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Hawkins Hatton Newsletter March 2024

Newsletter March 2024

Employment, Productivity and the Future

Better skills lead to more productivity in the economy, in that people can generate more through efficiencies and skilling up, this is a statement you can understand without having in depth knowledge of economics. In the same way, most employers will say that they are always on the lookout for talent which coined the phrase “war on talent”.

These statements must be looked at in the backdrop of what is happening in the wider economy. Jeremy Hunt (the Chanceller) has reported that vacancies within the UK are at 980,000, and in contrast Andrew Bailey (the Governor for the Bank of England) has said the UK is at full employment with unemployment recorded at 3.9%. Does this mean you will always have a gap between people looking for a job, and the job markets?

The obvious answer must be yes. Yet, the UK is coming out of a technical recession which started at the end of 2023, during which you would have expected that jobs would be harder to find but this is not the case if there is full employment. So, what is the solution? As with everything in business, the more investment you make the better the outcomes. Instead of investing at the usual levels which give that consistent return, the alternative is to look at investing at different levels which may take a longer time to create the same returns. However, the outcomes from investing at these different levels is not just fulfilling for the employer but also creates employees with higher skillsets which they may have never achieved if they never had that opportunity. The employees in turn will express loyalty to the employer for those opportunities afforded to them.

Unlike most other careers, the barriers to entry to the legal profession are high in academic terms. However, if you ignore the pool of graduates, and you look a wider pool of students with varying educational achievements, you have a wider talent pool to choose from. That is why with the new apprenticeship programmes which span many sectors, this has to be the way to go. This is just a different way at looking at things which Hawkins Hatton (“HH”) adopted since its inception some 20 years ago. Training is the beating heart of HH, sitting alongside client service, as it has always been the view of the founders that giving people opportunities in life gives something back to the profession and people from different walks of life. A lot of people may have been sceptical about looking to train people who have not fulfilled all of the conventional academic criteria required, but even professions such as medicine, are now looking at apprenticeships. It may be harkening back to how things were in the early days of the industrial revolution, where people went into jobs as an apprentice to learn a skill. But it is these skills which are transferable and will enable more people to play their part in increasing productivity. To this end, I would encourage all employers to look at apprentices as having a wider talent pool creates a stronger business which is better able to deal with the challenges of an ever changing world.

Tax Free

When we hear that term, “tax free”, it tends to grab your attention. Without a doubt, we are all likely to spend more if it is free of tax. That is why when you attach tax free to shopping, it encourages tourists to spend more on something special than they may otherwise. From my experience, this is always the case with duty free, in the same way, buying things outside of the airport which will be tax free will always be appealing.

The UK has long been a go to destination for tourists worldwide, even though it may not be as popular as France, Spain, US or Italy. But certainly, the UK is in the world’s top ten places to visit. Again, something everyone knows is that whenever we go abroad, we spend money, and post-pandemic, the number of visitors to the UK has increased with over 35 million tourists last year, with all of them contributing towards the £214 billion that the UK profits from tourism.

So, it must be good news, if VAT free shopping for tourists is going to be brought back for foreign visitors. The Chancellor has referred the change of profit decision to the Office for Budget Responsibility to decide the cost benefits. What is interesting is that this was one of the policies flagged by Liz Truss in her short stay as Prime Minister.

On the face of it, many sectors will benefit from this tax incentive, as it is not just retail and hospitality, but travel, museums and galleries. That is why it is easy to see that business leaders in those sectors have been campaigning for a change for a while.

It is easy to assume that this VAT free incentive may just benefit London, but from my experience, that when family and friends visit from abroad, they spend more money when it is tax free shopping, so the benefits will be felt much wider afield. Getting people to spend more money in the UK has to be a good idea, as it will bring more money into the UK, so it would be interesting to see what Jeremy Hunt decides next month during the budget on 6 March, as why would you want to create barriers for UK tourism and the revenue this will generate.

The Fall of Cool Britannia

The stock market should be one of the barometers of an economic health and vitality. However, this is not necessarily the case with the FTSE 100 as it is mainly made up of international companies, rather than domestic companies. 

The UK has been in the shadow of its American cousin with Nasdaq. Since the Second World War, America has overshadowed the UK whilst the sun set on the British Empire. This has meant that America, through the dollar, has the global currency of choice and its stock exchange, Nasdaq, is sought after by high profile companies throughout the world seeking access to capital markets. 

There are many examples of the UK continuing to lose out to the US on listing, and now even to Frankfurt with TUI looking to leave the FTSE 100. Though TUI does have Germanic roots, so this move could be attributed to that.

The FTSE 100 is less attractive to the world at large due to the existing regulations seeking to protect investors, rather than allowing companies to find capital. Hence, the changes proposed by the UK regulator will go some way to make the FTSE 100 a better place to list with less regulatory constraints, and this will pay dividends in listing terms. In America, there is no shame in failure, whilst in the UK, this carries stigma. If you do not fail, you have not tried, so you learn from failure to try again. You cannot simply look to protect the consumer at every turn.

It goes without saying that simplification leads to cost savings and to the world at large, having one listing category rather than a premium standard makes sense. Also, in this era of unicorns, eligibility should not be determined based on long term financial history. That is why the stock exchange has to be opened to all entrants.

This new disclosure regime may not suit all, but it is ideal to allow investors to decide how they want to invest, rather than treating them as not able to make a decision and to be fully protected at all times failing which, they should go to a professional to mitigate financial risk.

It also makes sense that with a more diverse, and wider range of investors, voting on business matters should be limited to de-listing and takeovers, rather than related party transactions. Will all of these changes make London more competitive but only if it simplifies the prospectus requirements, allows more equity research, and incentivises capital investment in the market, whether through pension funds or ISAs.

Reflecting on 2023: Navigating Challenges and Embracing Opportunities

As we approach the end of another eventful year, it is time to pause and reflect on the journey we have all travelled together. 2023 brought with it the challenges of inflation and the medicine in the form of higher interest rates which dampened consumer spending and created commercial uncertainties.  

Sitting on the cold face I can see that business is still being done, corporates are buying and selling, and investment is taking place. We need more of this, but we need it focused, in terms of productivity as we want to avoid the decline of UK PLC not having investment in its infrastructure, whether that be the government PLCs or businesses generally. You do not fix a leaking roof when it rains, you fix it when the sun is shining, yet there are storm clouds ahead.

As we bid farewell to 2023, it is crucial for businesses to take stock of their journey so far and set their sights on the opportunities that lie ahead with the following thoughts:

Embrace Change: Change is inevitable, rather than fearing it, embrace it as an opportunity for growth and innovation. Be open-minded, adapt your strategies when needed, and seize new possibilities.

Prioritise Well-being: In the pursuit of success, it is easy to overlook our own well-being. Remember that taking care of yourself and your team is essential for long-term sustainability. Foster a supportive work environment, encourage work-life balance, and prioritise mental and physical health.

Collaborate and Connect: The power of collaboration cannot be overstated. Seek partnerships, both within your industry and across sectors, to leverage collective strengths. Engage with your community, build relationships, and create a network of support that nurtures growth.

