Briefly Legal Summer 2013

SUMMER 2013

INVESTMENT IN THE LEEDS CITY REGION

Ambassadors for Leeds City Region

CREATING A WORLD OF OPPORTUNITY FOR ENERGY George Rafferty of NOF Energy, considers the opportunities for the UK’s energy sector following George Osborne’s recent Budget announcement

CELEBRATING 100 YEARS OF UK PLANNING Stephen Litherland, Senior Vice Chairman of RTPI North East reveals plans for its centenary

HOUSE BUILDING: OPENING THE DEBATE Five experts offer their perspective on the future of the house building sector in a round table discussion

Welcome

WELCOME: By Gillian Hall

Welcome to the summer edition of Briefly Legal Our latest offering features articles from businesses that operate at the forefront of their sectors where innovation is key to their on-going success.

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SalesCycle, NOF Energy, Business Growth Fund and Galliford Try are only a few of those who have contributed to this publication. They give a fascinating insight into the opportunities for their sectors. We also talk to three businesses that have enjoyed a huge amount of success despite challenging trading conditions over the past few years. Their stories are inspiring and show us how bold decision making and a positive outlook can have an impressive impact on business success.

Our lawyers have also provided some thought provoking articles on issues of national relevance. We have entered the debate on employees working from home, analyse the effect of the Government’s Green Deal initiative on the commercial property market and we explain why the North East is a growing centre of activity for technology startup businesses.

As ever, we try to cover issues that crop up when talking to our clients. However, we want to be sure that this publication continues to be relevant and useful to you. If you have any feedback at all which you would like to relay to our team, please contact our PR and Communications Manager, Kathryn Dishman, by calling 0845 901 2093 or email kathryn.dishman@watsonburton.com.

I hope that you enjoy reading this latest edition of Briefly Legal and find some valuable insights within its pages.

Gillian Hall Senior Partner, Watson Burton

WELCOME: Contents

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BUSINESS FOCUS Vision + Determination = Results ........................................4 Accessing finance: Helping or hindering growth? ..........8 Yahoo! I’m working from home today ..................................12

SECTOR FOCUS Creating a world of opportunity for energy ....................14 How the North is well placed to catch a wave on the rising renewable energy tide ..................16 Celebrating 100 years of UK planning ..............................18 A greener Britain?..........................20 House building: Opening the debate ......................22 Capturing that lost online sale ......26 Bright outlook for tech startups ....28

REGIONAL FOCUS Ambassadors for Leeds City Region ....................................32

FIRM FOCUS Planning for success ....................36 60 seconds with Richard Palmer ....38

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BUSINESS FOCUS: VISION + DETERMINATION = RESULTS

With business confidence on the up and the pain of the economic downturn starting to fade, we invited three North East based companies and David Colclough of Business Growth Fund (BGF) to discuss what strategies their businesses have employed in recent years to mitigate the impacts of the recession and position them for future growth.

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BUSINESS FOCUS: VISION + DETERMINATION = RESULTS

Left to right: John Conway of Potts Print UK, John Weir of Wear Inns, Mark Thompson of Ryder Architecture and David Colclough of Business Growth Fund

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ne of the overriding themes was simply a determination to succeed, but one of the most challenging factors was being able to take stock of the current position and take swift, decisive action to secure its future.

As a long established North East company, Potts Print UK (Potts) had experienced previous recessions and this time around, the absence of public sector spending began to affect their market. John Conway, Sales Director, said “we noticed that print spend was slowing and marketing budgets were diminishing. Although confident we could maintain our position, we doubted we could sustain larger growth so we began an analysis of 'who and what is good for Potts?'

“As part of our strategy review, we took the time to get a better understanding of our client base: over 400 active clients of varying sizes and across diverse sectors throughout the UK and Europe. We were then able to identify the challenges for these organisations and apply sensible and relevant print, packaging and direct mail solutions to benefit their own plans”. This ‘client centric’ approach helped to maintain customer loyalty through the most challenging of times where the impacts of the recession were multiplied by the increased use of digital media at the expense of traditional print.

In the leisure sector the effects of the downturn were not so immediately felt.

“Prior to the recession we had been in acquisition mode, but when we began to hear about companies that were in difficulties we decided to put any further acquisitions on hold. Unlike many others, we did not experience a downturn; we just put our plans on ice” said John Weir of Wear Inns.

Whilst some businesses put growth plans on hold, others had to take more significant measures to ensure business longevity. Ryder Architecture had been on something of a roll: after winning a three-year programme of contracts worth £20 million in fees, they had invested in additional resources and staff. The company was then advised that the multi-billion pound Learning and Skills Council college building programme was to end.

“In January 2009, we made 18 redundancies as a result of the programme being reviewed.

In April 2009 we heard it was not going ahead at all. A further 48 staff were made redundant and a range of other cost saving measures were introduced” said Mark Thompson, Managing Partner.

“We believed that our range of office locations would be beneficial in the upturn, so, rather than close any individual office, we made redundancies at all levels throughout the company, affecting everyone from support staff to shareholders including many who had been with us for years.”

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BUSINESS FOCUS: VISION + DETERMINATION = RESULTS

There was the need to be realistic about the business’ position, and take action as quickly as possible to ensure its future Access to finance and relationships with our businesses banks were a key part of our businesses strategies. Mark Thompson commented, “Access to finance played a huge role. We had been trying – unsuccessfully – to meet with our bank manager from the summer of 2008. When we eventually succeeded, the bank would not renew our existing facility so the remaining directors had to invest which we were prepared to do, but it left a bitter taste.

Now we have a different banking team and the relationship has gone from strength to strength, which serves to demonstrate a key business truth: good people are what really make the difference”.

In the leisure sector, the story was the same.

“We have been badly affected because the banks are not willing to lend. They believe the leisure market is too risky. We have been fortunate to secure funding through BGF but

private capital is more expensive than bank debt. We began 2010 with 15 pubs and a turnover of £7.5m and now we have 26 pubs and are on target for a turnover of £15m, thanks to BGF” said John Weir.

funding support. A number will have well developed business plans and require a longterm funding partner who will go forward with them offering wider business support as well as financial backing.”

“We still want to expand of course but it will all depend on how we manage the expansion.

Two years through our three year plan, I can say we achieved year one targets and year two is also looking OK at 40 pubs.”

“Those companies we’ve already helped reflect different levels of investment with BGF providing medium to long term scope to deliver plans. We accept that some companies may go backwards before they go forwards – so we’re realistic in our expectations.”

Business Growth Fund (BGF) was established to help Britain's growing smaller and medium sized businesses prosper. As the engine room of the UK economy, SMEs depend on having the means and confidence to grow and BGF has access to £2.5 billion to make this possible. To date, BGF has backed 27 companies across the UK. David Colclough of BGF said, “Due to the market turbulence of the last six years, companies are now seeking more flexible

“Of course it is difficult to access funding on the same terms as five years ago but many banks are still lending and in our case, we have an available funding pot of some £2.5 billion, so there is a lot more we can do. I would encourage anyone who is looking for funding to come and talk to us and if we cannot help, we will direct them to someone who can” added David.

Having taken whatever steps were required to ensure survival, how then did the businesses start to position themselves for growth?

Wear Inns took the opportunity to review each and every supply contract, ensuring that their cost base was aligned with the market. “By renegotiating our terms we were not only able to reinforce our position with suppliers, but retain margin throughout the two duty increases of 2011/12 – in some cases, we even lowered our prices” said John.

“We judged that the price of property would fall further. We waited until prices had bottomed out and were able to buy pub premises at some 25%-35% less than 12 months earlier when we re-entered the market in January 2010. We have managed to double in size since then which has been due to funding we obtained through Business Growth Fund and NVM”.

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At Potts they changed their sales strategy to take a more sector based approach. “This allowed us to analyse profitability in each of the sectors, readjusting our pricing strategies accordingly. Additionally, we increased our service levels by offering value engineering of printed products, removing cost where possible, and complementing this with added value services in design, digital and logistical support. This strategy was also applied to companies with reduced print expenditure.

We tried to make their campaigns work harder by offering alternative specifications when possible” said John.

BUSINESS FOCUS: VISION + DETERMINATION = RESULTS

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BGF qualifying criteria The common characteristics are • a management team that is passionate about the business

When it came to lessons learnt, the panel were keen to share their experiences so that others might benefit from them.

In particular was the need to be realistic about the business’ position, and take action as quickly as possible to ensure its future.

“If we had not cut so deeply and so swiftly, we would not have survived. Competitors began scaremongering, but they themselves had to make redundancies later when we were starting to see growth” said Mark.

“Although the cuts were painful, we had to be decisive and this is where employment law

runs contrary to business sense – the 90-day consultation period for making redundancies on this scale can mean the difference between success and failure”.

