point is to look at Denmark. That’s where Scotland will be. There is no question that this is unprecedented and it has never been done before. There is no right to membership of the EU, but there is no way for us to leave. Some elements, who should know better, are claiming that we will be thrown out. But actually, there is no legal route for this to happen,” he says. He also disputes any talk of Scotland being a second-class nation before gaining full membership. “There will be no interim period for Scotland.” A recent European Policy Centre paper looked at how the UK might leave in the event of a referendum in 2017 deciding to quit the EU. It said there would be a two-year negotiated settlement to allow this to happen. “There is no precedent for any part of the EU territory to be thrown out. It is not in anyone’s interest to treat Scotland in this way,” says Mr Smith. “If it is ‘Yes’, then there will roughly be an 18 month timescale for this and the EU aspects will run concurrently with that. Then, at some point, Scotland will send a letter to

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the Commission as a ‘notice to remain’ in Europe.” “Scotland is a member of the EU right now, so to view us as a third state is the wrong thing. We are not coming in from the outside. We are represented by MEPs, do we suddenly stop them coming? I don’t think so. There will be no interim period.” Mr Smith, a lawyer by trade and a member of various constitutional committees, concedes that there was no active encouragement of Scotland’s membership in Brussels because no-one wants to become involved in another nation’s domestic matters. In a background briefing, a European Commission official said that Scotland’s members would depend on votes from the existing member states. Entry does depend on meeting and complying with all the requirements for membership. The Edinburgh Agreement commits the London and the Scottish Governments to respect and implement the outcome of the Scottish Referendum in September 2014. “The European Commission has made it very clear that it is not going to formally comment on hypothetical situations.” Will Scotland embrace the Euro and give up the Sterling? “In my mind it is absolutely vital that we remain within a wider European framework. The Euro’s future is bound to the ‘ScandoGermanic’ unification of the European economy: sound money, strong central bank, fiscal limits based entirely on the Bundesbank model. I like that as an economic model. It means there is no short-termism and sound money and inflation is the number one enemy. We will be part of that, we will make our views known and I’m relaxed about it.” However, a smaller independent nation within the EU, such as Scotland, will be faced with far tougher pressure from an expanding Eurozone when it comes to its own national fiscal discipline. The harsh lessons learned from the financial crisis in Europe – and the bailouts of Greece, Spain and Cyprus - have brought about major rules called the ‘Six Pack’, the ‘Two Pack’ and the ‘Treaty on Stability, Coordination and Governance’ and this is set out within the European Semester, the EU’s policymaking calendar. The Two Pack came into force in May 2013.

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An independent Scotland will be expected to comply with a yearly review of the economy of the country, which is about greater and deeper economic co-ordination with the rest of Europe. This would mean enhanced surveillance of Scotland’s economic situation and an alert mechanism examining 20 macroeconomic indicators. These stringent rules are tougher on debt levels, which would be a limit of 3% of GDP for deficits and 60% of GDP for debt. Any member state with debts of over 60% must reduce this by at least 0.5% a year on average over three years. Under the new rules, public spending must not rise faster than mediumterm potential GDP growth, unless it is matched by adequate revenues. Under the Treaty on Stability, Coordination and Governance, from 2014, medium-term

is endorsed by the Council, and made public. The situation will then be monitored and if the economic conditions deteriorate further then the Excessive Deficit Procedure (EDP) kicks in. If Scotland’s economy fell further behind in this scoreboard it could end up being fined by the European Union. Failure to reduce the deficit can result in a fine of 0.2% of GDP which will be approved by the Council, unless a majority of member states overturns the fine. Fines will become tougher rising to 0.5% of GDP if statistical fraud is detected. If an independent Scottish Parliament does not approve this as national law, then a further 0.1% of GDP can be fined. This is all part of Europe’s tougher handson remit to prevent banking and economic collapse. This stepped-up surveillance is vital for Europe to prevent contagion across

This is what is so tragic about the pantomime at Westminster. There is big stuff going on here in Brussels which is fundamentally going to alter how government does business budgetary objectives must be enshrined in national law and there must be a limit of 0.5% of GDP on structural deficits. The treaty says that automatic correction mechanisms would be triggered if the structural deficit limit is breached, which would require Scotland to set out in national law how and when it would rectify the breach in future budgets. The European Commission will judge Scotland on whether it meets its medium-term targets. As part of the European Semester process, Scotland’s progress will be assessed every April when the Cabinet Financial Secretary will be expected to present the three-year budget plans or stability programmes in Brussels. These are then published and examined by the European Commission and the Council within three months. The Council can invite Scotland to make adjustments. There will be far more focus on what Europe is saying about Scotland, particularly if there is a significant deviation from the medium-term targets. The Commission can hand out a warning, which

Europe. So, in effect, an independent Scotland would be replacing control from the Bank of England to the European administrators with far greater monitoring of our national economic performance. Mr Smith is clear that much of what is happening in Europe is not fully appreciated or recognised in Scotland and wants more discussion on such important matters. “This is what is so tragic about the pantomime at Westminster. There is big stuff going on here in Brussels which is fundamentally going to alter how government does business across the continent. There are major changes going on in Europe and, because the UK Government is playing hokey-cokey at the door, any serious substantive points that the UK could be making are roundly ignored. And Scotland with them,” says Mr Smith. The ‘What Ifs’ can go on, but what is certain is that an independent Scotland can expect a much more immersive relationship with Europe and Brussels, whether we like it or not. n

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The £45m renaissance of two neglected wynds off Edinburgh’s historic High Street is almost complete. Property developer Chris Stewart has stamped his personality and cash on a mixed scheme that is set to delight visitors and locals. Kenny Kemp caught up with him

Up close and personal 49

It would be fascinating to hear what that most eloquent of architectural presenters, Kevin McCloud of Channel 4’s Grand Designs, would make of Scottish developer Chris Stewart. You can picture McCloud cooing about his latest work nestling in the contoured confines of Edinburgh’s Old Town. “Here is a magician who conjures up new spaces that appear before your very eyes. Here is a young man who has not shirked from the challenge of redefining a historic slither of Edinburgh’s Crag and Tail. And it works. Sublimely, it works.” One of the classic vistas of Edinburgh is standing on Advocate’s Close on the High Street and looking down the wynd towards the Scott Monument on Princes Street. It is a view which perfectly summed up Auld Reekie. Anyone who might tamper with this would have incurred the wrath of angry denizens, the Cockburn Society, and even UNESCO. Yet the close was simply a flight of stairs - a convenient way of getting from the courts and St Giles’ cathedral to Waverley station. Worse, at night, it had become an unsavoury space swilling with urine and marked by graffiti. Not the kind of memory for a distinguished place where several Lord Provosts have resided and which dates to at least the 1560s, when it was named Clement Cor’s Close after a merchant and burgess. Over the last 100 years, the City of Edinburgh Council has snapped up many of the buildings alongside its multi-storey Victorian City Chambers, and so Advocate’s Close and its neighbour, Roxburgh Close, named after a well-known cook of the day rather than a Borders lord, were in civic limbo land. But the move by the council to new premises in Market Street once again opened up this land and its buildings, giving an opportunity to create something unique, modern, but with its bunnet tipped to the past. In April 2011, a £45 million plan for the site was unveiled with three restaurants, six offices, two restaurants, bar, coffee shop, serviced apartments and a 200-room hotel. The work on the site between Advocate’s and Roxburgh Close is around £20m of this – funded by Chris Stewart and Associates, and supported by Close Brothers, the corporate financiers.

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ENTREPRENEUR

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The deals have to be right. We make life more difficult for ourselves because of this but we think this is the right way to do it

At the time of writing, Chris Stewart and his team are putting the finishing touches to the luxury penthouses, with their exquisite views of Edinburgh, ready for bookings taken for the Open Golf at Muirfield from 17 July. With ScotRail’s return ticket to the course £11.80, including a shuttle bus from Drem, the apartments will be an ideal place to bed down after catching Ernie, Lee, Justin and Tiger at play. Not only did the project require lateral thinking because of the multiple levels and difficult access, it required an untarnished developer and builder who has been able to buck the trend, working full-on throughout the recession. Chris Stewart is something of a phenomenon. He has put up his own money to make his own mark on the revitalisation of these historic closes. His success comes from what one colleague says is his attention, bordering on finickiness, to the minutiae of commercial development. He won’t even consider a project unless he has costed every penny and worked out his margin. He even turns his hand to designing some of the furniture. Standing in the penthouse suite of The Chambers, in what is now Roxburgh’s Court, with its commanding views down towards Princes Street, Chris Stewart explains his approach. “The deals have to be right. We make life more difficult for ourselves because of this but we think this is the right way to do it. What is fundamental to our business is that the deals we do deliver the returns that are required to make sure things can expand. We are acutely aware that the business has to move forward. It isn’t just static, one deal at a time. It’s an interesting balance.” This balance involves revenue from rental

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providing solid regular income, which is why Chris has set up The Chambers, managed by Julie Grieve, to ensure the guests have a wellabove par experience. “This allows us to grow two distinctive businesses: our trading serviced apartments and the development side. That gives us opportunities. You can take the product from its raw state and, instead of buying a servicedapartment from another developer, creating it for ourselves. There are savings on that and it means that the trading aspect runs on less of an overhead. It doesn’t have the same financial burden and it’s a nice model.” The spec at The Chambers is exceptional. The floors are wide beams of French oak, lightly singed and seasoned to dry out the resin; the bathrooms and kitchens are bespoke designer, with white Italian sanitary ware and graffitistyle tiling, the lighting and security systems are subtle and light touch; the sofas are by Southfacing Furnishings, made in Loanhead, who have been working on the refurbishment of the Caledonian Hotel, now the sumptuous Waldorf Astoria, while the soft furnishing are Bute fabrics, all designed by Karen Brown. “You always get ideas: you should try and take as much from experience as you can. We’re looking for tasteful but not overly ostentatious. We’d rather work with local guys and give them business rather than bring it in from China or Italy, but that’s not always possible when it is something like marble,” he says. Then there is the bespoke wood panelling and the full-length wardrobes. As Chris pulls out a noiseless drawer on runners, it is certainly not flat-pack. "I designed the drawers for the cupboard. It was something I wanted to do." His project team includes architect Gavin Lloyd, of Morgan McDonnell, project managers Grant Millar and Craig Hepplewhite, of Thomas & Adamson, with Andrew Rennick taking the lead for the Chris Stewart Group. Chris loves the feel and the texture of the materials stacked in the clerk of works office: the Italian floor tiles, the carrera marble worktops, and even the old Victorian gas lamps, which are to be reconditioned and returned to the close. It appears that Edinburgh, the international tourism city, needs more serviced

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accommodation for the short-stay visitor or business figure who prefers to be out of a hotel room and have more than a minibar. "It's been something that has been in short supply in Edinburgh. Many European families, those from Spain and Italy, for example, like to stay together as a family and is means living in an apartment where they can all hang out together.”