Emphasise Digital Transformation: The digital landscape continues to evolve rapidly, offering immense opportunities for businesses of all sizes. Embrace digital transformation — whether it is enhancing online presence, optimising processes, or leveraging data-driven insights.

Plan for the Unexpected: While we hope for smoother waters ahead, it is crucial to remain prepared for unforeseen challenges. Develop contingency plans, evaluate risk factors, and ensure you have the necessary safeguards in place to navigate any storm that may arise.

As we step into 2024 with renewed hope and determination knowing that there will still be uncertainties of elections, recessions and other bumps in the roads which businesses have to navigate, if we just take a step back and reflect on the journey of 2023 and put in place those lessons we have learnt for 2024, we will all be more forearmed to deal with trials and tribulations that we may yet face. Wishing you a wonderful festive period and a prosperous New Year!

HH’s Annual Dinner

The Hawkins Hatton annual dinner, which has been held at Weston Park for the last 14 years, has become a firm fixture in the regional professional service sector and client calendars alike.

The 2023 F1 Dinner hosted by HH over two consecutive weeks in November did not disappoint in any way. The theme put a new spin on the event and instead of creating debate around business matters and economic trends, it drew on comparisons between the F1 and HH to demonstrate the power of being niche.

The F1 comprises of supercars which do not seek to compete with conventional vehicles which are more readily available. Moreover notwithstanding a supercar may have similar horsepower as a heavy goods vehicle, the difference is a supercar’s ability to accelerate, decelerate and navigate. This is analogous of HH in the legal sector in that HH is niche and nimble. Continuing with this analogy, a supercar needs:

  • A strong chassis – in the same way business clients, when purchasing or exiting a business, need strong, clear advice to give certainty and HH’s corporate department provides this in an abundance.
  • An engine – this is equivalent to a business’ power plant being its commercial property, which enables a business to expand, and HH supports this growth through its real estate department, leaving no stone unturned.
  • Fuel – to drive the engine and turn the wheels. Commercial finance fuels a business and HH’s banking and finance team efficiently deliver the cash back into businesses from banks and other lenders.

In a race, there are times when others break the rules and drivers turn to the stewards, when rules are broken in business, our clients turn to the HH dispute resolution department to right the wrongs.

HH’s explosive, electrifying and polished dinners ended with guests commenting on the unique style of corporate gifts, which caught the essence and spirit of the evening being HH branded engine oil, given HH provides its clients’ business engines with F1 treatment to keep them running at optimum efficiency.

Inflation down but will production rise in the UK?

This is the million question which leads to many other questions around the interest rate cycle and whether or not it has hit its peak. We can speculate about the false dawn of falling inflation, now wage growth is higher than inflation, but many would not agree that we are in a feel good economy which is expected from wages being higher than inflation, and people having more disposable income. 

The autumn statement later this week has been trailed as leading to tax cuts, but is this the wrong time to consider tax cutting and should we instead be looking at investment? The headroom the Chancellor is looking to exploit for political gain for the next election should not be squandered on inflationary tax cuts, but instead directed to long term changes in the investment culture within the UK for businesses. 

The sting in the tail for the inflationary story is that core inflation is not getting the intention it deserves within the current debate, as it remains very sticky and close to 6%. This core inflation is important as this is the figure which the Bank of England looks at when deciding interest rates. 

If anything, the core inflation will mean that interest rates will not come down as quickly as some may anticipate. This could mean the economy for UK PLC will slow down, with predictions that there will be a recession in 2024 given the backdrop of economic data surrounding retail sales, job vacancies and mortgage approvals. The question then is, without investment, how long and deep will the recession be?

If the direction of travel is clear in terms of interest rates, this has to be the right time to invest as you want to catch those productivity gains when the economy slows down to be in a position where your business is stronger, coming out of any slowdown. Where wage growth is higher, this has to be a situation where investment reduces wage cost, whether through new machinery, or through the new revolution of AI.

If this productivity can be captured, there will be change to working practises which may mean a four day week according to Autonomy within the next 10 years, so jobs which the UK have in abundance for management and data processing could soon disappear. But these productivity gains should not just be focused on a shorter working week, but look to enhance the service offerings of businesses to create a more robust business environment especially as the UK operates within a global economy. It is this global economy that has given the US the advantage of the Inflation Reduction Act and the EU the European Green Deal, these policies which aim to push capital investment and long-term growth through clean energy need to be replicated within the UK. This is where the Chancellor should focus any tax surpluses on and try to give back to businesses through full expensing for capital expenditure.

In a backdrop of China slowing down and global consumer spending contracting, have the Brexit ripples started to dissipate when we measure the health of UK PLC. There is a plethora of economic information which has just come out. The chattering classes are saying that the UK is hitting the top of the inflationary cycle but there are no indications whether interest rate heights will now slow down. All we have is a rearview mirror which indicates that GDP figures showed that the UK economy shrank by 0.5% in July which was greater than the expected 0.2% contraction. Yes, we could blame this on the inclement weather and industrial strife.

Yet, when looking further back in the rearview mirror, GDP in June was stronger than expected. With all this inconsistent data, are we on the precipice of the R-word which economic superstition does not allow you to say just like theatrical superstition only allows you to refer to the Scottish play. Will the Governor of the Bank of England hike interest rates at the risk of tipping UK PLC into recession?

The signposts all around us indicate trouble ahead when you look at Europe’s largest local council going bust, the HS2 debate about the Manchester leg, Barclays laying off 450 staff and the recent fall of Wilko. From experience, I know clients who have invested in training employees are reluctant to lay off people, so is this the start of a wider cutting back for UK PLC in employment costs? You have to bear in mind that wage data is showing that wage inflation has caught up with headline inflation, even though unemployment is slightly up from this time last year.

By way of comparison, when we look at UK’s biggest trading partner, you can see the Euro has had its tenth continuous increase in interest rate hikes to 4% which means that since the launch of the Euro over 20 years ago, this is the highest rate for the Euro.

With a similar picture across Europe, it is clear that you do not have to be a soothsayer to know that the earliest we can hope for a fall in interest rates, whether or not we are at the pique of the cycle, is going to be in 2025.

The good news is that UK and EU relations have started to thaw from an all-time low, such that the UK is now joining the Horizon Europe Scientific Research Initiative and the EU’s space programme known as Copernicus. An agreement has also been reached on the Northern Ireland Protocol.

With a fair wind, headline inflation could drop by the end of the year to may be 5% as a result of deceleration in increasing energy costs and food inflation. So as long as businesses have time to normalise the input costs despite no clear indications of travel from the available data, the silver lining is that it was harder twelve months ago and in twelve months we should be in a better position.

Bumps in the road

We are all familiar with that phrase and if we apply it to world events, we can clearly see more bumps than smooth tarmac ahead. But with businesses, how do they cope with these bumps? Being a business advisor and an owner, the answer is simple, it is “foresight”.