John Weir added “the last few years have been good for us. I think we made the right decisions. We might have expanded more and created more jobs, but we are delighted with the 150 full and part-time jobs that we have created”.

• a proven business model • the need for next stage funding for working capital to facilitate UK or overseas expansion or a new product launch. Others may require capital to fund organic growth or an acquisition strategy.

Companies at an earlier stage in their development with less mature growth forecasts may also be suitable and wish to discuss with us how to make their funding proposal more attractive. By joint discussion and debate, we can often stimulate ideas which lead to an alternative business model.

And what of the future?

... well placed to capitalise on the rising economy, which we are told is on the way

Potts has been approved for regional growth funding which has helped towards the financing of new equipment and investment in facilities and staff. “We operate with a consultative approach and will continue to grow by listening, talking, providing high service standards and applying sensible business practices. Staff training and development, performance measurement and working with our suppliers to identify purchasing savings are all crucial to this approach” commented John.

“The future's looking good” said Mark Thompson. “We recruited 15 new graduates last summer and will exceed that this year. Our pipeline is strong and our strategy of reinvestment into the business throughout the recession has resulted in the launch of BIM Academy, a joint venture with Northumbria University and the acquisition of practices in London and Glasgow, as well as establishing a team in Hong Kong who are currently pursuing exciting projects across the region”.

“This is our 60th anniversary year and given the last few years, it’s even more of a cause for celebration.”

At Wear Inns, they are confidently facing the future and are “well placed to capitalise on the rising economy, which we are told is on the way”.

Our panellists in brief: Based in Cramlington, Potts Print UK is an expanding printing, packaging and direct mail company.

Established in 1875, turnover is now £14m and the company’s success stems from its focus on ‘The Three Cs’ - Cost savings, Continuous improvement and Client satisfaction.

Ryder Architecture has offices in Newcastle, London, Glasgow and Liverpool and a growing international portfolio. The firm appears in Sunday Times 100 Best Companies to work for 2013 and this year won best new entrant in the Architects Journal 100.

Increasingly recognised as a major force in the provision of an excellent customer experience at the most affordable prices, Wear Inns was founded in 2006 and specialises in the management and acquisition of freehold pub premises in the North of England.

Business Growth Fund (BGF) provides long-term capital for growing British companies, investing between £2m and £10m in return for a minority stake in a business and a seat on the board in companies that are typically turning over between £5m and £100m.

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BUSINESS FOCUS: Accessing finance: Helping or hindering growth?

Accessing £inance: £

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In the current marketplace, there has probably never been such a variety of funding options for businesses to tap into

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BUSINESS FOCUS: Accessing finance: Helping or hindering growth?

Helping or hindering growth?

The narrow escape from the Triple Dip Recession seems to have paved the way for more bullish talk around ‘economic green shoots’ in the UK. But is this sentiment filtering down to grass roots level amongst businesses in the North?

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n the current marketplace, there has probably never before been such a variety of funding options for businesses to tap into. With the emergence of crowd funding platforms like Seedrs helping early stage companies access new finance and the likes of Business Growth Fund providing larger development capital investments to SMEs, businesses are now able to explore funding opportunities from a variety of sources. These range from high street banks, asset based lenders and grant making bodies to private equity and venture capital investors, business angels and online social networks.

But with the variety of options to consider and networks to navigate comes the challenge of determining which source of funding is best for your business.

Watson Burton, in association with Insider Media and Garbutt & Elliott recently completed

a survey of over 290 businesses in the North East and Yorkshire with the aim of establishing whether the accessibility of finance, or indeed an understanding of the options available to businesses, is helping or hindering growth.

As a whole, the results show that businesses are optimistic, with three quarters predicting that the regions will experience growth. 31% of respondents are hoping for growth of 10% or more in the next twelve months, yet the majority (53%) still feel that a lack of access to finance is hindering their business’s growth.

Six in ten admit that they have had difficulties accessing finance with nearly a third (31%) saying it was very difficult or even impossible.

A number of barriers to accessing finance were identified. Respondents believe that the downturn in the economy has limited the amount of finance available for businesses and the costs associated with gaining finance

are quite high. A number of those surveyed also stated that they believe the level of control exerted by funders is too onerous On the flip side those businesses that have been able to source finance have mostly done so through a bank loan, which shows that perhaps the rein on bank lending is loosening.

In the main, the results show that businesses in the North, as well as elsewhere in the UK, are not fully aware of the appropriate means of accessing funding for their business and many are put off by the doom and gloom headlines which state that money simply isn’t available. With this in mind, maybe now is the time for businesses in the regions to change their mind-set, seize the opportunities of alternative finance options and grow their organisation in 2013 and beyond.

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BUSINESS FOCUS: Accessing finance: Helping or hindering growth?

access to finance: helping or hindering growth?

Investing in what?

A survey of over 290 businesses in the North East and Yorkshire

North East • new products and services (39%) • plant and machinery (33.3%) • organic growth (33.3%)

A sunny outlook

Yorkshire • plant and machinery (35%) • acquisitions (31.5%) • organic growth (29.5%)

3/4 predict that the regions will experience growth (almost a third hoping for growth of 10% or more in the next 12 months) Over 50% of respondents looking to raise finance this year

Out of reach

Now is the time for businesses in the regions to change their mindset, seize the opportunities of alternative finance options and grow their business in 2013 and beyond

Six in ten had difficulties accessing finance with nearly a third (31%) saying it was very difficult or impossible

Duncan Reid, Partner, Watson Burton Sources of funding Angel investments and loans

53%

44%

Asset based lending Bank loans/mortgages Crowdfunding Equity investments Family/friends

53% in Yorkshire say this is restricting growth. 44% in the North East

Government grants/loans Stock markets (inc AIM and Plus)

North East

Yorkshire

Other (please specify)

Main barriers to finance A changing landscape Banks still main source of finance (50% Yorkshire, 30% North East)

Releasing equity on Angel investments mortgages increasingincreasingly in popularity popular in the North East

Asset based lending now second highest source for Yorkshire business

Angel investments increasing in popularity in the North East

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1 Simply not available 2 Too much control by funders 3 Associated costs

Business only 18 months old and banks unwilling to lend, despite full order book for 2012/13 and 40% secured for 2013/14 Anonymous

BUSINESS FOCUS: Accessing finance: Helping or hindering growth?

Yorkshire perspective: a change in motion Surprisingly, 59% of respondents in Yorkshire stated that raising finance over the last 18 months has been difficult to impossible.

Those that have successfully raised finance during this time highlighted that the majority of funding is in fact still coming from the banks. That trend looks set to continue, particularly in light of the Bank of England’s recent extension of its £80bn Funding for Lending Scheme, which was brought in specifically to boost support to credit starved SMEs by incentivising banks to lend more.

In spite of that, what does remain clear is that until planned growth is realised, businesses won’t be able to rely entirely on the banks.

Other options will need to be fully explored and exploited to suit the particular identity and needs of individual businesses. However, one source of funding that businesses in the region perhaps still need to consider further is Government backed loans or grants.

The Regional Growth Fund (RGF) supports projects that are using private sector investment to create economic growth and sustainable employment. Also, despite the Enterprise Guarantee Scheme being plagued by bad press, this source of funding can provide viable businesses with loans of up to £1,000,000, particularly those that do not

have the normal requirements of security.

Perhaps at the other end of the spectrum there are new initiatives, for example, the Social Incubator North which recently launched in Sheffield. This is a co-funded Government initiative that offers investment, bespoke business support and access to expertise to grow entrepreneurial ideas.

Interestingly our survey results have shown that there seems to be a great shift in people seeking asset based loans as a source of funds – the second highest source for Yorkshire business. The tide has definitely changed here. In the past, many business owners have been wary of using these types of facility. This reluctance is based on a historic stigma that could portray businesses as having financial problems, as well as the belief that it will be a costly or administrative nightmare.

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Find out how our corporate group can help you by getting in touch with Andrew Francey

0845 901 0958 andrew.francey@watsonburton.com

North East perspective: set for growth

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31% of respondents are hoping for growth of 10% or more in the next twelve months, yet the majority (53%) still feel that a lack of access to finance is hindering their business’s growth

Despite the doom and gloom constantly streaming from the UK business press, respondents within the North East seem optimistic about business growth over the next twelve months. 5% of those surveyed indicated that they will be looking at raising in excess of £5m in the year ahead, with funds being utilised for the development of new products and services, the purchase of plant and machinery as well as organic growth.