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The modern electronic system can monitor temperature levels remotely, so that a visiting golfer and his family arriving on a chilly September from Spain, can have a warm and cosy cocoon from which to explore the city. Each apartment is reached by a personal lift. “If you turn up at 2am rather than us having lights go on for you, we can preset it so that, as soon as you punch in your code into the

front door, the lights will go and it will be bright on arrival. In the interim, the heating will have been on at a lower level and it will be instantly set to the exact room temperature. It is linked in to how people will access the apartments.” The work has been meticulously planned. “We've taken out all Georgian timber and replaced it with new steel structures inside >>

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ENTREPRENEUR

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which are the frames of the new building, which has allowed us to build higher and on various levels." No tower cranes which might blot the city’s skyline were allowed. Instead, every one of the 400-tonnes of steel girders and beams was hauled up the close and the each flight of stairs by pulleys and human sweat. Coupled with this, 3,000 tonnes of debris and masonry had to come out of the site by hand and by wheel barrow: a considerable feat. "It was taken stick by stick up the stairs and some of the steel is three quarter of a tonne per piece. It’s been a very physical job.” There have been 50 joiners and many other allied tradesmen with Interserve, the main contractor, and its project manager Colin Hawkins, with Rybka, as mechanical and electrical engineer, and Will Rudd Davidson as the structural engineers "Interserve is a large FTSE company that is very capable. It’s been good working with them. All the partners have worked extremely well, I think," says Chris. The stylish apartments are only part of the project. Half way down Advocate’s Close, opposite the carved sandstone lintel of the home of William Chambers, the publisher who created the world famous dictionary, a new bar bistro, with high windows and untreated stonework, will surely be one of these little finds that tourists love about Edinburgh. "This close is such a valuable asset for the city that has been neglected, now businesses will be in the close and visitors can come and explore,” he says pointing out the work. “This is a Victorian building which was once the pumping house for the Edinburgh Evening News press.” On this mongrel site, there are five different centuries worth of building and possibly the original walls of the oldest town house in the Old Town, dating from 1400s through to the 1950s. A full archaeological dig and excavation was carried out, undercovering a medieval brooch and dump of oyster shells – the shell-fish was once the staple diet of the poor. “This site has been overbuilt every hundred or two hundred years, so there isn't much of the ancient Edinburgh left,” he says. The Bon Vivant, which already has a wine

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bar in Thistle Street and Stockbridge, is considering the space, in joint venture with Chris Stewart. "What we wanted to do with the whole development is get a mixture of national brands and really good local companies. We want local character as well as the financial stability of having a recognised brand.” In the Roxburgh Court, a new Zizi Ristorante, owned by the Gondola Group, has opened just underneath the front reception of The Chambers, with new steps connecting the street from Cockburn Street to the Royal Mile. Four routes now lead into a tiny square where the outlet serves its pasta and pizzas. It is transformational for this part of the capital, while Chris Stewart’s new office will sit right on top of the bar bistro. Chris is a shy entrepreneur. He prefers talking about his projects rather than himself, showing off each of the rooms with pride. He mounts the staircases – and there are a lot of stairs in this project - with bursts of energy. He’s much more reserved about his personal life, giving only that Fiona, his partner, doesn’t interfere in his work “because she knows what I’m like”. Although he gets away from the dust and noise, by heading up north to Loch Tay and donning his water skis. Born in Dunfermline, with no family role model in the building trade, he formed Chris Stewart Associates in 1997, age 22. He undertook small refurbishments, learning how to as he went along, but in many ways it has been instinctive. “I left school and had a very short university career. I just wanted to get out and get working. Property development is something I wanted to do from an early age. I was lucky enough to find a couple of private investors who were willing to put some money into deals in 1996, which was the St

ENTREPRENEUR

Stephen School in Stockbridge and then three townhouse projects in Glasgow. It’s been a rolling state since then. It is very difficult at the outset to balance the combination of trying to get some money to pay the bills and have some capital to invest into the next project.” He was given a leg-up by Edinburgh surveyor and retail agent, Eric Young, and by Mike Rutterford, the property entrepreneur and the founder of Archangels Investment Syndicate. [“I’m on good terms with Eric and Mike. We know them very well.”] He was given a leg-up by a syndicate of private investors and cut his teeth on the St Stephen Street School, Stagecoach headquarters in Perth, and the BBC studios in Queen Street, which became the Jam Club. His golden rule was to buy at a good price so it can be fitted out to the highest spec and still be a good price for buyers. By 2009, Chris had sold £45million of property and his own company portfolio was growing, having secured premises on Waterloo Place, at the east end of Princes Street.

Edinburgh’s demand for budget lower-cost accommodation was encouraging more national chains to move in. Chris struck a deal with Travelodge for a prime site on Waterloo Place, agreeing a 35-year lease for the 93-bedroom hotel for £674,000 a year. It was regarded as one of the property deals of the year. On the same street, in 2007, Chris also purchased the Georgian terrace in 23 Waterloo Place, once the housing office of Edinburgh Council, from Morley Fund Management, the asset management arm of Aviva, before selling it to Apex Hotels, the four star Edinburgh chain chaired by Norman Springford. The Chris Stewart Group was now well established and took over the former Bank of Scotland branch at 8 North Bank Street, creating some stylish apartments which sold well. It was then that he turned his mind to Advocate’s Close and to the elegant old Edinburgh Festival headquarters building on Market Street, which had looked very forlorn and neglected. The German budget hotel chains, Motel One, which has over 30 properties in Berlin and Austria, was interested in coming to the capital, and Chris Stewart became involved in the £45m development with Motel One, backing onto the Advocate’s Close. Motel One opened before Christmas 2012 and has improved a jaded corner of the capital. “I thoroughly enjoy what I do. Yes, there are pressures at times and it can become fraught when things aren’t going quickly enough. But I wouldn’t want to be doing anything else.” With this landmark under his belt, there will doubtless be many more historic refurbishments to come. Now what about the City Chambers in Glasgow? That would be a suitable job. n

There are pressures at times and it can become fraught when things aren’t going quickly enough. But I wouldn’t want to be doing anything else

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COMMERCIAL PROPERTY

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>> Flexible business space A speculative headquarters building within Buchanan Gate Business Park – ten minutes from Glasgow city centre – is now on the market. Buchanan Gate, where a new 68,900 sq ft Scottish Water national operations centre is situated, adjacent to Junction 3 on the M80, has been put on the market by joint agents, CBRE and Montagu Evans. The HQ building, owned by Scarborough Group International, spans 40,000sq ft over four levels. The office building boasts a reception area, car parking provision, shower and cycle storage facilities and floor-to-ceiling windows. With 10,000sq ft open-plan floor plates, sub-divisible from 3,000sq ft, the HQ building will offer highly flexible business space. David Rolwegan, associate director at CBRE, said: “The Buchanan Gate Business Park is a prime development with some impressive existing occupiers including Barratt Homes, BAM, Premier Inn and Scottish Water, which is due to come on site over the next few months.” “The HQ building opportunity offers a highly prominent location within the park which benefits from the transport links afforded by the M80, nearby Stepps railway station and bus connections.”

>> Central perk Developer SCOT Sheridan has announced plans for Aberdeen Central – a £4m, light industrial development in a strategic location in Aberdeen – following the purchase of a 2.1-acre site at St Machar Road. The move represents the first development in the city for the Glasgow-based company. Aberdeen Central, it will be developed in association with funding partner Milow Properties Ltd.

>> Signs are positive Retail, industrial and office sectors all returned positive figures in the first quarter of 2013, the first time since Q3 of 2011, says the Scottish Property Quarterly report. Scotland’s quarterly total return for Q1 2013 was 0.2%, which is lower than the UK as a whole; however the UK-wide performance

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>> Infrastructure seen as the road to global city success Major investment in Edinburgh’s infrastructure – including the trams network – can secure the capital’s future by enabling it to compete internationally as a modern global city, according to a property expert. Mike Fitzgerald, a real estate partner at law firm HBJ Gateley, said Edinburgh City Council’s decision to fund the expansion of the Edinburgh International Conference Centre, with the associated Grade A office space in the adjacent Atria 2 complex, showed foresight and courage. The Atria Edinburgh was recently unveiled to the market. Attendees at the launch, which included professionals from across Scotland and representatives from the City of Edinburgh Council, were welcomed by chief executive Sue Bruce, and Lord Smith of Kelvin. The development is already 33% let with two leading financial services occupiers taking space in Atria One. Investment manager Brewin Dolphin will take 48,000sq ft on levels 5 and 6, and the Green Investment Bank confirmed that it would take 12,000sq ft on level 7. The development marks the completion of The Exchange business district in Edinburgh. Mr Fitzgerald said similar projects to create top-class business accommodation, such as the Ediston development at 145 Morrison Street, the Tiger scheme at Haymarket Yards, and the Charlotte Square Collection, were part of a trend in office space moving back to the financial services district around Lothian Road following development elsewhere in the city. Sue Bruce, chief executive of the City of Edinburgh Council said: “Atria Edinburgh provides the city with a competitive advantage in attracting new, and retaining existing, businesses. This is reflected in the announcement of two new significant tenants prior to completion, which is a huge endorsement for the building and for the city. Mike said: “Property is still a tough place to be at the moment, and that impacts on lots of other things. How the Atria project lets could be a barometer for the economy of the city and even Scotland as a whole, since businesses need confidence to take space in prime offices.”