None of us are able to predict the future, otherwise we would choose the correct lottery numbers this Saturday. But, what we can all do as business leaders, is look at factors which may affect the UK, such as the domestic economy, the workforce, inflation and factors further afield. Once you know what these factors are, we can all start to cater for them.

Global economic factors as simple as influenced by factors such as the Ukraine war and now the conflict in the Middle East and whether or not this will spill into the wider region, not forgetting that Russia and China are still looking to form a stronger alliance. These all affect global sentiment.

When looking at the UK itself, we are all well aware of the interest rates increase, but what we do not realise is that we now pay more as a country for interest payments than we do on defence. In the short term, none of this will change, as interest rates will take more time to rebalance, maybe that is why M&A transactions in terms of value are on the decline, as are IPOs, whilst corporate insolvencies are on the rise.

In the current uncertain climate, private equity may be more cautious and foreign investment may slow down, but we have to also look forward and consider that there is a good chance there may be a change of government in the new year with the election looming. This will bring with it new policy changes.

Therefore, the message to business owners is to focus on increasing productivity and continue to invest in R&D and purchases of equipment. Without these commitments, businesses may not be cushioned from the bumps in the road that will be faced in the next 12 months. It is like the old adage, do not fix the roof when it is raining, fix it when the sun is shining. Even though it may be raining now, there are clearly storms ahead.

What is the temperature of the UK economy?

In a backdrop of China slowing down and global consumer spending contracting, have the Brexit ripples started to dissipate when we measure the health of UK PLC. There is a plethora of economic information which has just come out. The chattering classes are saying that the UK is hitting the top of the inflationary cycle but there are no indications whether interest rate heights will now slow down. All we have is a rearview mirror which indicates that GDP figures showed that the UK economy shrank by 0.5% in July which was greater than the expected 0.2% contraction. Yes, we could blame this on the inclement weather and industrial strife.

Yet, when looking further back in the rearview mirror, GDP in June was stronger than expected. With all this inconsistent data, are we on the precipice of the R-word which economic superstition does not allow you to say just like theatrical superstition only allows you to refer to the Scottish play. Will the Governor of the Bank of England hike interest rates at the risk of tipping UK PLC into recession?

The signposts all around us indicate trouble ahead when you look at Europe’s largest local council going bust, the HS2 debate about the Manchester leg, Barclays laying off 450 staff and the recent fall of Wilko. From experience, I know clients who have invested in training employees are reluctant to lay off people, so is this the start of a wider cutting back for UK PLC in employment costs? You have to bear in mind that wage data is showing that wage inflation has caught up with headline inflation, even though unemployment is slightly up from this time last year.

By way of comparison, when we look at UK’s biggest trading partner, you can see the Euro has had its tenth continuous increase in interest rate hikes to 4% which means that since the launch of the Euro over 20 years ago, this is the highest rate for the Euro.

With a similar picture across Europe, it is clear that you do not have to be a soothsayer to know that the earliest we can hope for a fall in interest rates, whether or not we are at the pique of the cycle, is going to be in 2025.

The good news is that UK and EU relations have started to thaw from an all-time low, such that the UK is now joining the Horizon Europe Scientific Research Initiative and the EU’s space programme known as Copernicus. An agreement has also been reached on the Northern Ireland Protocol.

With a fair wind, headline inflation could drop by the end of the year to may be 5% as a result of deceleration in increasing energy costs and food inflation. So as long as businesses have time to normalise the input costs despite no clear indications of travel from the available data, the silver lining is that it was harder twelve months ago and in twelve months we should be in a better position.

Natwest Legal Report 2023

The UK legal sector continues to be hugely important within NatWest. We have a long and proud history of supporting legal firms throughout the UK, helping them develop successful and sustainable businesses.
I’m delighted to present our ninth edition of the NatWest Legal Report. This year PKF Francis Clark have been commissioned to write the report. I’d also like to recognise Robert Mowbray for his vital contribution and ongoing development to the NatWest Legal Report in prior years. I’m incredibly grateful to all the firms who’ve contributed and provided insights that will help others within our sector during these challenging times.

Our report focuses primarily on firms that operate at the SME level across England, Scotland and Wales. By comparing the financial performance of firms from across the UK, we’ve identified some interesting trends and valuable insights. Firms can use these findings to target areas of improvement, with the aim of enhancing profitability and management of working capital.

I think the challenge for everyone in the  current environment is finding the time to focus not just on the immediate now, but also on longer term vision, thinking about sustainability in its widest sense and having a future proof mindset – which, ultimately, I believe helps build better businesses as a result.

With this in mind, we’ve concluded this report with a top tips for business success and growth, which we hope will give you a useful framework to help navigate challenges and leverage new opportunities to pivot, innovate and grow your business.

It’s encouraging that despite the recent and ongoing challenges, the legal sector continues to show remarkable resilience, with many firms demonstrating record profitability in the last three years.
I hope you enjoy this report.

Download the full report here.

Batt for Six

Apologies for the cricket pun, but this was the “perfect six” when Batt Cables (“Batt”/“Company”), one of Europe’s leading distributors of electrical cables, was acquired by private equity investor Chiltern Capital (“Chiltern”).

Batt is a UK headquartered, global specialist in the management and distribution of electrical cables, with facilities in the UK, mainland Europe, USA and Asia. It holds a wide range of over 8,000 different products in stock, serving industries including infrastructure, construction, renewables, offshore, telecommunication and transport.

Batt was founded in 1952 by previous majority shareholder, Peter Holm’s father, Jens Holm, and his business partner, Robert ‘Bobby’ Batt. As part of the transaction, Peter Holm will remain as an adviser to Batt and it will continue to be run by its existing management team who will become shareholders in the Company. As part of the transaction Chiltern will also introduce industry veteran, Jeremy Ling, as Executive Chair to support the management team in driving the Company through its next phase of growth.

Peter Holm said: “From the age of 18, I have spent my entire career building Batt from a small UK focused distributor, into the £200+ million revenue international company it is today. I’m enormously grateful to all the people who have supported me on this journey over the years, from customers, suppliers and not least my fantastic staff and management team. Whilst there will be a touch of sadness, I know now is the right time to hand over the reins and I have no doubt that the business will thrive following Chiltern’s investment, and I will enjoy supporting them on that journey.”

Peter Holm was assisted throughout this transaction by Hawkins Hatton Corporate Lawyers (“HH”) and Colin Rodrigues (Partner at HH) said: “The global footprint of Batt may seem daunting when it comes to a corporate transaction but the quality of the operation and people within Batt made this transaction seamless as they had all of the information we required at their fingertips so negotiating and delivering a deal like this was like “hitting the perfect six”.”

Joe Bennett, Investment Director at Chiltern Capital, added: “We feel privileged to be taking ownership of a company with such a long history in the UK cable distribution market. With the pressing requirement for ESG-driven electrification to support countries’ net-zero targets, now is an exciting time to be investing in the sector. We will seek to protect Peter’s legacy, whilst also investing to take the Company through the next stage of its growth journey.”