The method in which they will choose to obtain funding differs depending on circumstance and regional location. One of the most interesting differences between the North East and Yorkshire relates to angel investment and loans. Just 4% of Yorkshire businesses participating in our survey had utilised this source of funding, whilst almost 26% of those in the North East had benefited from this approach. One factor which could account for the difference is the smaller pool of business angels operating within the North East, which means that businesses are more aware of the angels who are actively backing the growth ambitions of businesses. In addition, the links between the Finance for Business North East funds (the “JEREMIE” funds) and the angel networks may be more mature in the North East, meaning companies are matched with the most appropriate angel investors more often. Whatever the reason, it is positive that North East businesses have demonstrated their willingness to engage with business angels, who can offer much more than funds to an investee business.

So what are our recommendations to any business seeking finance? Be honest with yourself at the start. If you are considering

venture capital investment, are you comfortable with a venture capital fund’s desire for an exit within a specified timescale of say 3-5 years.

If you have longer term plans, which don’t involve selling your organisation within such a timescale, venture capital investment may not be the most appropriate option for you.

Consider what your requirement for funding is.

Many of the respondents to our survey wanted to fund the acquisition of plant and machinery.

There are some very innovative funding solutions in this sector, and the traditional asset based lenders are branching out into new products, such as funding the acquisition costs of bespoke software solutions, which can be then licensed back to a company over the life of the loan.

Don’t necessarily go for the obvious solution.

Some venture capital investors and business angels will be more than happy to invest in order to fund the acquisition of property or new machinery if they support a clear growth strategy for a business. It is often easy to look only to the “traditional” providers of finance in these circumstances, but we would strongly advise seeking the method of funding most appropriate to your business needs.

Find out how our corporate group can help you by getting in touch with Paul Wigham

0845 901 0960 paul.wigham@watsonburton.com

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BUSINESS FOCUS: Yahoo! I'm working from home today

Yahoo! I'm working from home today 96% of all employers in the UK now offer some form of flexible working. In the US, over a million more Americans worked from home in 2010 than in 2005. But not all businesses seem to be convinced.

There are reportedly 1.35 million people working in the UK whose main work is freelance and a further 200,000 do freelance work as a second job

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BUSINESS FOCUS: Yahoo! I'm working from home today

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arissa Mayer became Yahoo!'s CEO in mid-2012. She had 13 years prior experience at Google where she rose to be a Vice President. She developed some of Google's most successful products and is listed as an inventor in her own right on several patents in artificial intelligence and interface design. The companies she came from and moved to are both modern global technology businesses at the forefront of innovation. Yet one of Marissa Mayer's early changes at Yahoo! at the beginning of 2013 was to ban home-working for Yahoo! Staff.

Employees were told to relocate from their home offices to a Yahoo! office within a few months or leave the organisation. The reason given was that “to become the absolute best place to work, communication and collaboration will be important so we need to be working side-by-side. That is why it is critical that we are all present in our offices”.

Flexibility Marissa Mayer’s move has clearly offended many within Yahoo! but does it herald a wider trend reversal to more traditional working practices in white-collar roles?

The evidence seems to be no. In the UK, following the recession, businesses sought flexibility to adapt to a volatile and uncertain future. Many investigated a variety of flexible working arrangements, from home-working to reduced days per week or compressed working, increased use of freelancers, consultants, agency staff and part-time working. But who gains from greater casual and flexible working?

Proponents of increased flexibility in the workplace argue that both employer and employee reap the rewards. They believe that employers gain flexibility, responsiveness and can manage their cost base in line with available work. They find it easier to attract highly skilled individuals, staff are more satisfied, more productive and absences decline when they are able to work in a way that suits their lifestyles and demands on their time. Cynics think businesses are losing out on ideas by

employees not collaborating as effectively as they could face-to-face and that they are not doing the work they are paid for. Others are concerned that the rise in working patterns, such as zero hours contracts, has a hidden social cost, reducing job security and employee rights.

Marissa Mayer seems to have focussed more on the need for innovation and how to achieve it than mistrust of employees. The debate that surrounded her decision polarised into how best to generate insights and ideas critical to gaining a competitive edge in a fast-paced industry in which Yahoo! operates and how to work efficiently in the modern world, attract and retain talent. Her ideas are exemplified by the image of impromptu face-to-face meetings around water-coolers and coffee machines which create a melting pot for innovation. This in turn allows for the free exchange of ideas and the possibility of quick meetings being organised within an office to react to both ideas and change. The contrary argument suggested that those who worked from home could be far more productive without the full range of workplace distractions and noise.

The truth is actually far more nuanced than either side of that debate would let on. Some work probably is best done at home, but never having direct staff interaction would be damaging to most businesses. It depends on the kind of work an employee is doing and where they are best doing it.

Performance Marissa Mayer took over a declining business and clearly needs to focus on innovation to claw-back market position and advertising revenue. Most employers are primarily concerned with recruiting and retaining talent, delivering their services or products efficiently and want to manage staff to get the best performance from them. Yahoo! is no different.

Marissa Mayer may have sacrificed home working in the drive for innovation, but she still needs talent to create and deliver those ideas.

Competing with other Silicon Valley companies, she recently doubled paid maternity leave to 16 weeks for US staff (she only took two herself, but did build a nursery in the office next door!).

New fathers get 8 weeks paternity leave and new parents are given $500 to welcome baby.

For some, in the background there is the lurking fear that working from home is a synonym for not working at all. In fact there are many tools available to employers today to monitor employee performance from online ‘keystroke’ tools to output measurements.

Organisations are normally able to record employee performance. It is true that on working from home employees will often fit their working time around other commitments.

Coffee will be made numerous times, the washing machine will be emptied, bills get paid and someone may come round for lunch. However, the net result might not be unproductive. There are some tasks which are better done away from distraction and interruption and the gains made in quality and speed on those tasks by someone working from home can be significant, as can the gains in employee goodwill where this fits with their lives. There are equally occasions when face-to-face meetings will inevitably achieve more than any number of telephone calls, emails or video conferences can.

Retaining talent There are reportedly 1.35 million people working in the UK whose main work is freelance and a further 200,000 do freelance work as a second job. This represents an increase of 11.9% between 2008 and 2011. The number of firms using remote or teleworking staff has risen from 13% to 59% in the last 5 years and 82% of part-time workers are actively choosing part-time work to fit around their life circumstances. A recent CIPD survey indicated that approximately 75% of UK employers felt that implementing such practices had a positive impact on talent retention, motivation and staff engagement.

Faced with an increasingly flexible workplace, most employers will have to look at flexible working to recruit and retain the talent they need, whether they want to or not. Employers will have to actively decide upon, implement and promote a staff mix and working policies that support their business needs to remain competitive in a rapidly changing market.

Find out how our employment group can help you by getting in touch with David Jenkins

0845 901 2035 david.jenkins@watsonburton.com

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SECTOR FOCUS: Creating a world of opportunity for energy

Creating a world of opportunity for energy George Rafferty, Chief Executive of NOF Energy, considers the opportunities for the UK’s energy sector following George Osborne’s recent Budget announcement.

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t is often suggested that oil & gas is a sunset industry. However, this couldn’t be further from the truth.

Thanks to the supply chain’s development of new technologies, supportive tax regimes and the price of oil, investment in the recovery of resources continues to increase, which is providing considerable opportunities for supply chain companies.

The North East, in particular, is a globally respected source of oil & gas supply chain solutions and has played an integral role since the discovery of North Sea oil in the late 1960s.

In the decades since, the region’s supply chain has established itself in multiple segments of the oil & gas industry, such as our excellent subsea sector, and successfully operates in such diverse geographic locations as South America, Australia, Malaysia and South Africa.

Within the NOF Energy membership are 230 North East companies, which, between them,

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generate a combined turnover of £2.5billion, the majority of which comes from oil & gas.

The UK oil & gas industry supports 340,000 jobs directly and indirectly and another 100,000 are involved in exporting goods/ services. Notably, 15%, approximately 66,000, of the total number of people working in the UK oil & gas industry, reside in the North East.

It is the role of the supply chain to drive the innovation and technology that will ensure the planet can maximise the benefit of its oil & gas reserves.

Oil and gas fields Established oil fields, such as the North Sea, also still have plenty to offer. For example, it is estimated that the UK continental shelf holds as much oil as has already been extracted.

And it is the extraction from these established oil & gas fields that will ensure that the industry remains a prominent part of the UK economy.

The Forties Field in the North Sea is a prime example of how the application of improving technologies and the experience of the supply chain is playing a significant part in the sector’s future.

When Apache acquired the field in 2003 it was due for decommission in 2012. However, in that period, 120 development wells were discovered and drilled and five seismic surveys were undertaken with another planned for this year.

This has led to decommissioning being deferred indefinitely and the site is currently producing 50,000 barrels of oil a day.