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has been driven by the strength of the central London office market, which achieved a quarterly total return of 2.6% in Q1, states the report from property consultancy CBRE. Total returns for the retail sector improved, delivering a positive return of 0.1% in Q1 2013, compared with a negative return of -0.3% in the previous quarter. This was mainly due to a slower pace of decline in capital values, from -1.8% in Q4 2012 to -1.4% in Q1 2013. Total returns in the retail warehouse sector were higher in Scotland than in the rest of the UK. Scottish offices also improved in Q1, moving out of negative territory. Total returns for offices increased slightly (0.02%) compared with a negative return of -0.4% in Q4 2012. The decline in rental values slowed to -0.3 from -0.7%, while income return improved very slightly to 1.8%. Even though Scottish office returns were only just positive in Q1, the sector actually performed better than anywhere else in the UK outside of London and the South East of England. Supported by a quarterly income return of 1.9%, industrials were the strongest performing commercial property sector in Scotland achieving a total return of 0.9% in Q1. Capital values continued to decline while rental values reversed their decline with ERV growth of 0.1% over the course of the quarter. On an annual basis Scottish industrials outperformed the UK by a slight margin. Aileen Knox, CBRE’s senior director in Scotland, said: “There is modest growth across Scotland’s commercial property market, indicating that the Scottish economy is continuing its slow recovery from the recession. The overall UK performance is driven by the strength of the central London property market. However, if London and the South East are stripped out of the UK figures, Scotland is one of the UK’s strongest regions.” Some £123m was transacted in the Scottish property investment market in Q1 2013. Over half of this was in the office sector, where £72m of transactions took place over the quarter. At £46m, Waverleygate in Edinburgh was the largest office transaction in the first quarter, let to Amazon and the Scottish Government at a yield of 7.3%.

COMMERCIAL PROPERTY

Retail transactions of £24m accounted for just under a fifth of all Scottish investment activity in Q1, while industrial transactions, at £18m, accounted for just 15%.

>> Kiltane sets up shop The former Castle Antiques shop at 330 Lawnmarket in Edinburgh has been secured by Shepherd Chartered Surveyors for Kiltane Retail on a 25-year lease at £72,000 pa. Kiltane Retail operates from a number of highquality premises in Edinburgh and this 1,430sq ft ground and basement unit will complement these and operate as a premium provider of the finest Scottish clothing and accessories.

>> Real estate appointment Gavin Willins has been appointed the BNP Paribas Real Estate‘s head of Scotland, working alongside Gary Cameron, from Inglis Howie as investment director, and Nadir KhanJuhoor and Marcus Weurman, from Knight Frank, to lead its office agency business.

>> Call for more hotels Five more hotels are needed in Dundee to meet the surge in demand from the £1bn transformation of Dundee Waterfront, say local enterprise chiefs. A massive increase in tourism is forecast between 2015 and 2025, as a wave of leisure, business and family visitors generate opportunities for the new commercial, leisure, retail and residential development underway in the Waterfront area and across the city as a whole. The £45m V&A Dundee is expected to provide a major boost to visitor numbers while a further growth in visitors will be generated by other infrastructure, business and tourism projects, including a proposed ‘Maritime Way’ tour from Discovery to the Unicorn, plans for a Marina at City Quay and the marketing of Dundee as a destination for the growing cruise industry.

>> Strainstall bridging the gap with contract Strainstall, the engineering consultancy, has won a contract in partnership with Forth Crossing Bridge Constructors to provide the crucial structural health monitoring for the new £790m Forth Replacement Crossing bridge. The new Forth Replacement Crossing will be a cable-stayed bridge carrying a motorway with two lanes of traffic plus hard shoulder in either direction. Supported by three single column towers, the completed structure will be 2.7km long including its approach viaducts. Final design and construction is being undertaken by the Forth Crossing Bridge Constructors consortium, comprising Hochtief, Dragados, American Bridge International and Morrisons Construction. The client is the Scottish Government. Richard Burmeister, managing director at Strainstall, said: “This contract is a further demonstration of the international name and reputation of Strainstall in the provision of structural health monitoring both for new-build civil engineering projects as well as the protection of important heritage structures.” The contract announced will see James Fisher and Sons plc, a subsidiary of Strainstall, provide sophisticated monitoring technologies, allowing the bridge’s precise movements and loadings to be monitored in real time, during the construction as well as throughout the life of the new bridge.

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COMMERCIAL PROPERTY >> i2 moves into Aberdeen Serviced office provider i2 Office has secured prominent office space in Aberdeen, in a move that establishes the firm’s first presence in the city centre. The Milton Keynes-based company has signed a sub-lease agreement with Stewart Milne Developments to occupy 16,395sq ft of office space at 210-214 Union Street, and 1 Huntly Street. The rent has been agreed at £232,750pa. The business centre will be available for occupation from the end of July.

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>> FedEx sign Eurocentral deal James Barr’s investment team has concluded the acquisition of 51 McNeil Drive, Eurocentral. The property comprises a purpose-built 51,769sq ft distribution warehouse let to Fedex UK until 2022 at a rent of £255,000pa. F&C REIT paid £2.92m for the property, representing a net initial yield of 8.25%. James Barr acted on behalf of F&C REIT and CBRE acted on behalf of the vendor, DSV Road Ltd.

>> Tayburn renews South Side rental Tayburn, the design and marketing company, has agreed a new lease with Aviva Investors Pensions for Block C, Kittle Yards, Causewayside, Edinburgh. The suite extends to 6,148sq ft of office space on the first and second floors and has been let for a further 10 years to Tayburn at a rental of £92,220 per annum.

>> Nursery move into incubator park A new nursery has been set up in the fast-growing Aberdeen Energy & Innovation Parks in Bridge of Don. Stompers Nursery opens for business in July at the recently-renovated Balgownie Centre, after signing a lease with Buccleuch Property. This is the second location in the city for Stompers, which will be located in the Innovation Park, but will be available to parents working onsite at the Aberdeen Energy and Innovation Parks, a joint venture between Buccleuch Property and Scottish Enterprise. Cameron MacKay, Buccleuch Property’s associate director, says the addition of a nursery added value to the 1,800-strong workforce based at the Parks. “As landlords, having canvassed the opinion of park

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occupiers, we knew there was strong demand for a nursery. Stompers were seeking to expand its existing provision in Aberdeen, so we are delighted to offer them a leasing agreement.” Elsewhere on the park, the new serviced office units at the James Gregory Centre are being taken up at an occupancy rate from 40% to 70% in the three-month period from March to May. Since the start of 2013, Buccleuch Property brought Oliver Valves, ICR Integrity, RESON Teledyne, First Flight Non-Executive Directors, QoSL, AISUS Offshore Ltd, Glacier Energy Services and Suretank to the park. The new lettings when combined with the renewal has seen income secured of more than £500,000 per annum over nearly 40,000sq ft of accommodation.

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>> Seven deals for Bilsdale Joint agents GVA and Jones Lang LaSalle have completed seven deals in 12 months on behalf of Bilsdale Properties, securing a range of occupiers in Glasgow’s central business district. Six lettings and one sale have already been concluded for Bilsdale, the owners of two office properties in the city which form part of its £400m UK portfolio - Kintyre House on West George Street, known as Glasgow’s ‘James Bond’ building, and the prominent 183 St Vincent Street. Premium quality office accommodation has been secured across the two refurbished buildings for a series of high-profile companies including Chemwaste, employment law specialists Law at Work, private equity firm Maven Capital, consultancy Capital Employee Benefits, insurance specialists Unum and engineering firm Tony Gee and Partners. Additionally, a period townhouse providing traditional office space at 26 Blythswood Square was sold last June to the trustees of a private pension fund for £1,350,000. The last two remaining floors at Kintyre House are 5,191sq ft and 5,492sq ft and are both available at a quoting rent of £16.50 per sq ft.

>> £21m deal for Buchanan Street block A client of DTZ Investment Management, represented by Knight Frank, has bought 133-137 Buchanan Street, Glasgow, for £21.2m - reflecting a net initial yield of 5.5%. The 35,197 sq ft building, previously owned by LNC Property Group, occupies an entire block on a prime retail location at the corner of Buchanan Street and St Vincent Street. The premises include retail space at ground floor and basement level, with office accommodation on the upper floors. Tenants include Phones 4U, TM Lewin, the Post Office, and a former HBOS unit, currently being assigned to Jack Wills.

COMMERCIAL PROPERTY

>> Lochside View for high-profile tenant The flagging office market in the west of Edinburgh has been boosted by news that Business Stream is to relocate to Edinburgh Park’s flagship building, 7 Lochside View. New Edinburgh Limited (NEL), Edinburgh Park’s developer, has struck a 10-year deal with Business Stream to let the 20,692sq ft first floor at 7 Lochside View at a reported rental of £18.50 per sq ft. Pamela Grant, development director at NEL, said: “This is an important deal for Edinburgh Park and we are pleased to welcome such a high-profile tenant to 7 Lochside View.”

>> Cook hits Morningside COOK, the frozen ready meals manufacturer and retailer, is to open its first premises in Scotland at 328 Morningside Road, Edinburgh. The company has taken the retail unit next to I J Mellis cheesemonger, extending to 815sq ft, on a ten-year lease at a rent of £21,000 per annum. Ryden acted on behalf of the landlord in the deal. The University of Strathclyde has played a key role in a helping Glasgow City Marketing Bureau to generate £1bn in revenue. Since the bureau’s launch in 2005, more than 800,000 delegates have visited Scotland’s biggest city to attend events ranging from medical conferences to dance contests, spending 3.3 million nights in local hotels. It has also worked closely with the higher education sector in order to attract events. Professor Sir Jim McDonald, principal of the University of Strathclyde and chairman of the Glasgow Economic Commission, said: “This is a significant milestone on the economic journey of Glasgow and I congratulate all those from the Glasgow City Marketing Bureau who have helped the city reach this target. This success is down to two things – vision and partnership. “The city leadership had the vision to reposition Glasgow as a conference powerhouse and partners from across the region came together and worked to make this happen.” The bureau, chaired by council leader Gordon Matheson, was launched by Glasgow City Council with the remit to turn the city into a global conference venue. This year, it won the coveted crown of the UK’s Best Convention Bureau for a historic seventh year in a row.