The Ills Of The Magic Money Tree

Theresa May (the former Prime Minister) once said “there isn’t a magic money tree that we can shake that suddenly provides for everything people want”. We all know that the country is in a debt crisis we only have to look around to see the ravages of inflation and the pressures on household spending.

In the same way, a Prussian diplomat once said “when America sneezes, the world catches a cold”. So, will the UK get a bad case of influenza as a result of the current state of the American economy?

The central banks in both the UK and the US have worked very hard since the financial crisis to ensure their respective economies stay out of intensive care. Their solution was creating cheap debt which ultimately has had repercussions leading up to this current debt crisis, hence the magic money tree. With any vaccine, you usually administer a small amount of the pathogen, perhaps the magic money tree was shaken too hard such that there was too much cheap debt which lead to more borrowing and ultimately inflationary pressures.

In the US, the jobs market is still strong but the undercurrents of a slowdown in consumer spending and increase in credit card debt are starting to become more pronounced. Are these an indicator that the US will be admitted as a patient suffering from pre-recession symptoms? The last time the US suffered from what was called ‘the Great Recession’ (because that recession lasted from December 2007 to June 2009) was clearly some time ago, so do current conditions mean the recurrence of a new recession? The problem with this diagnosis is that it has been put forward by economists for some time and there have been no signs of the US economy faltering though you should bear in mind that whenever someone’s not sure about a diagnosis they get a second opinion and the New York Fed has apparently predicted that there is a 62% chance of a US recession in the next 12 months which apparently is the highest for the last 40 years. You should also bear in mind that there is a 38% chance of no recession and the thing about economics is that no one ever really knows. What is certain is that these are interesting economic turns to be navigating in the business sector.

Hawkins Hatton Newsletter June 2023

Hawkins Hatton Newsletter June 2023

Oiling the Wheels of Industry

Even without an engineering background, we all know machines need to be lubricated with oil, and where better to find a business based in oil, which is not in the Middle East, or in the North Sea, but in the heart of the Black Country being the birth place of the Industrial Revolution.

Midland Oil, has a national reputation for the production of its extensive range of high performance lubricants covering a wide range of application areas which cover almost any grade of industrial, metalworking or automotive lubricant. Richard Parry and Mark Hayes who have worked in Midland Oil for many years and have an intimate knowledge of the business, found it a natural step to take over the reins of Midland Oil when its founders were looking to take a step back.

As with any management buyout, knowledge of the business is important, but more than that, is the determination of a management team to continue the success and direction of the business and to build on what are firm foundations to take the business into new directions and continue to strengthen its core offerings.

When Richard and Mark decided to start their management buyout, they instructed Hawkins Hatton Corporate Lawyers. Colin Rodrigues of Hawkins Hatton said, “it is unusual to have a new client simply pick up the phone and decide to instruct our firm, as we have built a strong and reputable brand through reputation, which in turn, has led to repeat business from its professional network and clients. Richard and Mark did just that, made an initial call and the rest, as they say, is history.”

Richard and Mark said, “just like the oils we sell which are of different grades which do different things for different machines, having key advisors who you know you can rely on is a recipe for success. Being new to the world of M&A, everything is a school day, but you know you are in safe hands when you can talk to your lawyers in simple terms and get clear guidance.”

It is hoped that the management buyout which was funded by Cynergy with a £3.4 million facility will really help to boost the prospects of growth for Midland Oil in the next few years.

The King That Lost It’s Crown

No this article is not about his Majesty King Charles III who we all wish a long and happy reign. Instead, it is about the London Stock Exchange (“LSE”) and lack lustre ability to attract companies for listing. The LSE did actually have its roots in a Royal Exchange which was set up for merchants to conduct financial dealings back in 1571. However, local stock brokers were not permitted to trade from it so instead they traded in coffee houses and that was what lead to the creation of the LSE in 1773.

The LSE is just about keeping its position in the top 10 stock exchanges in the world by size and it is now finding it’s bigger rivals from the US, Hong Kong, Shanghai and India and even the Euronext just to name a few are bigger than the LSE and attract more listings. This may come as a surprise but it should not when you think about the size of the companies that are listed on the US stock exchanges such as Saudi Arabian oil, Google, Microsoft, Amazon and Apple just to name a few.

It is like the old adage of “money makes money” and in a bid to attract more capital to the UK, could be the main reason why the Financial Conduct Authority are looking to change the listing rules for the LSE. These changes are now looking to move the focus of listing to enable entrepreneurs to cash out of their business as well as enabling companies to attract more capital to fund the next stage of their growth.

It is hoped that the changes to the listing rules will make the LSE more nibble especially when the LSE got snubbed by Arm (that famous Cambridge technology company) when they decided to list on the Nasdaq despite the overtures of the UK government. The removal of some of the listing hurdles will encourage more companies to consider listing on the LSE. But why are these changes important and do not forget we already had an update to the listing rules recently through Big Bang 2.0 whose main architect was Lord Hill. Clearly the LSE is important to the UK economy so that is why there are more changes as without the LSE, UK Plc will lose a vital engine that creates economic growth through the promotion of economic development and investment which attracts capital into the UK.

However, these structural changes to the listing rules may still not achieve the desired goal notwithstanding as laudable as they are, simplifying the listing rules and having one standard rather than a standard and premium listing will simplify listing rules and regulations. Coupled with allowing companies to list when they only have 3 years audited accounts will also encourage companies to list at an early stage. Though this may still not be the answer that policymakers are looking for. This is because there is great swathe of money sitting in pension funds which needs to be encouraged to invest in higher risk equities. Therefore there needs to be a cultural shift if the LSE is to not to lose its crown and drop out of the top ten stock exchanges in the world.  

Landscaping Real Estate

I wanted to share with you some of my thoughts on the UK Real Estate landscape.

No one could have predicted that the legacy of the pandemic would leave in its wake the high level of unoccupied office space despite employers encouraging workers back to work. The retail sector continues its decline in the face of inflationary pressures, which has had a knock on effect for large online retailers who have halted the acquisition of sites to build “large sheds”.

From a landlord’s perspsective, legislative and tax reforms have made it less attractive for investors to retain commercial or private rented accommodation, especially with the move to a zero carbon world, resulting in Energy Performance Certificates (“EPC”) bands continually moving up. This will inevitably lead to the repricing of properties where work is going to be required to upgrade EPC ratings. The smart money in commercial property has moved to properties with strong green credentials.

There is a correlation between the cost of borrowing and the sharp decline in the demand for commercial loans, but this has not translated to a fall in values of commercial property as yet. Maybe this is because landlords are increasing incentive packages to tempt prospective tenants.

Prudent landlords are checking their insurance policies to make sure that they are not unintentionally underinsuring because of the inflationary world we are living in is leading to higher costs of repair. These landlords also have seen the unpredictable weather trends and have made sure their insurance cover extends to fire, flooding and subsidence. This is because weather related losses due to fire are one of the key threats for commercial property, as is flooding for residential property in certain areas.