A time of change These existing fields are also benefiting from the recent changes to the tax system. The announcement by the Chancellor, George Osborne, to introduce a Brown Field Allowance to help increase the lifespans of older North

SECTOR FOCUS: Creating a world of opportunity for energy

It is often suggested that oil & gas is a sunset industry.

However, this couldn’t be further from the truth

Sea fields is a major endorsement by the Government and acknowledges the significant contribution the sector makes to the economy through job creation, investment and direct taxation to the Treasury.

The Brown Field Allowance shields up to £250m of income in qualifying brown field projects, or £500m for projects in fields paying Petroleum Revenue Tax, from the 32 percent Supplementary Charge rate. This will provide tax relief of up to £80m or £160m respectively.

Therefore, with the activities in existing fields coupled with the discovery and recovery of hard to reach resources, oil & gas will remain a central part of the global energy mix for decades to come.

This capital investment has risen year on year since 2003 and is forecast to reach £100bn by 2013-14, which will provide considerable opportunities for high quality supply chain companies.

As the UK’s business development organisation for oil, gas, nuclear and offshore renewables, it is the role of NOF Energy to support the activities of its members to assist them in securing a proportion of the opportunities available in the market.

We work incredibly closely with our 410-strong body of members with a range of business development services such as international market visits, networking events, workshops and member-to-member introductions that support their ambitions to enhance their position in the supply chain.

While other emerging sectors, such as offshore renewables, are starting to gain prominence in the energy mix, oil & gas will remain core to delivering the country a balanced energy future.

The sector is one of the economy’s jewels in the crown creating jobs, driving investment and providing around £8 billion annually to the Treasury in taxation.

Therefore, there is no denying that rather than setting, the sun is definitely shining on the industry and the opportunities open to North East companies with the right skills, products and services are plentiful.

Priorities These companies, according to the NOF Energy annual survey carried out at the end of 2012, are clear that oil & gas is their priority sector for the coming year, and beyond, and they are making investments and introducing new technologies that give them an edge in a competitive global market.

George Rafferty, Chief Executive of NOF Energy @NOFEnergyLtd

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SECTOR FOCUS: How the North is well placed to catch a wave on the rising renewable energy tide

How the North is well placed to catch a wave on the rising renewable energy tide Any surfer will tell you that if you want to catch a wave, it is all about timing. The ideal scenario is to begin standing just as you feel the pull of the wave.

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uch advice would not go amiss with any game-changing decision, which is all about knowing when to hang back and when to push ahead.

So when it comes to re-balancing the UK economy between regions and away from some of our traditional industries towards a greener, lower carbon environment, the Northern region seems well placed to take advantage of the green energy revolution which is really starting to gain momentum.

As a region we began the shift away from its former traditional heavy industrial base some years ago and, the foundations have now been laid to catch the rising wave of activity around renewable energy as the UK seeks to achieve its emissions reduction targets and become less reliant on energy imports.

Rich in academic and research facilities as well as huge swathes of countryside and coastline, the North of England certainly appears to have the intellectual capacity and natural resources necessary to carve a niche for itself within the UK renewables market - if not globally.

You just have to look around to see the rapid growth of renewable energy sources in the North East to conclude that with carbon reduction targets to meet, they are only likely to increase.

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The scale and impact of the kind of renewable energy projects we are witnessing will do much to re-energise the regional economy, creating many hundreds of new jobs as well as providing a much needed injection of inward investment to pump prime new schemes.

The award-winning National Renewable Energy Centre in Blyth has already invested over £150m of UK Government, private and European Union funding to create a unique testing and research facility which is enabling the industry to deliver lower cost and more reliable power.

Its team of scientists and engineers are operating some of Europe’s largest research and testing facilities for electrical networks, offshore wind and marine and tidal power generation technologies.

A further 140 jobs are to be created in Northumberland through the construction of an £80m renewable energy investment

by Estover Energy at the site of Aesica Pharmaceuticals in Cramlington. The biomass heat and power plant will use low grade wood from nearby local forestry operations to significantly reduce Aesica’s carbon footprint.

Pivotal to the ability of the UK to meet its green energy targets is the £3bn Green Investment Bank (GIB), launched by the government in November 2012.

SECTOR FOCUS: How the North is well placed to catch a wave on the rising renewable energy tide

The rationale behind its funding model - that its three billion pounds of government money would leverage private sector projects - certainly seems credible given the results of its first five months of operations.

GIB has already provided £635m of investment for 11 transactions which have a total value of some £2.3bn with the rest of the funding coming from the private sector - amply demonstrating the anticipated payback ratio of £1 of public cash to £3 of private investment.

Here in the region, we have already benefited substantially from GIB funding. We have a new anaerobic digestion plant in Middlesbrough that will convert the region’s waste into electricity was the first project to get funding from GIB when it launched.

Operated by Earthly Energy, GIB’s £8m cash injection attracted a further £8m of matching private sector funding. This is just one of six sites in the UK now secured by Earthly Energy, three of which are in the North.

In Yorkshire too, sixty permanent jobs are planned as a result of a further energy from waste scheme which is being developed by Shanks and Wakefield Council. The recycling and anaerobic digestion facility, which is worth £750m, has received £30.4m backing from GIB. It will power about 3,000 homes and create around 250 jobs during the construction phase.

It is one of five waste or biomass projects funded by GIB so far including the enablement of the UK’s biggest coal-fired power station, Drax in North Yorkshire, to convert some of its coal boilers to wood and other biological materials.

The level of GIB support for biomass plants has nonetheless drawn heavy criticism from environmental groups who are particularly concerned about the use of whole trees in the biomass process, instead of wood waste such as bark, chippings or other residues.

The issue is around the difficulties of accurately calculating the carbon emissions which relies on assumptions being made about where the wood is coming from and what is going to be burned. The irony may well be that we cannot actually know whether biomass being burnt with the support of taxpayer subsidies, is saving any carbon emissions at all.

But given the latest estimates from EU statistics agency Eurostat - which suggest that UK CO2 emissions climbed by 3.9 per cent last year, compared to 2011, while Germany saw a 0.9 per cent increase – the UK will be very much under the spotlight as Europe’s largest polluter, and the biomass debate will undoubtedly continue apace.

With the need to push ahead further and faster on the renewables front, we should count ourselves fortunate to have on our doorstep such a wealth of technology-based talent supported by an astute professional services sector. This is and should be regarded as a major and quite genuine opportunity.

As GIB squares itself up to broaden its sphere of influence and its financial backing in the future, the North of England undoubtedly has a tremendous opportunity to contribute to its success and its aspirations for a greener UK. Now is the time for us to stand up and catch the wave.

The Northern region seems well placed to take advantage of the green energy revolution which is really starting to gain momentum

Find out how our energy group can help you by getting in touch with Christopher Graham

0845 901 2033 christopher.graham@watsonburton.com

Briefly Legal R summer 2013 17

SECTOR FOCUS: Celebrating 100 years of UK planning

Celebrating 100 years of UK planning The term ‘Town Planning’ and its statutory practice go back as far as the Housing, Town Planning Act 1909, which was the first Act of its kind that permitted local authorities to prepare schemes for land in the course of development, or likely to be developed.

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n the 11th July 1913 a provisional organising committee was established in London and an invitation was sent to potential members to join a ‘Town Planning Institute’.

The first meeting convened on 21st November 1913 and was chaired by Thomas Adams who, on the 13th March 1914, became the first elected president of the Institute.

Today the Royal Town Planning Institute (RTPI) as we know it is much larger, with some 22,000 members nationally. In order to facilitate its function the RTPI is broken down into regional areas with each region being guided by an elected management board. In the north east there are currently around 800 members of the institute.

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In 2014, I will take over the reins as the Chairman of the RTPI north east, in what will be the institute’s centenary year.

To celebrate 100 years of being, the North East region will be hosting a series of events open to all its regional members and others in the development industry.

• A series of challenge days aimed at school aged children will take place throughout the year with the aim being to engage children in matters that concern the built and natural environment • A free centenary reception will be open to all regional members of the Institute

In addition to the normal events hosted by the Institute on an annual basis the RTPI will be running the following events throughout 2014:

• A 100km bike ride will be organised for members and their friends, families and colleagues

• A time line exhibition which charts the history and celebrates the achievements of Planning. The timeline exhibition will be displayed in the Centre for Life in March and then subsequently in other areas within the region throughout the year

• A high profile speaker will be arranged to speak at the annual Thomas Sharpe lecture (in association with Newcastle University) • A planning related quiz and pub crawl will be arranged and aimed specifically at younger members of the Institute

SECTOR FOCUS: Celebrating 100 years of UK planning

Planning in the UK: An overview The planning system has changed significantly since its inception by the Housing, Town Planning Act 1909 and is still evolving.

• A special centenary dinner, open to all members and others who work within the development industry, will conclude the year’s celebrations We are looking forward to an exciting year filled with events to celebrate the achievements of planning over the past 100 years and those that have made it possible.