The city leadership had the vision to reposition Glasgow as a conference powerhouse and partners worked to make this happen >> Riverside House goes for £13.7m Riverside House in Aberdeen has been sold by Rockspring Property Investment Managers, on behalf of clients, to Aston Property Ventures for £13.75m. Scottishbased property firms Ambassador Group and Graham + Sibbald advised Aston Property Ventures on the acquisition and will have an ongoing advisory role in the management of the asset. The investment is located within Aberdeen’s expanding Riverside Business Quarter, where rents have recently achieved £29 per sq ft. Acting on behalf of Aston Property Ventures, Sandy Gilmour, investment specialist at Graham + Sibbald, said: “Aberdeen continues to attract capital and investment from a wide variety of sources.”

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

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BUSINESS LUNCH

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Chris Tiso has been at the helm of Scotland’s largest independent quality outdoor retailer for over 20 years. As he savours West Coast scallops and a fillet of halibut in Glasgow’s TwoFatLadies at the Buttery, he recalls a childhood when meals were simpler yet the outdoors beckoned. Genevieve Robertson found him in excellent form

Utterly Buttery delightful The young Tisos spent their holidays in canvas tents in Scotland. It was often the in-your-face 360 degrees experience of rain, wind, clegs and midges, with dad leaning over the Primus stove prodding a boil-in-a-bag rice and curry with his Swiss Army pen knife. “When everyone else at school was going to the south of Spain on their summer holidays, we were in a tent somewhere up north, or on some beach on a remote island on the West coast. That was the tone of my childhood,” recalls Chris Tiso. Sitting in the upholstered comfort of the TwoFatLadies at the Buttery, enjoying a wonderful fillet of halibut, stir-fried vegetables with sesame seed and signature of teriyaki sauce, Chris Tiso can look back with affection and laughter at these childhood recollections. He is casually dressed in a grey jumper and white shirt with a head of thick, wavy hair, a fresh complexion and he speaks with a refined but clear and recognisable Scottish accent. In so many ways, he is deeply proud of how his young life prepared him for the rough terrain of the business world. When he took over Scotland’s largest independent

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quality outdoors and leisure retailer at the age of 21, he was pitch-forking into the front line. Twenty years later, the Tiso chain has changed beyond recognition, yet somehow the late Graham Tiso, who set up the business

in 1962 and loved Scotland and its majestic scenery, would be able to see that an ethos which helps people enjoy the outdoors is still at the heart. Today the Tiso Group, based in Commercial Street in Leith, includes Alpine

Bikes, Blues the Ski-shop, and George Fisher in the Lake District, employing around 400 people, although this is seasonal. Graham and Maude Tiso instilled a love of Scotland and outdoors, which still resonates with Chris. Indeed, even more so. “My mum and dad introduced me to something that I am really proud to be passing onto the next generation, by taking my kids wild camping. It’s the simple pleasure.” But the economic downturn has made many recalibrate what is important in their lives, especially when money is tight. “I feel strongly that something positive has come out of the huge economic change that’s taken place in recent years. People, through necessity, have found themselves holidaying at home: the so-called staycationer phenomenon. This has led to many people reengaging – or in some cases engaging for the first time – with their own country and what it has to offer.” He is delighted that people who might never have visited the Highlands and Islands, and live in the Central Belt of Scotland, are now experiencing their homeland – and >>

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BUSINESS LUNCH

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wanting to do more.“There are people who have never explored the West Coast; never been wild camping; never walked up a hill; never cycled down a track; never beachcombed with their kids. Scotland has the best things to offer in the world: I love it, I grew up holidaying in Scotland.” In Scotland, a family can jump in the car with a few sleeping bags, a tent in the boot and drive for a couple of hours and be in a remote and wild place where they can pitch a tent next to a mountain stream, see eagles soaring overhead, or look out for the deer. All this out of sight and sound of any other human being. “That’s just fantastic,” he says. It’s also good for a business too that we can supply every single outdoor need – except the weather. It hasn’t been an easy ascent for Chris Tiso. On reflection, inheriting the business at the age of 21 was a lonely vigil. While he has been able to rely on his mother’s sound counsel, in recent years some difficult decisions have been made to secure the Tiso future, and this involved some unpleasant choices. “In the wider economy, there have been huge challenges and the Tiso Group is no exception. This has necessitated tough decisions and some good friends and long-standing colleagues have had to go as we rationalised our stores.” The double whammy of recession and the baseline shift to online selling has meant Tiso

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has had to invest in making the shops more attractive, interactive and ensure that the service was second-to-none. The innovation of the Tiso Outdoor privilege card has been a boost. “We make our livelihood in the most part from people who are going into the outdoors. Sure, there are people who will shop in Buchanan Street and buy a North Face jacket and they are never going to go any further than the local pub. That’s part of it too. If not, we wouldn’t need a shop in Buchanan Street! We’re clear that we operate in the quality end of the market, offering service and top performance brands.” Chris Tiso attended Rannoch School, located on the shores of Loch Rannoch, in Highland Perthshire, which was very much focused on the outdoors. “I spent a lot of time in my youth mountaineering, rock climbing or ski-ing. My sporting life has ebbed and flowed over the years. I’ve found myself born again into certain sports. For example ski-ing, I hadn’t done much for many years because I had a very young family and the options to get away were limited.“ Last winter was Chris’s first time on snow in many years in the Cairngorms and he found it a magnificent experience. “It was Alpinestandard snow with clear blue skies, and no

queues at the tows. It was stunning. Our young kids just loved it.” This has re-engaged him. “They are at a stage and age that we can go together.” Like so much of the outdoor equipment market, in the time that had elapsed, the quality and textures of the kit and the technological improvements have made it much easier and far more enjoyable. He moves on to talk about bikes. “The terrific advance in technology and the creation of biking trail centres in Scotland at Glen Tress, Laggan Wolftrax, or Nevis Range is outstanding. We now run retail or hire facilities in a couple of key sites.” “Glen Tress is fantastic. The Forestry Commission has done an amazing job, we sometimes do ourselves down in Scotland and we need to remind ourselves that actually up at Nevis Range and Glen Tress we have worldclass facilities that people travel around the world to come to try.” This has all rekindled his love affair with bikes. “We bought Alpine Bikes a number of years ago and suddenly I found myself looking at mountain biking again. I got really interested, although we weren’t given much option because the guy we put in to run the business insisted that we all had to buy mountain bikes!” More recently, road biking has enjoyed a

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remarkable resurgence, helped by Sir Bradley Wiggins winning the Tour de France, and Sir Chris Hoy and his GB team-mates, scoring piles of gold on the track. “There has been a huge rise in interest, fuelled in part by Olympic success and the extraordinary achievements. There was a

BUSINESS LUNCH

great uptake. We have seen the proportions have changed. When we bought Alpine Bikes it was mainly mountain bikes and this has now moved to include hybrid bikes – for the commuter, fuelled by cycle-to-work schemes – and the serious road racing bikes.” Chris is living proof of this evolution. He got

Two Fat Ladies at The Buttery The Buttery is one of Glasgow’s most cherished eating houses. It might appear an incongruous tenement block in the midst of a high-rise housing development and a local school, but it is a comfortable, must-visit venue for its ambience, attentive but not cloying service and its medium-priced lunch menu. Get along soon, if you haven’t been for a while. Chris enjoyed a starter of flash fried West Coast Scallops, spiced dahl and lime coriander sour cream, which was declared ‘extremely tasty with the tang of spice offsetting the salt of the succulent scallops’. Genevieve chose the Buttery-style king prawn cocktail which was ‘mouth-wateringly marvellous’. The main course selected by Chris was a fillet of halibut, served with stir-fried vegetables, sesame seeds and teriyaki sauce, which Chris said was ‘light and flavoursome, with the fillet simply melting in my mouth.” Genevieve enjoyed the sea bass, cherry tomatoes, pinenut and rocket cous cous served with mint yoghurt. ‘A refreshing lunch-time main course with the sea bass perfectly done.’ The main courses were served with new potatoes, crunchy carrots and mange-tout. While Chris stayed on the fizzy water, Genevieve had a glass of white Champs du Moulin, Cote du Gascogne, a fine Colombard grape that complemented her sea bass. Both had coffee and were served some delicious and colourful petit fours, including a mini custard tart. In all, a perfect place to enjoy something that is distinctly Glasgow with its unique surroundings and laid-back Ella Fitzgerald soundtrack. Lunch for two was around £70. Special thanks to Maddie Anderson and Iain Lord, the waiting staff Alison and Stephen Johnston in the Buttery kitchen. The TwoFatLadies at the Buttery, 652-654 Argyle Street, Glasgow, G3 8UF. www.twofatladiesrestaurant.com 0141 21 8188.

It’s good for business that we can supply every single outdoors need - except the weather

a road bike two years ago and says it is highly addictive getting into the saddle and knocking off a 25-mile circuit before his Rice Krispies. “The great thing about it is you can wheel it out of your backdoor – and go. Running was always a constant in my life – and I loved it but I have noticed as I got older road biking gives you wonderful exercise and is kinder on the body!” He recently undertook the closed-road Marie Curie Cancer Care Etape Caledonian in May, an 81-mile journey through Highland Perthshire. “There was something like 5,000 riders on closed roads. It was a great fun-cyclo-sportif event and such a treat.” Tiso has supported a number of charitable organisation over the years. “We like to build long-term relationships. We’ve supported a medical research expedition to the Andes looking into the effects of hypoxia and altitude sickness and have long-standing relations with the John Muir Trust, the conservation trust.” Throughout lunch, Chris Tiso is in sparkling form and keen to move the conversation away from himself to have a bit of chat about another interest – the state of the media in Scotland. While the coffee is being served, a souvenir teaspoon – one of the Buttery’s many nice touches – has the crest of the Channel Island of Sark. It prompts Chris into a discussion about newspaper barons – although its clear he has no intention of making a bid to buy any ailing titles. He’s keen to stick to the outdoors – and what he knows best. n

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livingston ON WINE

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When office colleagues show their true colours Jamie Livingston, the founder of Glasgow executive search and selection firm, Livingston James, thought he would spread out the wine-tasting task – and found out the hard way that good wine is not always made for sharing I’ve realised that wine appreciation is a very personal thing. While I’ve always been a committed team player – particularly on the rugby field with West of Scotland Rugby Club and now with Livingston James – I now understand there are as many opinions on a tipple as there are varieties of vineyards.