Notwithstanding the uncertainty in the year ahead, there will always winners and losers, but I suspect forced sales will still be limited unless the types of properties are located in an unattractive part of the high streets or large office space and older industrial buildings which cannot be repurposed. If you want to read more about this, go to https://chambers.com/law-firm/hawkins-hatton-corporate-lawyers-ltd-uk-1:71360

Arm Wrestle

Arm is that famous semiconductor company, which is so big that it has a part to play in everything we use which contains a silicon chip, from mobile phones to scientific and defence equipment, to cars and even your TV. The literal ‘arm wrestle’ between the London and New York stock exchanges came out in favour of New York for the listing of Arm rather than London.

Why did Arm choose New York when Arm is a British company and London is Europe’s oldest and one of the biggest stock markets in the world. Is this a sign that London does not have the ability to raise capital in the same way that New York does?

Ultimately, when a company decides to move to a country for listing, this then means that the Company’s profits, intellectual property and net worth will eventually reside in the jurisdiction in which it is listed. Put another way, that Company’s tax take will also fall into that jurisdiction.

Maybe, one of the reasons why the New York stock exchange is favoured over London stock exchange is because of the narrow range of investors in the London stock exchange. In London, the investors are predominantly very large pension funds, whilst in New York, the money comes from much more diverse sources hence those investors may be prepared to take greater risks.

The high liquidity in New York means it has a wider global group of investors who are prepared to invest in those companies. When looking at valuations, there is no doubt that New York tends to be higher than that in the UK, but this then translates into a larger gap when you seek to raise millions of pounds.

When Rishi Sunak was the Chancellor of the Exchequer prior to his elevation to Prime Minister, he put forward Big Bang 2.0 in a bid to help de-regulation and innovation within the London stock exchange in order to help London have a more worldwide focus casting its gaze on the far east and America rather than just looking at Europe. At the moment, these changes are just focused on helping small-cap companies seeking listings in London.

Maybe more radical ideas need to be implemented, though bear in mind the backdrop of the insolvency of the Silicon Valley Bank. It is only government policy that can lead it to a policy change to change the investment culture of the UK, if we are to try to match New York’s appetite for risk, rather than maintain the prudence of the Europeans.

The Legal 500 for West Midlands

As ever we are proud to be listed highly in the Legal 500 world rankings.  Please download a copy of it here..  https://hawkinshatton.co.uk/wp-content/uploads/2023/02/legal500.pdf

Rollins expands UK operations with acquisition of Pestproof

Rollins, Inc. (NYSE:ROL) ("Rollins"), a premier global consumer and commercial services company, through one of its subsidiaries, has again demonstrated its ability to find key acquisition targets, and so expand its presence in the UK. During December 2022, the company finalised its latest acquisition of Pestproof Ltd (“Pestproof”).

Pestproof was established in 1993 by Steve Ivell and David Harrison. Pestproof offers a full range of pest and bird control services, in addition to specialist cleaning and washroom hygiene services. A complete pest prevention package is offered to customers ranging from domestic householders through to leading high street companies.

Commenting on the sale, Steve Ivell said, “Having had numerous discussions with the Rollins team, we came to appreciate the numerous synergies between the two companies. So, it was a really simple decision to decide to sell to them. I believe they will continue to invest in the business and allow it to continue to grow, whilst also supporting all our key employees and customers.”

Caspar Appeldoorn (MD of Rollins Europe and Middle East) said "The acquisition of Pestproof extends our coverage into the North West of England. I could see the opportunities to help support and grow this business as it shares the same high standards and core values. Everyone at Rollins UK is looking forward to working with Pestproof and developing the business.”

Hawkins Hatton Corporate Lawyers represented Pestproof and said “We have done a number of transactions where we have acted for Sellers who have acted for Rollins and we have always found that the negotiation has always been fair and every deal has been amicable delivering what each party is expected of the other.”

Pestproof is just the latest addition to the growing number of Rollins companies in the UK. This began with the acquisition of Safeguard Pest Control in 2016. Since then, AMES Group, Kestrel Pest Control, Baroque Pest Services, the Guardian Group, Albany Environmental, Van Vynck Environmental, Enviropest, IPM, NBC Environment, and Europest have all been added to the Rollins family of businesses.

Three Years and Three Key Words

It has now been three years since Brexit on 31 January 2020, when every debate was dominated by “Brexit” being prefixed with “hard”, “soft”, “deal” or “no deal” etc. Then another word took over which was “Covid-19” which continued until the new word of the moment which is “Ukraine”. It is safe to say these words have dominated the political landscape in the last three years.

Without wishing to judge whether or not Brexit was a success and to avoid the political rhetoric, it would be interesting to ponder whether Brexit will stand the test of time. In order to do this, we need to look forward and take a circumspect view of what has happened as it is  impossible to compare what the position would be if the UK had stayed within the EU.

Could we improve on what has happened, but this would be pure conjecture. Brexit was supposed to deliver freedom for the UK to break free from the shackles of EU bureaucracy. There was no deal on financial services, a shrewd ploy on part of the EU’s chief negotiator Michel Barnier clearly intended to weaken the UK economy as a punishment for leaving the EU. At this time Rishi Sunak, as the then Chancellor of the Exchequer, came up with the “Big Bang 2.0”.

The UK intended to gain a comparative advantage by deregulation of the financial services industry akin to what occurred in the 1980s. To do this now, there has to be an implementation of deregulation in order to seize the opportunity and to simulate growth which the UK economy desperately needs. Otherwise the International Monetary Fund’s (“IMF”) prediction that the UK economy shrinking by 0.6% may become reality. IMF predictions of the UK economy have previously been wrong so there is still room for re-evaluation. This will depend on Rishi Sunak turning the Big Bang 2.0 into reality now that he is the UK’s prime minister as he can influence the UK’s destiny. The signs are all looking good with growth in exports for financial services to Singapore, Switzerland and the USA. With less barriers to entry, the theory is there will be more innovation and more market entry which will lead to an increase in long term productivity, not only is the pace at which this deregulation slow but certain decisions of late the UK Government’s desire to regulate cryptocurrency seems counterintuitive to Big Bang 2.0.

Rethinking Refinancing.

Refinancing is akin to consumers letting their utility contracts “roll” without thinking about tariffs, providers, cost reductions or carbon credentials each provider offers.

This analogy is still appropriate as utility prices have skyrocketed since the Russian invasion of Ukraine. This has caused a higher inflationary climate with recessionary storm clouds forming and business trying to forecast how long and deep the recession will be. In times of uncertainty, refinancing is a consideration for business in the same way as householders switching utility providers. This is due to the economic cycle of higher interest rates.

With inflation high, businesses achieve growth by a simple formula of investment. To have investment, however, you need to have money to invest. Businesses need to think smarter as to where the money is coming from. There is no magic money tree to shake and instead, businesses should look at their assets to see what can be leveraged to create cash for business investment. Even without assets, future profits also give this ability to “refinance”. Andy Oates (Head of Corporate, West Midlands, HSBC) said “as a bank, we are in the business of lending money, but we are much more than that. It is the support we bring to the local and national economy by ensuring that entrepreneurs can continue to do their day-job by creating opportunities and employment for all the stakeholders in their business, for which we are proud to be a part”.