Whilst we are still in tough economic times there is a feeling of optimism within the development industry that things are beginning to improve.

Positive planning has never been as high on the Government’s agenda and in my year as chairman of the institute I want to continue the theme of positive planning to achieve a more prosperous economy for the region and the country as a whole.

We are looking forward to an exciting year filled with events to celebrate the achievements of planning over the past 100 years and those that have made it possible The centenary year will be sponsored by Nathanial Lichfield & Partners and Barton Wilmore, two of the UK’s leading planning consultancies.

Stephen Litherland, Bellway Homes Plc Senior Vice Chairman of RTPI North East

Recently, further noteworthy changes have been implemented by the Coalition Government, which has introduced radical reforms into the planning legal system since coming to power in 2010. They have given new powers to local councils, developers, communities, neighbourhoods and individuals and are promoting economic growth and localism at the same time.

Some of the new legislation includes: • The Growth and Infrastructure Act 2013, which aims to remove obstacles to development proposals by reducing evidential requirements and allowing appeals to be made directly to the Secretary of State • The Town and Country Planning (General Permitted Development) (Amendments) (England) Order 2013, which will allow conversion of some commercial buildings to residential use • The Community Infrastructure Levy (Amendment) Regulations 2013, amends the 2010 Regulations, which inter alia, provides for Parish Councils to be the beneficiary of 25% of Community Infrastructure Levy • The Localism Act 2011 provides new powers to Local Communities to promote Neighbourhood Plans and retention of community assets • The Enterprise and Regulatory Reform Act 2013, contains various reforms to listed buildings and conservation area controls

Find out how our planning team can help you by getting in touch with Amanda Campbell

0845 901 2080 amanda.campbell@watsonburton.com

@RTPI_North_East

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SECTOR FOCUS: A greener Britain?

A greener Britain?

Since the launch of the Government’s flagship Green Deal initiative in February of this year, the issue of energy efficiency in the UK has become the focus of much debate with politicians and industry bodies voicing opinions on the subject. Here, real estate specialist Michael Shuker offers his perspective on the scheme, describing its impact on the property market and the potential opportunities for businesses.

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ou don’t have to look far to find rather jaw-dropping statistics regarding 21st Century fuel consumption to appreciate that both fuel poverty and climate change are at the top of the Government’s agenda.

The Green Deal is the latest provision designed to “revolutionise” the energy efficiency of both residential and commercial properties in the UK, with an aim to providing: • property owners and occupiers with long term energy efficiency savings • the UK market with 100,000 jobs within five years • a significant contribution to the UK’s self imposed legally-binding Carbon Budget of reducing the country’s green house gas emissions by 80% by 2050 The legal framework of the Green Deal was brought into effect in October 2012, through the commencement of the latest tranche of provisions arising out of the Coalition’s Energy Act 2011, laying the foundation for consumers to enter into a Green Deal Plan from 28 January 2013.

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At current rates of consumption, there is enough crude oil in the world’s major oil fields to last another forty years

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Institute of Mechanical Engineers

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The Green Deal Plan: how does it work?

Once committed to the scheme, The Green Deal Plan is a simple mechanism that will allow consumers to make energy efficiency improvements to their homes or business premises, through an accredited provider, at no up-front cost, with the costs being recouped through a Green Deal charge levied on their utility bill.

The Government has endeavoured to make the Green Deal Plan attractive to potential consumers and have garnered a “Golden Rule”, that the “expected financial savings must be equal to or greater than the costs attached to the consumer’s energy bill”.

To underpin this level of consumer protectionism, the Green Deal stipulates that any potential energy efficiency improvements to a property must be: • assessed by an accredited advise • installed by an accredited provider Consequently the new legislative framework has introduced the possibility of widespread changes to both the residential and commercial UK property markets as well the opportunity to create a niche market for property surveyors, energy efficiency consultants, construction companies and tradesman.

SECTOR FOCUS: A greener Britain?

Opportunities As expected with the roll-out of such a large scale and innovative programme, The Green Deal has opened the door for a range of companies to offer their services to the Secretary of State as Green Deal Providers (“GDPs”). This aims to ensure that The Green Deal has the necessary public and private finance, surveying and construction expertise and cost collection mechanisms to succeed.

Up-take by the private sector to engage with The Green Deal has been good with over 30 assessors and 80 installers having already passed through the GDP accreditation process in Tyne and Wear alone – right through from “one man bands” to FTSE 250 industrial giant, Mitie plc.

The North-East’s energy credentials need no introduction and The Green Deal presents a unique opportunity for the region’s companies to explore.

Impact There is a sense of the unknown when considering the likely impacts that The Green Deal will have on the real estate market.

Mortgage finance, social housing, property sales and landlord and tenant issues are all areas that are susceptible to change as a result of its introduction.

The added value to a consumer’s property in light of any energy efficiency modifications is likely to be the cornerstone of how the market receives The Green Deal, especially whilst access to finance and consumer confidence remain in a state of limbo.

Furthermore, the issue of getting the Green Deal works done and the associated charges will be topical to landlord and tenants in both the domestic and commercial markets: • Works Tenants may wish to incorporate terms into their leases that will prevent the landlord from unreasonably refusing consent to a tenant’s proposed works by their GDP – currently there is no statutory restriction on the landlord refusing consent.

• Charges The Green Deal Plan lives with the property not the consumer. While a property is tenanted the responsibility of paying The Green Deal charge rests with the tenant but where a property is not let the landlord must step into the tenant’s shoes and make the re-payments himself.

• Disclosure A landlord must disclose the existence of a Green Deal Plan on its Energy Performance Certificate or risk sanctions imposed by the Secretary of State.

We must draw the conclusion that engaging with The Green Deal going forward is vital.

The implementation of The Green Deal has served to reinforce the importance of climate change and energy consumption issues whilst simultaneously providing the UK property market with an opportunity to fully embrace energy efficiency measures. With the Prime Minister recently stating that the UK is on an “energy efficiency mission” to become the most proficient economy in Europe, the changes proposed will soon become a reality for the UK.

Find out how our real estate group can help you by getting in touch with Michael Shuker

0845 901 2075 michael.shuker@watsonburton.com

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SECTOR FOCUS: House building: Opening the debate

House building:

Opening the debate

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The No Stone Unturned Report was recently published by the Rt Hon Lord Heseltine with recommendations on how to increase UK growth. In it, amongst other matters, Lord Heseltine proposes that Whitehall funds for training, housing and transport be devolved into a single funding pot for Local Enterprise Partnerships to administer.

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racy Hall, partner and group head for real estate at Watson Burton, together with David Pridmore, partner and real estate specialist, speak to an architect, training provider and house builder to discuss whether they think Lord Heseltine’s proposals could provide the opportunity to make a positive contribution to regional growth.

Panel: Blake Robinson, Operations Director at 4041, Craig Taylor, Development Director at Galliford Try and Roger Maier associate at IDPartnership.

Left to right: Blake Robinson, Roger Maier, Tracey Hall, Craig Taylor and David Pridmore

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SECTOR FOCUS: House building: Opening the debate

Blake Robinson and Roger Maier

Tracy Hall: One North East was hugely effective for the North East, unlike other regional development agencies. Things have changed with the move to LEPs and I believe it would have been better if One North East could have finished what they started. The strength of the LEP will depend very much on how much energy and vigour is invested by those involved.

Craig Taylor: One North East did well in the way it assessed the needs of the region as a whole but I feel that the LEP has become very Tyneside centric.

Tracy Hall: Yes, it does appear that the local councils have not been working cohesively.

People looking to invest need more than the NewcastleGateshead approach and the LEP needs to look as if it is working for a much larger area than Newcastle. Maybe RGF will help.

Blake Robinson: The danger is that the LEP uses outdated methods to administer funding and misses out on the synergy of working with new methods and new people to deliver change.

Craig Taylor: The challenges for a single pot will be the same as they are for RGF – where housing, regeneration and infrastructure schemes are all bidding against each other for funding. One regional funding pot cannot work. Our redevelopment scheme in Gateshead is still not adequately funded so we can only undertake small pockets of

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The key issues are cost and building housing that has an element of longevity – a house for life – which is how it used to be for our parents.

We need to move away from the stigma of the term ‘affordable’ housing and just call it housing

regeneration and hope it will act as a catalyst.

We submitted a bid for RGF but were unsuccessful.

Roger Maier: Good point. IDP made an application for RGF and it was kicked out straight away. Construction jobs didn’t seem to meet the funding criteria and RGF is not meeting the needs of the region as a whole.

It’s as if the large teams, who have the resources to put together expensive bids, always win. This must then beg the question, who is the funding really benefiting if the same contractors or developers keep winning bids?

doesn’t meet the economic needs of the wider region.