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When BQ asked if I’d like to do the sampling for this edition, I thought it would be smart to share this more pleasurable assignment with my colleagues; surely a nice opportunity to undertake some team-building on a Friday afternoon. The team showed their customary enthusiasm in tackling this ‘challenge’. I’d already been down to meet Pete Stewart at Inverarity One to One in Bath Street for a bit of preparatory training, where he took me through some of the nomenclature of viticulture. Pete and his One to One colleague Andy Bell, the secretary of Glasgow’s Whisky Club, are two of the most informed and enthusiastic wine buffs in the West of Scotland. I hoped some of their knowledge would rub off on me. Armed with this knowhow, I thought perhaps I might be able to bluff my way through the wine tasting with my colleagues. By Friday afternoon, I was ready. We tasted the wines as a team in the office but I quickly realised trying to give a balanced view that represents the collective was not going to be easy. What an opinionated lot we are! Pete selected an Ad Hoc Straw Man, a Sauvignon Blanc from the Margaret River in Western Australia, at £14.99 a shot. The consensus was a little sceptical of this New World interloper before tasting – clearly we’re a bunch of Francophile traditionalists when it comes to blanc – but we were pleasantly surprised. There was much more balance and flavour than we had expected. While some still preferred their Gallic favourites, we all felt

it would clearly work well with a chunky fish dish, such a monk fish or fish pie. The red was a Sergo Alighieri’s Possessioni Rosso 2010, in collaboration with MASI, from the ancient vineyards bought on the proceeds of Dante Alighieri’s best-seller, The Inferno. This wine was a crowd pleaser and I am sure that the guys at Inverarity will be receiving orders from the team for more of this. It drank well by itself - more instantly quaffable than some other Italian reds we’ve had - and would certainly be a great accompaniment to a meaty lasagne or hearty Tuscan stew. It’s a devil of a good deal at £11.99. I have my own proof of how much the team enjoyed this wine. Moments after it was opened, I took a few minutes to take a phone call from a client. By the time I had returned a remarkable amount of ‘evaporation’ had taken place. So if the speed at which the wine leaves the bottle is any indication of its quality – this one’s a good one! Our team excelled once again – although I now know who favours the Italians over the South Africans, or the Australians over the French. And I’m not talking about rugby. Thanks to Pete and Andy at Inverarity One to One, Bath Street, Glasgow. For a wine tasting with Pete, phone 0141 221 5121, or www.inverarity121.com. Margaret River Sauvignon Blanc £14.99. Sergo Alighieri’s Possessioni Rosso 2010, £11.99.

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MOTORING

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A new Bavarian friendship Nicola Taylor, director of Glasgow-based Chardon Management and a board member of British Hospitality Association, loves driving. But how was a new convertible BMW going to compare with her beloved Porsche? Actually, she discovered that it was a great companion on the road >>

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MOTORING

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motorING

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Why is it guys should have all the fun when it comes to enjoying their motors? After all, we love driving great cars just as much as the opposite sex. So it came as a nice surprise to be asked to do the BQ car review, and put something new through its paces. If Jeremy Clarkson can swoon at the purring of a McLaren 12C Spider’s V8 engine then surely I could get emotional about bonding with a convertible. Every year, I do a lot of driving for my business, so I want to be comfortable. My work takes me all over the UK. In 1993, when I joined Chardon Management, the UK’s leading independent hotel management company, we operated four hotels. Today we manage 35 hotels and seven health and fitness clubs encompassing such leading brands as Indigo, from InterContinental Hotels Group, Doubletree by Hilton, Best Western & Choice Hotels; Holiday Inn and Holiday Inn Express as well as many

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independent properties under their own unique brand. Our own brand portfolio comprises: La Bonne Auberge; Limelight Bar & Grill; Triangle Health and Fitness and Tri Health & Beauty and I need to ensure that our systems deliver topnotch quality. I want to be as fresh and filled with energy as I can at our meetings after a long drive. I also chair the Holiday Inn Express Owners’ committee in the UK, and sit on the board of the British Hospitality Association, so I understand the intrinsic importance of maintaining high quality brands – and I’ve always admired BMW for the same reason. The M6 Convertible - I was test driving one in Silverstone metallic with black leather sports seats and wide tyres - has all the styling and presence that you would expect from a BMW. The M6 Convertible was something new for me and different to the Porsche 911 I’m used to. While my Porsche is firm and direct, the M6 was a totally different experience; a dynamic, controlled drive. Although heavier than the Porsche, it did not disappoint me. As I accelerated I could feel the extreme power generated by the refined 550bhp V8 BMW TwinPower engine. With a 0-62mph in just 4.3 seconds this car felt seriously quick and BMW have done an excellent job. As I retracted the hood the car transformed into another dimension: there wasn’t a lot of cabin noise even at higher speeds. The seats were comfortable and poised, and the layout of the dash was welcoming and uncluttered.

We love driving a great car just as much as the opposite sex I was also pleasantly surprised with the running cost of this car. With C02 emissions of 239g/km and a combined fuel economy of 27.4mpg, it wouldn’t put me off. As you would expect, no detail has been ignored and I was familiar with its layout and controls as similar to all BMWs – my parents drive a 7 series and an X5. Externally, the muscular wheel arches, large kidney grilles and adaptive LED headlights gave this car a real sense of purpose. The 20” double spoke alloy finished the look. At over £104,000 you would expect the M6 to be something special and it was. Would I swap it for my long-term German relationship - let’s just say I’ve found another Bavarian friend that I like very much. The car Nicola Drove was the M6 Convertible, OTR £104,785. Car supplied by Douglas Park Glasgow BMW/MINI, 3-33 Kyle St, Glasgow G4 OHP 0141 333 0088, 0141 333 8245 www.douglasparkglasgowbmw.co.uk

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XXXXXXXX EQUIPMENT

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voyage of rediscovery New thinking around ancient technology has seen sails making a welcome return to prominence in the seafaring market

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EQUIPMENT “Raise your sail one foot, and you get ten feet of wind”, as an old Chinese proverb has it. What might be more remarkable today, in the era of the mega-yacht, is that anyone raises sail at all any more, aside from on learner dinghies. The motorised vessel has, on first sight, so overtaken demand for sails in the luxury market - despite luxury brands’ association with major events the likes of the America’s Cup, the Tall Ships’ Race and even Les Voiles de Saint-Tropez - that the sail might seem anachronistic. True sailors, of course, know that it is precisely the quality of being an ancient technology that makes mastering a sailed yacht, to best utilise available wind, that is at the heart of sailing’s pleasure. Indeed, even at the very top of the market, some kind of battle is at hand between classic sail boats and their proposed equivalents of tomorrow. Take, for example, the renaissance of the J-Class yacht. The J-Class belonged to an era of the wealthy gentleman adventurer, and were sailed by the likes of Harold Vanderbilt, whose surname speaks for itself, and Sir Thomas Lipton, then owner of the grocery chain and the Lipton Tea brand. In fact, it was Lipton who had the first J-Class commissioned to race in the America’s Cup. It was a revolutionary design: long, with a waterline of between around 23 and 27m (the size of a yacht being ascribed a letter of the alphabet), sleek, agile and aqua-dynamic being almost triangular in profile - and with impressive speed, thanks to a mast that >>

As with the floating palaces beloved of Russian oligarchs, in sailing yachts, size increasingly matters BUSINESS QUARTER | SUMMER 13

While one part of the luxury yacht world may look to yesteryear for inspiration, another is decidedly steering towards the future analysis and found that the balance of the design could hardly be improved on. But could the sails themselves? While one part of the luxury yacht world may look to yesteryear for inspiration, another is decidedly steering towards the future - in no part driven by the ecological and financial benefits afforded by new sail or hybrid power technology. Huisman, for example, also has for sale the Athena - inspired by the J-Class style yachts of the 1930s, but made entirely of aluminium, making it extremely light. It is, in fact, the largest all-aluminium sail yacht ever built. Of course, as with the floating palaces beloved of Russian oligarchs, in sailing yachts, size increasingly matters too. Lila-Lou, a Londonbased yacht-brokers, is building the Ankida, at 73m long, while Sparkman & Stephens is

allowed the carrying of huge sails, one at a gargantuan 18,000sq ft. Up until the end of the 1930s only 10 J-Class vessels were ever built, but by then it had arguably come to define the look and lines of the definitive classic yacht in the public imagination, one that has held right up to modern times. Certainly the class still evokes that romance, which may be why Hanuman, a modern

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recreation of the J-Class, built by the Royal Huisman shipyard complete with a period interior and currently for sale, is garnering so many interested parties. Or why Spirit Yachts has this year announced an historic collaboration with Sparkman & Stephens yacht-builders to build a new J-Class. But then perhaps it is no wonder at all: a decade ago boatbuilders put the J-Classâ&#x20AC;&#x2122; dimensions through aqua-dynamic computer

EQUIPMENT

building a 75m Bermuda-rigged schooner - to put that in perspective, both yachts will on completion be bigger than Nelson’s HMS Victory (and these are minnows against proposed motor yachts concepts the likes of that from Donald Starkey or Emocean’s 200m Project 1000). And certainly one key trend in big sailing yachts now is designs that reconfigure the interior to make more space. In fact, UltraLuxum’s CXL concept somehow makes room for an on-board garage, ostensibly built to house a McLaren supercar. But such concerns are secondary to J-Class levels of style, with the advantages of science too. Enter the likes of Igor Lobanov’s Phoenicia sailing yacht concept, with, for example, a hi-tech version of a bow design dating to the Greek triremes of 2000 years ago.