Refinance can take many forms from traditional cash flow loans to more innovative forms of finance such as letters of credit from importers, revolving credit facilities, invoice discounting and stock loans. With this wide array of finance and lenders, it is important to consider what can be afforded without putting the business under undue pressure. Steve Harris (director of Central Finance being a commercial broker) said, “cash flow is the lifeblood of any SME, and what we do is make sure that blood continues to flow to all parts to ensure that business operates at potential at all times”.

As part of refinance, businesses should think about headroom when working with their accountants to ensure cash flows are robust to meet unexpected events.

Businesses should foster their relationship with their lenders and not treat their financers as a commodity to be used. Long-term relationships with brokers and lenders are invaluable as they cushion against the whims of commercial lenders’ appetites changing. Stuart Welch (Director of Commercial Banking, NatWest Group) said that “At NatWest, we pride ourselves on being a business bank that has intimate knowledge of our customers, fostering long-term relationships that help us to support SMEs and businesses through every stage of their growth journey.

Do not overlook how the financial mix is made up as part of the refinance. With a multi-layer approach, you can take the best from different funders and dovetail it as a holistic business solution. The cherry on the cake is a grant paired up with refinance creating further opportunities for businesses to buy kit, take on employees, carry out development and better enable a business to meet its goals.

So you do not need to a conjurer to create a sensible refinancing opportunity for a business. Look at the business assets and the profitability of the business, then with the help of accountants and business brokers, businesses can find the right product, spreading the risk between lenders to generate further cash flow for investment and ultimately improved productivity and resilience.

Much of the same with improving prospects of sunshine.

This is my favourite time of the year for writing a comment piece as I am not confined by current events instead I am able to look back on the last twelve months, and try to predict what the next twelve months will have in store for UK PLC, the main caveat being that I am not a soothsayer nor am I an economist. In the immortal words of Albert Einstein, ‘If you want to know the future, look at the past’.

 

This comment piece has been prepared using the tools of my trade, which in short are many conversations with my corporate clients to better understand the issues they face on a daily basis, thereby allowing me to frame the contents of this comment piece.

 

Without wishing to sound like a weather forecast, I genuinely do feel that the next twelve months will be much of the same with improving prospects. The reason for this is that we have not yet navigated our way out of the downturn and pay disputes are still on the rise, fuelling inflationary pressures and the thunder of industrial unrest is still rumbling through the economy.

 

It is clear that the transient inflation has now whipped up into a storm, causing wage inflation but the prospects of hitting the rocks of unemployment for the majority of the workforce still does not seem a reality as one thing Brexit has taught us is that there is still a demand for talented skilled labour.

 

No one can predict how or when the war in Ukraine will end or whether the relaxation of the zero Covid policy adopted by China will lead to a new strain of Covid and further worldwide restrictions. However one thing is for certain, as with any extreme weather, provided you batten down the hatches and prepare for the worst, there is an opportunity to mitigate the devastation caused.

 

The depression sitting over the UK economy means that there is an unavoidable recession in the same way that when there is a storm there is rain. The smart money is ensuring that more resilience is built up within businesses through continued investment despite the higher borrowing costs as inevitably the investment should lead to productivity gains. But what is not clear is whether or not the new shift in working patterns will absorb those productivity gains such that they will not translate into higher GDP for UK PLC when the storm clouds have moved on and brighter skies appear in 2024.

 

Rishi Sunak’s promotion from Chancellor to Prime Minister may mean that he is now in a better position to deliver on Big Bang 2.0, which if he can get right, will be a gamechanger for UK PLC and will help make the UK economy more resilient to future inevitable cold fronts affecting the economy. The only problem with this is the forthcoming election within the next two years and the uncertainty of whether Rishi will still be Prime Minister or the Conservatives still in control of the direction of travel for the UK economy.

Hawkins Hatton Newsletter December 2022

December 2022 Newsletter

HH’s Skyfall Dinner November 2022

We have been entertaining clients for the last 15 years at Weston Park and this has turned into one of the most prestigious business events in the West Midlands business calendar. In that time, we have worked incredibly hard in creating a name and reputation which cannot be surpassed by any other niche corporate practice outside of London. We are remarkably earnest which can be seen through our hard work during difficult times to maintain relevance and  to continue  to evolve in order to meet the exacting standards set for our clients, who have grown to be close friends, sticking by HH through thick and thin. This was reinforced at our two latest events themed  Skyfall, during which we extracted iconic characteristics of James Bond, such as commitment, loyalty and diligence, and compared these to the characteristics  of our guests in attendance  who were, as contemporaries, more than a match for Scaramanga. You do not need a “Golden Gun”, you just need dedicated people who will fight your corner. Not to be fooled by the Bond-esque theme as the dinners were not all about Ian Flemming, the creator of the iconic 007, but also focused on the topic of bonds, more specifically how these brought an end to the last Chancellor of the Exchequer Kwasi Kwarteng and his Prime Minister, Liz Truss. This was a prelude to discussions on QE (Quantative Easing) and QT (Quantative Tightening) and how powerful the bond market can be in eliminating Chancellors and Prime Ministers alike. “You all share a likeness to James Bond” said Colin Rodrigues, our Dispute Resolution partner Harminder Sandhu agreed enthusiastically, both fondly sharing memories of friends, old and new. The evening ended on a high for both clients and professional advisers, who came to celebrate not just HH’s achievements, but to revel in how they have helped UK PLC keep the wheels of business turning.

Déjà vu.

The government has announced its new “Energy and Security Strategy”. Obviously, the focus will be on renewals and nuclear. But will eight new nuclear power stations ever be commissioned even if these are going to be located on the existing power station sites? Will the new offshore wind farms come into the fore? That’s why I say déjà vu, it is as if we are back where we started on the energy debate.

It was just the other day at the “COP26” in Scotland where the UK restated its aim of net zero. Thus, in reality there is nothing new in the strategy being put forward for the short term. Is this a missed opportunity given that everything is focused on the long term? All it takes is a change in government, for policy decisions to be consigned to the bin, especially when some of these policy decisions do not affect the term of that current government but instead successive governments.  

Any nuclear power station will take at least 15 years to come online even once the planning and finances have been agreed. Part of the energy security debate has to take in account how to fix supply and not just look at how to generate supply. In the short term there are very easy wins when looking at energy saving installations which will save money on energy consummation. The UK's housing stock is one of the most energy inefficient in Europe despite years of government grants to improve the situation. Surely there has to be a dual approach.

Even if the government is not going to focus on energy saving improvements, I suppose it is a good thing that at least the government is looking at a new offshore grid and hydrogen to replace natural gas. However, the government needs to be bolder as back in 1973 the oil crisis led to “Messmer plan” which made France focus on nuclear energy as a means of power generation. It is the lack of investment in the UK which will cause further bill shocks in the future. If the government invested in nuclear and alternative renewables despite energy bills being at their current height, in the long term the UK consumer would secure a better return. This sounds contrary but some of the earlier wind generation contracts which looked expensive at the time are now paying dividends as they are generating electricity at prices lower than the current energy price.