Blake Robinson: How do these proposals translate into wealth generation? There must be coordination between building and available spend. Without the confidence to spend, projects will start but will stagnate and this will impact on growth and further development.

Craig Taylor: It’s all about the level and context of government intervention. The last thing we want is projects being delivered and buildings left standing empty.

Tracy Hall: RGF is too prescriptive and it’s too focused on manufacturing, therefore it

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SECTOR FOCUS: House building: Opening the debate

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“ Craig Taylor and David Pridmore

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SECTOR FOCUS: House building: Opening the debate

Is Help to Buy making a difference?

Tracy Hall: Do we think this might help at a time when the banks are still very cautious? I would like to think it will help families move up the ladder into a better quality home and help first time buyers get on the ladder. Through my work with Bellway, I am currently seeing a steady level of plot sales coming through in the Merseyside area on the Help to Buy scheme and the market has a much healthier feel.

Blake Robinson: As the scheme only applies to new homes, it creates the opportunity for people to buy but what will happen to the homes second time buyers are vacating?

I think we’ll see an increase in derelict and empty properties. I also think that house builders will inflate the prices now there are government subsidies available.

Roger Maier: Also, will house builders step up to the mark and increase production? They will want to protect their margins.

David Pridmore: I have doubts that the house building industry is going to be able to match demand. Are there sufficient plots available to develop? Because if demand outstrips supply, in normal market conditions, this means the price goes up.

Tracy Hall: I understand that the funding arrangements have been set up in such a way that they take into account the value of the property. The Royal Institute of Chartered Surveyors (RICS) has to be satisfied that each house is priced accurately to reflect market conditions. Funding arrangements and any incentives offered are such that they won’t change the value of a property. For me, the issue is whether enforcement will be carried out properly.

Roger Maier: I also have reservations about whether they will meet the numbers required because there’s no great incentive for house builders to increase their output. If they have a land bank available the larger house builder will react conservatively to protect margin and position. For smaller house builders it is now impossible to get funding.

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How do we bridge that gap with landowners – particularly in the North of England where affordability is a significant factor?

Complex planning legislation prevails Tracy Hall: The green agenda has made it worse – developers need sites suitable for affordable homes and often the only available sites are on greenbelt. Even big operators like Bellway have a tough time with planning on these sites. The planning structure is shocking.

Roger Maier: Land supply, delivery constraints and site quality are the issues. Brownfield sites are widely available here but they are expensive to develop. Greenbelt sites come with widespread local opposition making it almost impossible to take them forward.

Planning consent is therefore complex and costly to obtain.

Craig Taylor: Many landowners who bought when prices were high are asking too much today. We are currently experiencing 20% lower prices but build costs have increased.

This makes it more difficult to protect already squeezed margins. The Localism Agenda has made this worse. In Hexham where only greenbelt sites are available for affordable housing, there is huge local opposition and the margin is not even there to begin with.

Roger Maier: There is a limit to the cost you can shave off a development because the cost is really the land cost.

Craig Taylor: This is where planning authorities have a role to play. Durham and Northumberland, the two biggest local authorities in the country, have still not released their core strategies.

Tracy Hall: The whole issue with brownfield sites though is ‘do people really want to live there and should government be able to dictate where people live?’ There was a report produced that Europeans live in cities and we should adopt this approach here.

Craig Taylor: The European model won’t work in the UK unless you have decentralised government. Here it is centralised and we are constantly affected by it in the north.

Tracy Hall: The BBC’s Media City is a case in point. BBC staff had this more or less imposed upon them when they were forced to move to Salford Quays.

So what of the future of housebuilding?

Blake Robinson: The key issues are cost and building housing that has an element of longevity – a house for life – which is how it used to be for our parents. We need to move away from the stigma of the term ‘affordable’ housing and just call it housing.

David Pridmore: I agree. I have a client who had a site with planning permission for nine homes and had to move it on because he couldn’t get a builder to take it on – the larger firms are simply not interested in a site this size.

Roger Maier: Land and planning are hampering delivery. If we can get a good supply of land released there’s a role to be played by smaller builders, self-builders and custom-built housing - a small part of the market here, but much bigger in other parts of Europe. This could make a big impact.

Blake Robinson: This is when the opportunity arises to use young people on apprenticeships to build new homes, because it ticks the employment, regeneration and social reform boxes all at once. I think the LEP needs to bring funding for training and housing funding together to overcome some of the present issues.

Tracy Hall: In North East England there is no public housing left, which is a national scandal - and no focus on it at government level. The private sector is supposed to deliver it through ‘affordable housing’. Young people’s views have changed too. They are happy to rent so should we not be considering more

developments like Tom Bloxham’s Urban Splash concept?

Craig Taylor: The market will become more buoyant again because housing is now being regarded once more as an asset class. We are in discussion with a couple of private equity investment companies currently. And given the high specification of affordable housing, why would you buy a house from a private developer? I think the affordability of private housing will drive the growth of the affordable homes market.

David Pridmore: The Help to Buy scheme is providing demand in the short term but the issue is how we are going to maintain supply.

A lot is to do with people living longer as well as family break ups, driving demand for more housing units. So how do we bridge that gap with landowners – particularly in the North of England where affordability is a significant factor?

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SECTOR FOCUS: Capturing that lost online sale

Capturing that lost online sale Gerard Callaghan, director of north east based SaleCycle, a global leader in online cart recovery, reviews the art of internet customer conversion.

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n 2010 the ‘internet economy’ was worth £121bn, more than £2,000 per person, according to researchers at the Boston Consulting Group, with some 13.5% of all purchases being made over the internet. Their findings also predicted that this figure is set to rise to 23% by 2016. This makes online retailing big business especially as our growing affection, or could that be addiction, to using mobile devices makes it even easier to shop on line.

Of course with any purchase there is often the change of heart – the exchange or worst case scenario, the return of goods. When shopping on the high street, face to face transactions allow the retailer to encourage another sale,

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perhaps by advising the customer that the product is available in other sizes and colours or that it has been reduced in price. But how can the online retailer respond to basket abandonment, as we refer to it?

Our founder and president, Dominic Edmunds, identified this aspect of online retailing as a sizeable issue for all internet businesses.

Whilst it was accepted that every site would lose a substantial percentage of its customers at the point of purchase, he believed having the capability to reach out and remarket to those customers who abandoned at the last minute, would present a significant opportunity for retailers.

SECTOR FOCUS: Capturing that lost online sale

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In 2010 the ‘internet economy’ was worth £121bn, more than £2,000 per person, according to researchers at the Boston Consulting Group, with some 13.5% of all purchases being made over the internet Problem or opportunity?

Basket abandonment: big problem or big opportunity? This depends on how you look at it. With average abandonment rates being around 75%, it means that for every £1 spent on a retail site, £3 is abandoned at the point of purchase.

This figure can vary based on the products that are sold on each site. For instance, in the case of a niche product, abandonment rates may be lower than this as potential purchasers chose that site for a specific product. However, for other sites such as hotel operators, the abandonment rate can be higher as purchasers search for the best deal.

For retailers who successfully retrieve this lost revenue it is great news and SaleCycle’s statistics indicate that converting these ‘warm’ customers is far easier than trying to entice new customers to a site.

Using the flare of our highly talented in-house team we developed some very advanced software which not only allowed us to deal with basket abandonment, but also deal with it in volume. To demonstrate the extent of our software capacity imagine if you will, more than 400 of the largest ecommerce sites in the world operating on the busiest days of the e-retailing calendar such as Cyber Monday in the run up to Christmas - and you may get a clearer picture about the amount of data involved.

and those that for whatever reason, don’t.

Based on sophisticated criteria and a set of tools SaleCyle has developed, we then remarket products to those who abandoned, usually via email.

Thanks to the level of data SaleCyle is able to capture we know that, when appointed, we are able to achieve consistent results across a diverse range of industries and product types and typically increase revenues for our customers by up to 8%. This figure is mirrored across each of the currencies and countries in which the company operates.

Whilst SaleCycle has some competitors, they are few and far between. Since its inception three years ago, after facing some initial nervewracking challenges of a technical nature, we have been able to build an impressive technical solution and infrastructure which has been a complex process. This gave us the confidence to really push for growth.

Sophisticated programme modelling

What next?

Working in real time, SaleCycle’s software allows a review of all the transactions that have taken place on the sites including those that complete successfully resulting in a sale,

SaleCycle currently employs 35 staff from offices in the United States, Singapore, Europe and the Nordics. We have plans to generate revenues over £3.5million this year

and further expand our operations by recruiting another 20 employees.