It is precisely because even the very rich want to save on fuel that sails could prove the future of yachting

Or the Maltese Falcon, at 88m long currently the world’s second largest sailing yacht, built for venture capitalist Tom Perkins and, again, while looking to be a classic schooner, operating three hollow masts that rotate to unfurl a huge 2,400sqm of sail that can be extended out along the yard. Indeed, it is precisely because even the very rich want to save on fuel that sails could prove the future of yachting rather than being consigned to its past.

Or, at least, sails of a kind. Christoph Behling’s SolarLab Research Company has proven the efficacy of solar-powered craft through the 40-passenger, solar-energy powered boat it designed for London’s Serpentine in 2006, then with another - the world’s largest solar-powered boat - for Hamburg, and, most recently, in a ferry for Hong Kong harbour. In 2009 Behling received a private commission from a client in Dubai to build a solar-powered yacht, complete with a solar-powered desalination unit. And 2010 saw the launch of the Turanor PlanetSolar catamaran, the world’s largest solar-powered boat to date, using so-called solar sails. These, as they suggest, use their huge surface area to collect solar energy for conversion into electricity to power engines. Sauter Carbon Offset Design’s Emax E-Volution schooner takes the idea a step further, being a solar hybrid model, able to run on solar power (which, through panels embedded in the hull, also powers all of the yacht’s amenities, from refrigeration to jacuzzis), diesel or wind-power. Of course, such super-sails come at a price. Lipton’s first J-Class yacht cost him US$1m. The E-Volution will cost you US$40m. n

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FASHION high fashion on the high seas

The once disparate worlds of luxury fashion and yachting are becoming increasingly intertwined, writes Josh Sims

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When Monaco-based yacht-builder Wally launched its acclaimed triangular hull concept, proposing something akin to a floating apartment, its partner in the project was no mistake. Wally’s co-creator was French fashion brand Hermes. Certainly, if high fashion and yachting used to go together like oil and water, now private commissions and sponsorship deals have seen the likes of Giorgio Armani devise yacht interiors, Louis Vuitton launch the Louis Vuitton Trophy and, more recently, the Trophy Auckland regatta, and Prada pour money into its own America’s Cup racing team. Small wonder then that such brands have followed with a new breed of style-driven sailing clothing: Prada’s Luna Rossa line named after the yacht and including replicas of the sailing team’s clothes - alone has annual sales of over €20m. Puma has now set sail for the first time, Italian luxury textiles company Loro Piana has launched its Regatta clothing collection and Porsche Design its Marina Collection, its first specialist sailing clothing line, developed in conjunction with three-times Olympic gold medal sailor Jochen Schuemann. “Sailing has become much more a topic of media and public interest than it was, say, a decade ago,” says its CEO Juergen Gessler, “and that is driving demand for stylish, new products. And while boat shoes have long been a fashion must-have, of course, you can see other types of sailing clothes increasingly making the transition to being worn casually too.” Indeed, the interest of fashion brands in the sport, as well as that of a younger consumer, is now also prompting a reassessment of the place of style among the marine clothing brands who have traditionally placed functionality well to the fore - with issues of weight, waterproofing, articulation, corrosion, layering and storage all deemed priorities. Visitors to such famed sailing events as the Round the Island Race on the Isle of Wight this June, or the Tall Ships Race in St. Malo and Lisbon in July or Les Voiles de Saint-Tropez in September might expect a more stylish line-up from the sea-dogs. Boat shoe companies are already deep into the style market: Sperry Top-Sider has launched its new lifestyle stores in the US, while >>

Newbies typically wore either inappropriate clothing or the unnecessarily hi-tech

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FASHION

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FASHION Sailing has become much more a topic of media and public interest than it was a decade ago

competitor Sebago has created a limiteddistribution fashion line. But now Gill Clothing, for example, the official technical clothing sponsor for Cowes Week, has also created its

Race Collection, a co-ordinated 12-piece range aimed at providing the teams in match races - the F1 of yachting - with a distinctive look: in an unusual silver-grey with hi-vis colour flashes. “Fashion brands might develop a capsule line for what is now a highlyaspirational sport before moving onto something else, while marine brands have to be careful not to dilute their perception in the rather insular marine market. But there is no question that the market is developing an appreciation that a technical garment should look as good as it possibly can,” says Matt Gill, Gill’s product development manager. “Now consumers don’t just want red, yellow or navy, for example. Up until just a few years ago you would never see black. It might be low-visibility in the water but it looks good and has seen real demand.” Nor is Gill Clothing alone in pursuing the likes of Hugo Boss and Tommy Hilfiger in bringing such fashion names’ more pleasing aesthetics to their specialised clothing. Norwegian brand Helly Hansen has sought to blur the fashion/function boundary with its new Ask advanced sportswear line -

“because there’s a readiness to buy new sailing kit in line with changes in fashion now,” suggests its watersports manager Tor Jenssen. “People used to buy new every decade. Now it can be every other year.” Application of the latest manufacturing technology - in which the marine brands are ahead - has resulted in attractive but utilitarian detailing too. Henri Lloyd has teamed up with Japanese fabric and chemical manufacturer Teijin to launch Blue Eco, sailing’s first fully recyclable, waterproof/breathable collection. “We’re aware that the same people who sail often ski or climb and are influenced by the style of those sports too, and as the market gets more competitive, bringing aesthetics to the technology is what’s giving an edge,” argues David O’Mahoney, Henri Lloyd’s technical design manager. “Now it’s about using that technology to create a more stripped-back, streamlined style which is its own look. Ugly garments won’t cut it on the water any more.” But when kitting yourself out for sailing, be cautious not to go overboard either. After all, one conclusion of a study paper in consumer research entitled ‘The Consumption of Clothing in the Sailing Community’ by the Universities of Strathclyde and Stirling, was that the close-knit subculture of the sailing world was quick to identify and dismiss neophytes by their style. Newbies typically wore either inappropriate clothing or the unnecessarily hi-tech. ‘True’ yachtsmen and women, on the other hand, expressed their experience by simply donning the rather careworn and mis-matched. n

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entrepreneur

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The voice of an angel Recently Sherry Coutu was awarded a CBE and voted one of the top 25 most influential people in the wired world. She likes to ‘test her hypotheses’ when investing. It has obviously worked. She has made 45 angel investments in companies now employing up to 9,000 people in 20 countries with a combined turnover of £1.5bn. She is a business angel who is making a difference. BQ Editor Kenny Kemp caught up with her in Edinburgh BUSINESS QUARTER | SUMMER 13

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Sherry Coutu has a head for scaling heights. While she is a dedicated Munro Bagger, ticking off the Scottish peaks above 3,000ft, she is one of a coterie of entrepreneurs-turnedangel-investors who can talk, first hand, about scaling-up businesses. While this gently-spoken Canadian expresses a love for Scotland and our heather-clad mountains, her main reason for being in Edinburgh was to share her wisdom on how to grow companies at the EiE13 (Engage Invest Exploit) event which attracted over 300 investors and companies pitching for funding. Among her multiple interests, Sherry, who was recently awarded a CBE for her services to entrepreneurship, is co-chairman of Silicon Valley Comes to the UK and was voted by Wired magazine as one of the top 25 most influential people in the digital world. Before her keynote speech, she took time to speak to BQ Scotland about her own background, entrepreneurship and the national imperative of growing fast-track firms. While Scotland certainly gets the message loud-andclear about start-ups, it has not been so good when it comes to building lasting businesses to scale. Sherry is clear that this is a national duty, because it means more employment and a chunkier tax take for the country: so why wouldn’t anyone want to encourage that? Sherry is no shirker. In the last 12 years, she has made 45 investments, with a combined turnover of £1.5bn in 2012. She invests directly in smaller companies - often three or four pre-revenue businesses a year - giving smaller tranches of regular cash, from £10,000 to £500,000. “I don’t put it all in at once. You put in a small amount and watch where it’s going. If it’s going the way you want it to, you put in some more. When the company is getting the customers and making it work, you can then put in more,” she says with a smile, as if it is all nice and simple. The 45 companies funded by Sherry employ up to 9,000 people in 20 countries. She normally co-invests with others in a syndicate, pairing up with investors who might understand a sector she has less knowledge about. She’s also keen to dispel the myths that start-ups are all about young brainboxes just out of school or university. She cites a Kaufmann Foundation study which shows that among the Fastest-Growing 500

entrepreneur

You can start things up when you are younger but by the time you’re 40 the founders are generally going to be the ones that really work global businesses, the average age of the founder was 40 years old. “You can start things up when you are younger, but by the time you’re 40 the founders are generally going to be the ones that really work. It is the serial entrepreneur who sets up and tests a bunch of hypotheses,” she says. This is one of Sherry’s recurring themes: in a scientific way when you invest in a business you are investing in a hypothesis. It works – or it doesn’t. “What entrepreneurs do, and what entrepreneurs do who turn into investors, is spot patterns. I speak as an entrepreneur who has turned into an investor, we can see trends a long time before they happens. We are actively looking for companies in places such as Scotland who are solving problems that we know will be solved: although we don’t know who is going to solve that model.” Her current portfolio includes work with the University of Cambridge; Artfinder, which has massive market potential; Duofertility, which is helping people use technology to become pregnant; Raspberry pi, a fast growing educational charity out of Cambridge; and the Francis Crick Institute of Cancer. She has also been an adviser with LinkedIn since 2006 helping it to scale up. She was an early angel in Screenselect which morphed into LoveFilm. com, bought by Amazon in 2011. While all this is deeply impressive, it was the creation of Interactive Investor International, her second business, in 1995 which set her on the path. Today III is one of the largest retail financial services sites in the UK. She set it up, became chief executive and floated it in 2000. She appointed Tomas Carruthers, the current CEO, in 1997, and prior to flotation, as she was pregnant with her second child, he took over. It was bought in August 2001 by AMP, the Australian insurer, for £52.1m in cash. Earlier, she founded Internet Securities, which

was bought by Euromoney in 1999. “When I sold my second company I spent a lot of time thinking about what we could do to make entrepreneurship better. One of the things I was determined to do was understand the ecosystems for entrepreneurship, so we can all be more successful. This leads on to Silicon Valley Comes to the UK, where investors would be invited over to match up with potential investments,” she says. “I’ve been very lucky with what I have chosen. There are many hypotheses that I have tested that haven’t worked out – and that’s fine.” Can she talk more about her failures then? She gently winces at such a crude word. “I am testing hypothesis. I don’t look at it as a failure. I look on this as trying something that is absolutely worth trying and sometimes it doesn’t work out. From a scientific point of view, you are testing a hypothesis,” Whatever way it is painted, ‘failure’ is a term that has been applied as a badge of honour by serious entrepreneurs who reckon the learning from such adversity is an essential part of the process. Still Sherry and Reid Hofmann, her partner in Silicon Valley Comes to the UK, much prefer ‘testing hypotheses’. She undertakes a lot of due diligence on her investment and thinks more potential investors should spend time doing this. “I want to know the entrepreneur; I want to know the team; I want to know what drives them; I want to know how they face adversity and how they think their way through that.” While Sherry’s approach comes from her computing and Big Data standpoint, she might team up with a biotech angel to invest in a company. “If I was going into a bio-tech or life sciences business, I would pair up with someone who knew that space backwards. Often because I’m a big data person, I have made investments in the biotech world alongside other >>