So maybe a bold approach with energy saving measures framed in a radical approval process for new projects could be the solution but as always only time will tell as the government has to follow through no matter what the short-term cost are going to be as there will be long term gain then we can avoid déjà vu.

Hawkins Hatton had a licence to thrill it's clients at it's "Skyfall Dinner"​.

Hawkins Hatton Corporate Lawyers have been entertaining clients for the last 15 years at Weston Park and this has turned into one of the most prestigious business events in the West Midlands business calendar. In that time, this firm (more affectionally known as HH) have worked incredibly hard in creating a name and reputation which cannot be surpassed by any other niche corporate practice outside of London. This is acknowledged by Chamber and Partners and Legal 500 who are the only two journals who rank lawyers and law firms nationally and internationally. It is also the place where HH write their global editorials in respect of the UK.

HH are remarkably earnest which can be seen through their hard work during difficult times to always stay relevant and continuing to evolve in order to meet the exacting standards set by them for their clients, who have grown to be close friends, sticking by HH through thick and thin. This has been demonstrated by HH’s two latest dinners in the month of November with the theme being “Skyfall”, during which they extracted iconic characteristics of James Bond, such as “commitment”, “loyalty” and “diligence”, and compared them to the guests in the room who were, as contemporaries, more than a match for Scaramanga. You do not need a golden gun! You just need dedicated people who will fight in your corner. Do not be fooled by the Bond-esque theme as it was not all about Ian Flemming, the creator of the iconic 007, It drew on the bond markets also known as gilts in an interesting play on words brought an end to the last Chancellor of the exchequer Kwasi Kwarteng and his Prime Minister, Liz Truss. This was a prelude to the discussions of QE (Quantative Easing) and QT (Quantative Tightening) and how powerful the bond market can be in eliminating Chancellors and Prime Ministers alike.

 “You all share a likeness to James Bond” said Colin Rodrigues, corporate partner at Hawkins Hatton as Harminder Sandhu agreed as she fondly shared memories of friends, old and new. The evening ended on a high for both clients and professional advisers, who came to celebrate not just HH’s achievements, but to acknowledge their part in how they have helped UK PLC wheels turning.

Bonds – It Is Like A James Bond Thriller

“Investor uncertainty”, “falling pound”, “promised tax cuts” “funded by government savings” are all familiar phrases which are no longer headline grabbing statements as they have now joined the lexicon of familiar phrases no longer leading to eyebrow raising surprise or concern when we hear the same. 

The markets punished the former Chancellor, Kwasi Kwarteng, for not setting out his fiscal plan when delivering his mini budget at the end of last month, then he got further punished by Liz Truss and lost his position as Chancellor and was replaced by Jeremy Hunt, the fourth Chancellor in four months for the UK.

The markets believed that if money is not in the coffers of the UK Treasury to pay for the same, the UK would have to borrow and pay more interest in the backdrop of increasing interest rates. At the same time, there is uncertainty in the energy market and a looming recession whereby unemployment may suddenly do a U-turn from its current low of 3.5%.

This nervousness has been seen in the bond market with more ups and downs than a James Bond thriller. It goes to demonstrate the fragility of the UK economy and lack of confidence international investors have in the UK. Jeremy Hunt’s plan is to reverse most of the policies set by his predecessor with a view to bringing back confidence and stability.

To help understand why the markets reacted as they did, it is important to understand that government bonds are issued to raise money to bridge the gap between a shortfall in tax revenue and government expenditure estimated at £60 billion. The UK’s problem is that these bonds are now being resold at a lower value, meaning that the government IOU with a specific return can be purchased at a lower capital figure but with the same return. In the meantime, the government has to continue to borrow and can only issue bonds with a higher interest rate to achieve the same capital return which means  the long term interest rates increase. As this cycle continues and the long term interest rate increases, this will feed into mortgages and other borrowing rates.

All this uncertainty is not helped by the governor of BOE, Andrew Bailey, saying last week “the bank does not intend to extend its emergency bond-buying programme beyond the Friday deadline”. However, it is clear that the bank will have no choice but to continue to do this in some form until the new Chancellor announces his fiscal plan and economic forecast in October.

The UK is not the only country to face the spectre of inflation but every country is taking different approaches in terms of monetary policy. The USA has continued to increase interest rates and suck in foreign investment to meet its desire for cash whilst Japan is trying to keep interest rates low to stimulate growth after Covid which has meant a plummeting Yen. The question is in which direction is the UK going to head, is it going to follow Japan or the USA?

PRODUCTIVITY

Productivity is the efficiency comparison of inputs, such as labour and capital, which is used in an economy to produce outputs measured through GDP, where GDP is the market value of all the final goods and services produced and sold in that economy.

Not wishing to be an economist (joking aside, this would be my dream job if I were not a lawyer), I do not want to get hung up on technical phrases, which may or may not have a different meaning depending on the context within which it is being used or received. In my profession, which is the provision of legal services, efficiency is being able to evolve to deal with clients’ needs in a more responsive and resourceful manner.

The issue I have continually witnessed being on the coal face of business for a very long time is that UK PLC has not been able to improve productivity. There is no point focusing on the fact the UK is within the G7 (a group of leading economies), when the UK was the foremost leading economy by far, some one hundred years ago. It was called the "Workshop of the World” a phrase coined by Disraeli when the UK was quite literally the only economy that counted and was considered the “gold standard” in the world, yet now Britain has a currency which is no longer dominant when compared to the dollar and as a result of COVID-19, it seems that productivity within the UK will worsen, rather than improve.

I do not say this lightly as the only way to improve productivity is taking the old mantra of Tony Blair, back in the 1990’s when he said “education, education, education”, this combined with the mantra used by Bill Clinton who said “it is the economy stupid”, begs the question why have we not taken the opportunity to invest in R&D?

We have just had the autumn statement, and hopefully this will be the start of a boost to the lifeblood of UK PLC, which is SME businesses were recognised by the Chancellor, Jeremy Hunt, when he said it would be a “profound mistake” to cut the government’s research and development budget. He says funding will be protected, with an increase to £20bn by 2024-25. What is more important is that Jeremy Hunt has the ambition to turn the UK into “the world’s next Silicon Valley”. However, this can only be achieved by an increase in productivity. This means not just cutting tariffs to support business supply chains but also finding new and different strategies that rely on the fact that the UK is still one of the world leaders in education and innovation through its universities and when combined with “left behind areas”, it will help to grow clusters of new innovation centres within the UK. Let us see what new announcements in the spring budget bring as it needs to be more than warm words. It needs to be an adrenaline injection to boost UK PLC in order to achieve its desired and deserved outcomes.

PRODUCTIVITY

Productivity is the efficiency comparison of inputs, such as labour and capital, which is used in an economy to produce outputs measured through GDP, where GDP is the market value of all the final goods and services produced and sold in that economy.