Industry data suggests that the remarketing sector is worth in the region of $36bn per year and presently only 14% of businesses have remarketing solutions in place. This presents significant scope and opportunities for SaleCyle to increase its market share further as we continue to push forward to enter new territories and win new clients.

With the aim of making the most of the data we capture, we have some exciting new business development ideas in the pipeline.

These will allow us to provide an additional suite of services to online retailers that will add value to their business and substance to their bottom line results and at the same time ensure that we retain our pole position in the online cart recovery market.

Gerard Callaghan, Director of SaleCycle @SaleCycle

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SECTOR FOCUS: Bright outlook for tech startups

Bright outlook for tech startups

peratin ng in a high hly competiitivve, evo olu utio ona ary market, te echno ology startup busine esses oft ften find it diff f icu ult to stand d outt from m the e crowd. Whilst a recent rep port by the Scien nce and d Technologyy Select Committee warns thatt the governm mentt is failing g to sec cure funding for tech sttartups, the North East’s asssociation with them co ontinues to grow. He ere, we e speak to o corp porate fina ance spec cialist William McCullough and ask him why the North East has come to have such a vibrant and pop pular startup comm munity and what he considers to be key priiorrities for these e businesses.

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SECTOR FOCUS: Bright outlook for tech startups

The North East can offer technology startups the opportunity to benefit from the experience of expert mentors

Q

What do you think makes the North East so attractive for tech startups s?

Perhaps one of the most obvious attractions for those considering starting out in the technology sector is access to funding.

into 7 funds and is financed by the European Regional Development Fund, the European Investment Bank and the UK government.

Debt and equity finance from £1,000 to £1.25m is accessible under the £125m Finance for Business North East programme. This is available for SMEs based in, or relocating to, the North East. The programme is divided

There are also numerous venture capital funds, syndicated private equity investors and business angel networks which are located and actively investing in the North East.

Q

Do you thin nk locatio on plays a role?

Yes, being located in the North East gives these businesses the opportunity to connect with and utilise universities through projects such as DigitalCity, which collaborates with Teesside University and Newcastle Science City, which works with Newcastle University. Both projects offer business support to early stage businesses.

The North East can also offer technology startups the opportunity to benefit from the experience of expert mentors through the likes of the ignite100 programme. Now in its third year, ignite100 is a mentor-led accelerator programme that provides startup capital, mentoring and office space in a 14-week intensive programme. Many of the founders, who come from the UK and abroad, that complete the ignite100 programme choose to stay in the North East and add to the close knit startup community.

Another key resource available to technology startups in the North East is the access to relatively inexpensive residential and commercial property when compared with other technology startup hotspots such as Cambridge and London. An example of this is the NETPark Incubator in County Durham which offers a mix of office, laboratory and clean room space on a “pay as you grow” basis.

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SECTOR FOCUS: Bright outlook for tech startups

protect and exploit their ideas.

A clear position regarding “who owns what” in terms of intellectual propert r y should be towards the top of any start r up’s priority list

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SECTOR FOCUS: Bright outlook for tech startups

Q

What are the priorities for these comp panies fro om a legal perspective?

Many businesses seek funding at an early stage. There are a variety of options available from simple bank loans and overdrafts through to investment by venture capitalists or private equity houses. When considering investment, startups need to think very carefully about the conditions which come with such funding.

For example, a bank might require personal guarantees from the directors and equity investors often have conditions that require more on-going contact with them.

triggers. Investors also frequently insist on an element of oversight of the day-to-day running of the business. They may require an observer to sit on the board of directors or alternatively may insist on the appointment of an investor director of its own choosing. Either way, a financier often stipulates that the business cannot take certain decisions without the consent of that investor as a condition of the agreement. A new lender should be seen as a new partner in the business.

One thing to note is that the startup founders will need to accept that they have to sacrifice some of their equity in their business to secure investment. This could be by way of a straight equity investment or by way of a convertible loan which can convert to equity upon certain

The importance of negotiating suitable investment terms cannot be underestimated – it is a decision that the business may have to live with for a long time.

Q

What should tech startups consider to protect their business?

It is essential that startups protect and exploit their ideas. A clear position regarding “who owns what” in terms of intellectual property should be towards the top of any startup’s priority list especially if work is prepared by consultants on its behalf (as is often the case with App development or website design).

Another consideration is whether any staff, customers and suppliers should enter into confidentiality agreements to protect the company’s secrets. Founders often agree to assign to the company all of their own IP that relates to the business at the outset. This ensures that in the event of a dispute between the founders, the company will retain the IP it needs to continue trading.

The exploitation of IT for technology startups is, of course, essential. However, getting the basics in place is not always obvious.

Startups that utilise social media functionality

or user participation need to carefully consider the ownership of users’ data and the terms on which such data is collected. Ensuring that the appropriate website terms of use and privacy policy are in place might not immediately seem to be a top priority. However, these terms can govern (and limit) a business’s ability to commercialise user data and their importance should not be underestimated.

Find out how our technology group can help you by getting in touch with William McCullough 0845 901 0968 william.mccullough@watsonburton.com

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REGIONAL FOCUS: Ambassadors for Leeds City Region

Ambassadors for Leeds City Region

Mark Goldstone, Head of Business Representation & Policy at Leeds, York & North Yorkshire Chamber of Commerce, acts as the voice of regional businesses in relaying their views to key decision makers. Here, Mark speaks to Briefly Legal to explain what makes the area special as Leeds city region takes centre stage.

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REGIONAL FOCUS: Ambassadors for Leeds City Region

The ingredients for export growth truly exist in the Leeds City Region. We have high value, high quality and innovative manufacturing, world leading service sector companies and a wealth of expertise and support to help new and existing exporters

T

he Leeds City Region is a functional economic area, defined by the way our businesses operate and our residents live their lives. It is the largest city region in the UK, home to 3 million people and over 100,000 businesses, in turn generating 4% of the UK’s economic output. It is home to the largest manufacturing base in the UK and the second largest base for financial and legal services behind London. The region has a strong research base supported by nine universities with great examples of collaboration between business and higher education.

Whilst the region is by no means immune to external economic forces it is this diversity which has stood it well over the last five years.

Investment in the Leeds City Region The announcement by the Government in late 2012 that the Leeds City Region will benefit from devolved funding through City Deal looks set to bring forward strategic infrastructure projects through the creation of a ÂŁ1bn transport investment fund. Likewise the creation of a further ÂŁ400m economic development fund will assist in getting stalled development projects moving again. Both of these initiatives will help to create the 21st century infrastructure required by modern successful economies in turn creating business opportunities during their construction and on-going economic improvements upon completion. Add to this a new strategic approach to inward investment led by Leeds and Partners means there are plenty of opportunities to do business with the city region.

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REGIONAL FOCUS: Ambassadors for Leeds City Region

34 Briefly Legal R summer 2013

REGIONAL FOCUS: Ambassadors for Leeds City Region

67% of exporting companies in the Leeds City Region have seen their turnover return to or exceed pre-recession levels versus 53% of non-exporters

World Trade from Yorkshire Much has been made by the government about the need to get more companies in the UK exporting. Whilst the Chamber recognises that for some businesses this is simply not on their agenda we do support the view that international markets offer significant opportunities for companies. In fact Chamber research shows that companies that do business internationally are more innovative, more productive and more resilient than those that don’t. 67% of exporting companies in the Leeds City Region have seen their turnover return to or exceed pre-recession levels versus 53% of non-exporters (a copy of this research entitled ‘Beyond Borders’ can be found on the Chamber’s website).

HM Treasury statistics point to the fact that Yorkshire & Humber could do better with regards to the value of exported goods and services in comparison to fellow English regions. Furthermore export markets from the Yorkshire region have traditionally been to the USA and Europe, with six of our top ten markets within the Eurozone itself (not dissimilar to the rest of the UK). Whilst the United States appears to have turned a corner following last minute negotiations earlier in the year to stave off the ‘Fiscal cliff’, troubles in the Euro zone rumble on and show no real sign of abating in the short term.

Fortunately there is good evidence that companies in the Leeds City Region are looking outside their traditional overseas markets with our international department reporting increased interest in places like China, Turkey, India and the Middle East since the start of the recession in 2008.

Engineered products still remain the number one export out of the Leeds City Region in

particular supplying the power generation & distribution, mining and oil & gas industries.

The region is still very strong in textiles and chemicals exports. Additionally there has been a noticeable increase in the export of scientific / healthcare products over the last three years. The region has also seen much service sector export activity taking place.

Financial and legal services are well placed to serve international markets from the Leeds City Region; likewise there is a thriving Information Communication Technology (ICT) and digital / creative sector which is doing great work overseas.