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entrepreneur biotech angels. I understand the data: they know the science. I can see how my knowledge fits and I like what they are trying to achieve. Often angels with diverse backgrounds coming together in a company help make it fly, which is the best sport ever. Making something work is really fun.” Sherry talks about vital combinations, finding problem solving technology. This happens when there’s a sudden technology leap or regulatory change, and the existing incumbents are not satisfying the customers. So a new disruptor jumps into the gap. She is not afraid of embracing controversial businesses that are changing the game - like Wonga, the shortterm loan company that has raised hackles for its hefty interest rates, yet is building a disruptive financial services brand. “One of the reasons I met Errol Damelin, [Wonga’s cofounder] was because I am a national judge in the Ernst & Young Entrepreneur of the Year contest, involving Silicon Valley Comes to the UK, and we bring over big venture capital funders, not just the funds but the entrepreneurs who have made a fortune and are looking for the next thing. Wonga allows people who need loans to get them in seconds without humiliation and bureaucracy. And there is a demand for that because it uses technology in a very clever way to lower costs. So that you can get, within seconds and probably with a great degree of certainty, the outcome that was delivered by older processes. When that happens you get tremendous ‘disruption’ and you find that old ones disappearing and the new ones coming in and filling that gap.” Some may not like Wonga but the market shows that this financial technology company is meeting a pent-up consumer demand which the banks have failed to keep up with. “It is an industry that has been around for hundreds of years, no sense in denying it and he has found a way of improving the outcomes profoundly for the people who feel they require these services.” Sherry is a West Coast Canadian. After her first degree at the University of British Columbia, she came to the UK 26 years ago to undertake an MSc at the London School of Economics. Then, after being a computer programmer for a few years, she went off to Harvard Business School where she took an MBA and studied entrepreneurship,

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Being an angel investor is excellent for women with children meeting over 800 budding and fully-fledged entrepreneurs during her time there. “It inspired me to set up my own business. I found out that entrepreneurs were there to solve problems and create a better future, and I thought I could be one of them.” Before she entered business school, her first job was working with Accenture as a programmer. Her fascination with technology started at five. Her father was a telecoms engineer in BC Tel and one day he brought home a stretch of coloured cables and with great excitement declared: “It is going to change everything.” He was right. Optical fibre and not copper cables has become the backbone of the internet. “I became interested in programming and understanding what you could do. I didn’t care so much about the technology: I wanted to know what you could do with it. I wasn’t as excited about the nuts and the bolts, but if you hooked things together, then you can do things that were cool and very, very high impact. All of the businesses I have started have used technology to hook things together and make new things for a tiny fraction of the cost of the existing process, and often at speeds by several orders of magnitude.” She moved from Accenture into Coopers & Lybrand, before co-founding ISI Emerging Markets, which provided online company

information, statistics and analysis, then set up Interactive Investor International. What inspired Sherry to devote her energy to becoming an investor after exiting from III? “I was an angel investor when I was running my company and I had some angel investors who had been entrepreneurs themselves. I was surrounded by people who had trodden the path before, so it was a natural progression. It was Hermann Hauser who persuaded me to move to Cambridge from London and be a full-time angel investor,” she says. Hermann Hauser is the Austrian-born entrepreneur and creator of Acorn Computers and the spin-out of ARM, the technology business, who is widely associated with Silicon Fen, but he later cofounded Amadeus Capital, which was one of the investors in Scottish laser eye-care company, Optos. Sherry is also an investor in Amadeus. “Hermann said, ‘Now that you have floated your company, you need to think about what you are going to do next: you need to be an angel. You should be investing and supporting companies.’ I agreed with him. “Angel investment is excellent for women with children. I started when I had my third child because it was more compatible with having a family than being a CEO of my technology companies!” So what can Scotland learn from Sherry’s involvement with Cambridge? She is clear that we need to create a virtual cluster map along the lines of the Cambridge version. “The Cambridge Cluster Map was created to help firms that have started-up, scale up. There are 1,525 tech companies in Cambridge employing 50,000 people - and up to 80,000, if you include their families. Their cumulative turnover is £11.8bn. It is not a big place with a population of 125,000. Some of the companies are scaling up fast. We wanted to put in place a support system for companies that had already 20 employees and £5m in revenues to get up to 100-200 or 400-500 employees and £1bn of revenues, and one of the things that we did was try and make it easier for them to attract talent. “Talent is often clustered around universities. Scotland has four world-class universities in the top 200 of the world, something which Sir Tom Hunter says is remarkable for a small country like Scotland. Wherever there are universities, there are going to be spin-outs and people

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entrepreneur

Sherry Coutu’s Nine Steps to Scaling Up: 1. Choose a Big Enough Problem: Look for something that needs to be solved ... the bigger the better. There are lots of problems with our world and it is entrepreneurs who make the world a better place, by solving one problem at a time. We create the future every day by being dissatisfied with the status quo. 2. Embed yourself in the right network: Look for clusters and local ecosystems where you can be supported. This is critical because it is easier to find new people when you are scaling up if you are in the right cluster. 3. Recruit people who have done it before: A person who has scaled up from 20 to 200 employees has a far greater increase in productivity over someone who might have grown a business from 20 to 50 people. You must hire people who have done it before – not your best friend who has not. 4. Hire for Tomorrow and Not For Today: If you want to be a £100 million company in three years’ time, you need to hire people who have been in that position. 5. Embrace Diversity: Not just on gender, but mix types of people, like scientists and accountants together. Get people to talk about how they approach things. Don’t get people that are too similar. Find people who are curious. 6. Nurture Company Values: Keep hold of the right attitude as you grow the business. Try to keep in touch with the business and the original value as it grows. 7. Build Systems That Scale: Make sure you don’t have too many different terms and conditions for lots of different customers. This only takes up time and resources and makes it difficult to scale. Try to think of yourself as ten times the size. Keep it simple and elegant and don’t over-engineer. 8. Test the Product and the Market. This is about being obsessed with your customers and finding out exactly what they want from you. You have to test your products all the time to see if they work. This means you learn every day about your customer. Don’t ever rest on this. 9. Take the Right Kind of Money at the Right Time. There are angels, VCs, incubators and specialist funds. It can be confusing and it’s not simple. You need to find the best financial backing. It can be a mistake to take VC money too early in the process. Don’t take too much, or too little.

who can create these beautiful disruptive technologies that change everything.” It What are the skills that Scotland needs to develop this critical mass? “You’ve got to light the fire in schools: make young people understand why they might want to study maths, statistics, physics and computing science. If you put a dry maths teacher in front of young people who says: ‘You must learn this. It is important’, that’s not very inspiring. But if you put someone like Eric Schmidt, Larry Page or Sergey Brin and they explain that they were fascinated by numbers from an early stage, and in secondary school that allowed them to create a search engine that has clever mathematical formulas that allow them to deliver something really amazing. Suddenly people find maths curious and that’s cool. And that’s what we are doing with Founders4Schools [the educational wing of Silicon Valley Comes To The UK],

putting entrepreneurs who have created nifty businesses into the schools. They just talk about what they are excited about.” Her vision is that all UK schools should be able to get this for free. “We get tech people, who have created great businesses, talking about what they are excited about and suddenly we get young people seeing ‘I’m just like that person’ and they are perhaps only 15 years older than me. They see the bridge between what they are doing now and what they could do in ten years’ time. If you look at Mark Zuckerberg, he was only 20-21 when he set up Facebook.” Sherry is reluctant to choose any of her investments for special mention. “It’s like asking which one of your children you prefer most.” But when pressed to give a flavour of her portfolio, she says. “There is a company called Duedil that I’m very excited about. I’ve invested along with Jonty Hurwitz, one of the founders of Wonga, who is the main angel

for this. It uses data to research businesses and is doing fascinating new things and making it very simple for SMES to become transparent, and for anyone to do business with small enterprises, to find out the details and financials of the company at a click of a button.” This has a Scottish connection too. Despite being based in Soho, Damian Kimmelman, its founder and chief executive, still in his early 30s, took an international relations degree at University of St Andrews before being a serial property entrepreneur. So what about LinkedIn? “It is storming along and is just beautiful. I remember sitting with their product guys in 2006 and saying there is definitely a B-to-B play for you. [It was strictly B-to-C at that stage]. They then rolled-out a product that large corporates now use to find the talent and networks within large organisations, to attract new people. It’s a human resource goldmine. We held a conference last year and we tried to set the bar on which companies and customers to invite.” The conference was at the Queen Elizabeth Centre in London and there were 500 customers and the minimum amount of money each firm had saved using LinkedIn’s £7,000 product was £1m. “We’ve totally changed the way business worked. We didn’t go on the stage. We let our customers go up and talk about how they were using it and doing things they only dreamed about.” LinkedIn on the New York Stock Exchange is currently proceeding well and Sherry hasn’t sold any of her shares - and has no plans to do so soon. “The biggest problem that companies have for scaling up is attracting talent. I’m passionate about this. It would be better if the companies that do succeed were able to scale up really fast. That transition from 20 to 100 to 500 is hard to do. Compared to the US, we are not brilliant at scaling up companies in the UK at the moment.” Sherry wants to help in Scotland too. She first came in 1995 when she was running her financial services business – and she is keen to invest here “because there is a still a great buzz.” While she applauds a lot of the networking and support that already exists, she is clear that Scotland has to scale up its businesses to meet increasing global competition. n

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BIT OF A CHAT

with Jock Yuler >> Rat pack mission Let me apologise to Alastair Salvesen, one of Scotland’s leading business figures, angel investors and a great patron of the arts in Scotland. In my last column I made a reference to Alastair’s trip to South Georgia and suggested that he was involved in collecting eggs. This is not true – and I’m sorry for suggesting this. I’m much happier to report that Alastair was with the South Georgia Heritage Trust on a ‘Habitat Restoration Programme’ whose aim is to eliminate all the rats and mice. Millions of sea birds nest each year on these remote islands. The rodents arrived in the boats of the early seal expeditions in the mid 1700s and have since become a major pest. During 2013 about 50% have been successfully spread with bait and the numbers have been reduced dramatically, if not eliminated. “I would be thrilled if many of your readers would support the South Georgia Heritage Trust by sending donations so this project can be completed in two years’ time,” says Alastair. As a gesture of goodwill, Jock Yuler will be among them.

>> Wine oiled the wheels Tom Hunter’s mention in dispatches of the Orbital guys in Edinburgh [See On the Record] reminds me of a trip to San Francisco at the height on the dot. com boom in summer 2000. Kevin Dorren and Calum Smeaton were in Silicon Valley doing the rounds of the major companies,

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SUMMER 13

selling their software. In the course of penning an ‘inside’ article, I became a ‘marketing vice president’ and joined Calum and his US team. One lunchtime, after another exhausting morning of elevator pitching, we dropped into Café Niebaum in downtown San Francisco, run by one of Francis Ford Coppola’s daughters. We had just begun our appetisers when a large excited chap with a beard burst through the door with a box of 12 bottles of red wine. It was the Godfather director himself. He insisted that we, as dining guests, should sample his newly-bottled Napa valley vintage. How could we refuse? And jolly good it was too.

which included Elvis’s guitarist James Burton. He can’t say more, but if you’re a financial backer looking for a novel kind of investment, give Ash a ring on 0131 312 7771 or email ash@guptapartnership.com. Don’t forget to tell him Jock Yuler sent you.

A hidden gem where some of the great rock legends come and jam >> Legal eagle leads way

>> Spotlight on Speakeasy Former Ford Motor company marketing guru Ash Gupta is a cool Strat strummer, world-class organiser and inveterate networker. The rock and blues music club he and his wife Christine have created is wonderfully unique in Scotland: a hidden gem where some of the great rock legends come and jam. The Speakeasy at the Voodoo Club, above the Café Royal, is a cross between Ronnie Scott’s, Later with Jools Holland and a Scottish Hootenanny. Now Ash tells me that there is mounting television interest in capturing the magic of these special events –

There are a lot of decent Scottish lawyers out there doing great stuff. One of them is Mike Polson, formerly senior corporate partner at Dundas & Wilson. He is taking over as chief of a new legal sourcing and business support office in Glasgow for international law firm, Ashurst. Quite a coup. Ashurst has 24 offices in 14 countries and is finalising a merger with a major Australian firm which will increase its size to over 400 partners and 1,700 plus lawyers. Best wishes, Mike.

>> And a Parting Shot

The UK cheese category is worth £2.7bn and volume sales have increased by 1.5% year-on-year, with cheddar accounting for more than 50%. And Graham’s The Family Dairy is the latest to extend its products with the launch of a range of Scottish cheddar cheese. Now all we need is the pickle industry to up its game for the revival of the Ploughman’s lunch.

Business interests across Scotland, the North East, Yorkshire and the West Midlands?

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EVENTS

SUMMER 13

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

JULY

September

4 Power Lunch Club with Linda Urquhart OBE, forner chair of CBI Scotland. HSBC Bank, Hobart House, Hanover Street, Edinburgh, EH2 1EL. 12-2pm. Contact: info@powerlunchclub.co.uk

3-6 Offshore Europe, at the Aberdeen Exhibition and Conference Centre. The biennial SPE Offshore Europe Conference and Exhibition is the key event for engineers, technical specialists, industry leaders and experts on the oil and gas industry. For more info: www.offshore-europe.co.uk

4 Borders Business Gateway, Ettrick Riverside, Selkirk, Business Start-Up Finance. 9.15-12.30. One of several sessions throughout summer. Call 01835 825600, or email info@bgborders.com

4 Scottish Borders Chamber of Commerce Annual Meeting, venue and speaker, tbc.

5 Glasgow Talks.. with Archie Bethel, executive director of Babcock International Group, 8-10am Hilton Glasgow, G3 8HT. www.glasgowchamberofcommerce.com

5 CBI Scotland annual dinner, Glasgow Hilton Hotel, 1 William Street, Glasgow. Speaker to be confirmed.

17 Thrive for Business: Gordon Merrylees, director of Business Banking at RBS, Corinthian Club, 191 Ingram Street, Glasgow. 12pm - 2pm. Booking: www.thriveforbusiness.co.uk

5 Power Lunch Club with Charles Hammond, CEO of Forth Ports Limited. HSBC Bank, Hobart House, Hanover Street, Edinburgh, EH2 1EL. 12-2pm. Contact: info@powerlunchclub.co.uk

17 Recruitment and Selection. How to recruit new staff effectively. Dundee and Angus Chamber of Commerce, City Quay, Dundee DD1 4BJ. Contact Fiona on enquiries@zostera.com

6 Glasgow Talks.. Life Science. 8-10am. IET Glagow, Teacher Building, Glasgow G1 4DB. www.glasgowchamberofcommerce.com

18 West Lothian Chamber of Commerce Breakfast, 7.30-9.00, Alba Centre, Alba Business Centre, Livingston, EH54 7EG. 18 Power Lunch Club with TBC. HSBC Bank, 1st Floor, 141 Bothwell Street, Glasgow, G2 5HS. 12-2pm. Contact: info@powerlunchclub.co.uk 19-21 The Glen Clova Hotel Beer Festival. Supported by Dundee and Angus Chamber. Call 01575 550350.

August

13 SCDI Highlands and Islands Annual Dinner and Business Excellence Awards, Inverness. To book contact: Lesley.rhind@scdi.org.uk 19 Power Lunch Club with Anne McColl, chief executive of Scottish Development International. HSBC Bank, 1st Floor, 141 Bothwell Street, Glasgow, G2 5HS. 12-2pm. Contact: info@powerlunchclub.co.uk 19 West Lothian Chamber Breakfast Club. 7.30-9pm, Alba Centre, Alba Business Park, Livingston, EH54 7EG. Contact aileen.ross@wlchamber.com or call 01506 414 808 23-27 Highland Business Week. Various locations. A full programme of events including networking and seminars as well as the inaugural Highland Business Awards lunch. Run by Inverness Chamber of Commerce.

1 Power Lunch Club with Nelson Gray, business mentor, investor and fund manager. HSBC Bank, Hobart House, Hanover Street, Edinburgh, EH2 1EL. 12-2pm. Contact: info@powerlunchclub.co.uk 7 Understanding Type: a look at the Myers Briggs Type Indicator. 9.30-4.30pm. Dundee and Angus Chamber of Commerce, City Quay, Dundee, DD1 4BJ. Contact Fiona on enquirires@zostera.com 7 Thrive for Business: Lorraine Herbison. Head of News & Sport, Radio Clyde, Corinthian Club, 191 Ingram Street, Glasgow. 12pm-2pm. Booking: www.thriveforbusiness.co.uk 15 Power Lunch Club with Chris Van Der Kuyl, CEO of Brightsolid. HSBC Bank, 1st Floor, 141 Bothwell Street, Glasgow, G2 5HS. 12-2pm. Contact: info@powerlunchclub.co.uk

25-26 WildHearts Global Entrepreneurial Leaders Conference; RBS Gogarburn, Edinburgh. Speakers include Sir Tom Hunter, Rupert Scofield, founder of FINCA International; Cheryl Kiser, head of Babson Social Innovation Lab, Boston; Brandon Arbiter, New York Young Entrepreneur of the Year; Josh Littlejohn, founder of Social Bite & the Scottish Business Awards; John Swinney, Cabinet Secretary for Finance, and Bob Keiller, CEO, Wood Group. Hosted by Mick Jackson. For tickets email info@wildheartsevents.com. 25 Scottish Chambers of Commerce annual dinner. Hilton Hotel, Glasgow. 7pm-11.30pm. Speakers to be confirmed. www.scottishchambers.org.uk/events/scc-annual-dinner-2013

22 Glasgow Talks.. Sport. With Sir Craig Reedie and David Grevemberg, of Glasgow 2014. 8-10am. Crowne Plaza, Congress Road, Glasgow, G3 8QT. www.glasgowchamberofcommerce.com 22 West Lothian Business Showcase, 10.30-6pm, West Lothian College, Livingston EH54 7EP. 22 Diageo, Shieldhall, the largest whisky bottling plant in the world. Chamber Talk and Tour with Renfrewshire & Greenock Chamber of Commerce. 3-5pm. Email through lconnor@renfrewshirechamber.com 22 Inverness Chamber of Commerce: Members hustings. Up to 20 businesses have chance to make a short pitch. Members only event. 29 National Business Convention, RBS Gogarburn, Edinburgh. Over 250 business people from Scotland’s SMEs gather for conference. Workshops and speakers, including John Swinney, Ken Barclay, RBS, Prof Sara Carter. Register at: events@scdi.org.uk or 0141 222 9736 29 Dundee and Angus Chamber of Commerce annual general meeting. 4pm, Invercarse Hotel, 317 Perth Road, Dundee, DD2 1PG. Chamber helpline 01382 228 545.

BUSINESS QUARTER | SUMMER 13

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.

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