Our latest quarterly economic survey (released April 2013) points to further increases in exports by local businesses, especially service sector businesses. Indeed we have uncovered some great examples of companies taking advantage of opportunities generated through their websites, highlighting the importance of getting found in the digital world. This in itself presents fantastic opportunities for the legal sector as companies look to protect their intellectual property overseas and with a significant proportion of international contracts drafted under English law this region has the eco-system to support business growth.

Further assistance has also been made available through the creation of the region’s ‘We are international’ campaign www.exportnetwork.co.uk. This campaign spearheaded by Chamber International, UK Trade & Investment and the region’s Local Enterprise Partnership, aims to add £2.6 billion to the local economy by increasing the number of businesses selling their goods or services overseas.

Global Connectivity There is also good news with the recommencement of flights by British Airways (BA) between Leeds-Bradford International Airport and the rest of the world via Heathrow Terminal 5. One of this Chamber’s long

standing campaigns has been to encourage more international trade in our region emphasising the need for easy access to growth markets. As a result, we are delighted that our vision has now become a reality.

Connection to the UK’s only hub airport adds more choice for the global business traveller but just as important it also makes it easier for overseas visitors to get to Yorkshire.

The ingredients for export growth truly exist in the Leeds City Region. We have high value, high quality and innovative manufacturing, world leading service sector companies and a wealth of expertise and support to help new and existing exporters. Direct connectivity to world markets via Heathrow from LeedsBradford International Airport simply adds to this proposition.

The future This year has already seen the opening of the largest new retail development in Europe for many years and at 1msq’ ft Trinity Leeds has transformed the city centre. In July the long awaited Leeds Arena opens its doors with a unique design creating Europe’s only 12,500 seat super-theatre. This will be followed by further, major retail development as John Lewis comes to the city in 2016. Last but not least three global sporting extravaganzas will be hosted in the region: the rugby league and rugby union world cups in 2013 and 2015 and the spectacular Tour de France Grand Depart in 2014. With the eyes of the world on Leeds I am confident that business will benefit as the region’s profile goes global.

Mark Goldstone Head of Business Representation & Policy at Leeds, York & North Yorkshire Chamber of Commerce @Mark_Goldstone

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FIRM FOCUS: Planning for success

Planning for success Volatile markets, fluctuations in interest ratess and a decline in n access to conventional lending have created tough tra adin ng conditions for UK businesses in recent years. The dura abiliity of organisations, both large and small, has been defined by their ability to respond to on-going changes in n the markketplace e with a clear sighted business strategy.

CEO Patric ck Harwood exp pla ains.

F

or any business with aspirations of long term sustainability and growth, forward planning is a pre-requisite to achieve success. An in-depth knowledge of your target market, clearly defined aims and objectives and a logical framework within which the business can thrive are all essential ingredients in the formation of a strong commercial entity.

So how is this achieved? Through a forward thinking progressive vision that aligns the capabilities of your business with the needs of the markets and sectors in which you operate. For Watson Burton, this approach has focussed our firm on identifying our strengths and tailoring our services to secure further opportunities in those markets.

Building on this, we have initiated plans to identify where we can add additional value to our existing clients and, to identify other businesses who we may be able to assist by demonstrating our credentials in three core markets: house building, education and energy and utilities.

36 Briefly Legal R summer 2013

-d depth knowle edge of your target market, clearly defined aims and objectives and a logical framework within which a business can thrive are all essential components in the formation of a strong g commercial entity

FIRM FOCUS: Planning for success

Common goals It is essential to be strategic in your planning, establishing goals and outlining activities at least three years ahead of time. When doing so, it is important to consider both the internal and external environments that affect your business with the aim of implementing a structured approach to delivering continuous growth and improvement throughout that period of time.

As a firm, we seize every available opportunity to revisit our strategy to ensure that our business is performing to its full potential.

Our latest strategic planning activities, completed to coincide with the beginning of our new financial year, have resulted in the implementation of a key account management initiative for current clients and a revised approach to targeting new opportunities between now and 2016. This approach recognises the value of executing an on-going planning process which is nimble and responsive to the changing needs in the market and how in turn those demands reflect the overall political, social and economic characteristics of the wider economy.

Adapting to change At the centre of a successful business plan there should be an informed appraisal of competitor activity and the wider trading conditions prevailing in the market in which your business operates. For a professional services firm like ours, significant challenges have emerged since the global economic crisis in 2007. The legal sector in particular has undergone unprecedented levels of change with client businesses across all commercial and industrial sectors making moves to protect their profit margins. For many businesses, the choice was made to either manage legal services in-house or take more risks by foregoing external legal advice on more “routine� legal issues.

Not surprisingly, this has had an enormous impact on many firms in the legal sector, faced with the challenge of balancing what has traditionally been a high fixed cost business model with a substantially declining income. For others like us, these changes have signposted an opportunity to take a longer term strategic view of the market as we restructured our business with a key focus on reducing overheads and more importantly, debt. The strategy worked. Six years later, our firm has demonstrated stability in turnover and an increase in profit. As a result, national clients have been attracted to this pragmatic and far sighted approach to business planning, perhaps recognising that our unique position, having gone through the process ourselves, provides a valuable insight into addressing some of the challenges they may face.

Find out how Watson Burton can help your business by getting in touch with Patrick Harwood 0845 901 2091 patrick.harwood@watsonburton.com

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FIRM FOCUS: 60 seconds with… Richard Palmer

60 seconds with…

Richard Palmer Watson Burton’s professions and insurance group is nationally recognised for its high-level expertise. Here, we speak to partner Richard Palmer to discuss his influences and interests.

You are in a meeting with someone for the first time in a busy place – how would they recognise you?

In my mind’s eye, they will see a 6 foot four, sharply dressed male with a friendly face and a welcoming smile. Whether others agree with the sharply dressed part is another matter... !

What is the best job you’ve ever had?

As I have worked at Watson Burton for over two decades, I would have to say this one. I have, however, had many roles over the years and despite all the challenges it throws up, my current role as an owner of the business and relationship partner for a number of great clients, plays to my strengths. I am a people person who feels a great responsibility to the people I work with (whether colleagues or clients) and there is a great sense of fulfilment when I deliver on my commitments to them.

Who or what has most inspired you in your professional life?

I would say my father, who is not a lawyer but instead worked in the manufacturing industry. He worked his way up in the company he worked for and was successful in business whilst maintaining a focus on his family. That is a difficult balance to achieve but he did it well.

I know that he faced a number of challenges in his career and he demonstrated to me that any difficult problem does have a solution - you just have to work at it.

How would your colleagues describe you?

I would like to think that they see me as someone who leads by example, who is fiercely (but not blindly) loyal with good judgement and instincts. I always try to ’be inclusive and fair with people but at the same time, if something needs to be done, I will not shirk from doing it. I would always prefer people to understand why a decision has been made, even if they do not agree with it.

What is the best decision you have ever made?

In business terms, the decision to become one of the principal owners in the firm I have worked for all of my professional life must rank as the most important. Having done so at a time when the country was going into the deepest recession in recent times has added to the challenge. I have learnt so much about myself, my colleagues and my business and the opportunity is there to be successful and to leave something in years to come that I am extremely proud of.

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FIRM FOCUS: 60 seconds with… Richard Palmer

“

Garden design is another interest as well as being a chef (I have had experience of running a couple of pop up restaurants but wouldn’t want to do that day in day out)

What do you like most about being a lawyer?

Being presented with a problem (as a litigator, that is usually the way) and working with my clients and colleagues to produce a solution that works. To do that effectively, one needs to listen to what the client is looking to achieve (many lawyers fail to do this), to use your experience to suggest ways forward, to identify the obstacles and opportunities ahead so that a clear strategy and cost can be agreed and then to deliver, whilst at the same time thinking several steps ahead.

Working with colleagues and the client as a team to achieve a successful out come is hugely rewarding.

Which word or phrase do you most overuse?

My colleagues would no doubt say “strategy” (as in we need to create one) or “comfort zone (as in the need to move outside of one). Both are important in being successful in law and business a clear path to achieve what is needed and a real pushing of the boundaries to get the best out of those entrusted with delivering that strategy.

If you were stuck on a desert island and were allowed to take three essential items, what would they be?

Taking into account my interests, an acoustic guitar, a frying pan and a sketch pad. I would have taken an iPad but without a charger and a power source, that would be of limited use!

If you weren’t a lawyer what would you choose to do as a career?

Something involving design. I did consider architecture initially alongside law but I now represent architects and so I have got the best of both worlds. Garden design is another interest as well as being a chef (I have had experience of running a couple of pop up restaurants but wouldn’t want to do that day in day out). In the fantasy world, a musician (I do write and record music) or a football manager (I coach a youth team but I am yet to receive a request to make the step up to the Premier League!)

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WATSON BURTON LLP Newcastle - Leeds - London

0845 901 2100 watsonburton.com

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