 

Not wishing to be an economist (joking aside, this would be my dream job if I were not a lawyer), I do not want to get hung up on technical phrases, which may or may not have a different meaning depending on the context within which it is being used or received. In my profession, which is the provision of legal services, efficiency is being able to evolve to deal with clients’ needs in a more responsive and resourceful manner.

 

The issue I have continually witnessed being on the coal face of business for a very long time is that UK PLC has not been able to improve productivity. There is no point focusing on the fact the UK is within the G7 (a group of leading economies), when the UK was the foremost leading economy by far, some one hundred years ago. It was called the "Workshop of the World” a phrase coined by Disraeli when the UK was quite literally the only economy that counted and was considered the “gold standard” in the world, yet now Britain has a currency which is no longer dominant when compared to the dollar and as a result of COVID-19, it seems that productivity within the UK will worsen, rather than improve.

 

I do not say this lightly as the only way to improve productivity is taking the old mantra of Tony Blair, back in the 1990’s when he said “education, education, education”, this combined with the mantra used by Bill Clinton who said “it is the economy stupid”, begs the question why have we not taken the opportunity to invest in R&D?

 

We have just had the autumn statement, and hopefully this will be the start of a boost to the lifeblood of UK PLC, which is SME businesses were recognised by the Chancellor, Jeremy Hunt, when he said it would be a “profound mistake” to cut the government’s research and development budget. He says funding will be protected, with an increase to £20bn by 2024-25. What is more important is that Jeremy Hunt has the ambition to turn the UK into “the world’s next Silicon Valley”. However, this can only be achieved by an increase in productivity. This means not just cutting tariffs to support business supply chains but also finding new and different strategies that rely on the fact that the UK is still one of the world leaders in education and innovation through its universities and when combined with “left behind areas”, it will help to grow clusters of new innovation centres within the UK. Let us see what new announcements in the spring budget bring as it needs to be more than warm words. It needs to be an adrenaline injection to boost UK PLC in order to achieve its desired and deserved outcomes.

Hawkins Hatton Newsletter September 2022

September 2022 Newsletter

The Meaning of Sicon

If you have got green fingers, you will know that Sicon means “detached shoot or bud from a plant that is joined to a rootstock in grafting.” This is exactly what Total Specific Solutions (“TSS”) based in the Netherlands has done by its expansion within the UK through its fifth acquisition being Sicon Ltd.

Sicon has for more than 20 years been at the forefront of development and add-on modules within the software sphere. That is why Sicon is known as a leading developer of innovative CRM and vertical solutions to SMEs within the Sage 200 environment. Sicon is recognised as being a sector leader within manufacturing, construction, distribution and warehousing.

Jurriaan Piek, General Manager at TSS said: “We are delighted to welcome Sicon to the TSS family of companies. We recognise the entrepreneurialism and energy of this family-owned business and are very pleased that Richard and Jane will continue their journey to manage Sicon going forward.”

Richard and Jane Youngman, founders and owners of Sicon, decided that if they were ever to exit the business they would only do so if they knew someone would share their philosophy and that is why Richard and Jane Youngman said “to us this is not an exit, this is simply a natural transition to allow the business to further expand and grow and given the ideology and creativity of TSS we can see no better fit for the future of both Sicon, its employees and customers.”


Hawkins Hatton Corporate Lawyers assisted Richard and Jane Youngman in their journey with TSS to enable all parties to realise their expectations out of what was a complex transaction. Colin Rodrigues, corporate partner at Hawkins Hatton, said “having been introduced to Richard and Jane Youngman, I can honestly say there are not many clients that I have warmed to very quickly and having met them and worked with them through this transaction, I can genuinely say they will be invaluable with regards to the experience they will be able to continue to bring to both Sicon and TSS. I wish them every success.”

As part of the overall journey, Jerroms Business Solutions accompanied Richard and Jane Youngman to help them navigate through the bumps in the road and ensuring that everybody not only arrived at their desired destination but to make sure that going forward there would not be any surprises for anyone.

The Queen for all ages

The government has announced its new “Energy and Security Strategy”. Obviously, the focus will be on renewals and nuclear. But will eight new nuclear power stations ever be commissioned even if these are going to be located on the existing power station sites? Will the new offshore wind farms come into the fore? That’s why I say déjà vu, it is as if we are back where we started on the energy debate.

It was just the other day at the “COP26” in Scotland where the UK restated its aim of net zero. Thus, in reality there is nothing new in the strategy being put forward for the short term. Is this a missed opportunity given that everything is focused on the long term? All it takes is a change in government, for policy decisions to be consigned to the bin, especially when some of these policy decisions do not affect the term of that current government but instead successive governments.  

Any nuclear power station will take at least 15 years to come online even once the planning and finances have been agreed. Part of the energy security debate has to take in account how to fix supply and not just look at how to generate supply. In the short term there are very easy wins when looking at energy saving installations which will save money on energy consummation. The UK's housing stock is one of the most energy inefficient in Europe despite years of government grants to improve the situation. Surely there has to be a dual approach.

Even if the government is not going to focus on energy saving improvements, I suppose it is a good thing that at least the government is looking at a new offshore grid and hydrogen to replace natural gas. However, the government needs to be bolder as back in 1973 the oil crisis led to “Messmer plan” which made France focus on nuclear energy as a means of power generation. It is the lack of investment in the UK which will cause further bill shocks in the future. If the government invested in nuclear and alternative renewables despite energy bills being at their current height, in the long term the UK consumer would secure a better return. This sounds contrary but some of the earlier wind generation contracts which looked expensive at the time are now paying dividends as they are generating electricity at prices lower than the current energy price.

So maybe a bold approach with energy saving measures framed in a radical approval process for new projects could be the solution but as always only time will tell as the government has to follow through no matter what the short-term cost are going to be as there will be long term gain then we can avoid déjà vu.

The Queen, the word synonymous with Great Britain the world over. Her Majesty Queen Elizabeth II one of the longest reigning monarchs in the modern age renowned for all of the things she has brought to national culture and civic pride, whether it be her connection to the Armed Forces, the Commonwealth, charities and civic institutions which have carried her royal cypher, will prove to be challenging to emulate.

Whether you are a believer in the monarchy or not, you cannot deny Her Majesty’s sense of duty and immense contribution, not only to Great Britain but the world at large, hence why the nation felt a sense of pride during the Platinum Jubilee celebrations. In this moment of reflection, we all need to contemplate our own legacy and try to learn the lessons that Her Majesty has set for all to see.

These lessons are not difficult to learn and easy in their application, but revolve around duty, pride and a formidable work ethic. We should capture our emotions in this historical moment, and carry those forward it improve what we do and how we do it, whether this be in professional work environment or just in our daily lives.

Her Majesty is an exemplary example of how one person can change the complexion of, not just a room, a firm, a country or a nation through selfless commitment and a relentless dedication. The soft power and influence wielded by Her Majesty can never be measured, and now, even in death, you can see how influential Her Majesty continues to be.

Royal patronage has always been sought whether through royal warrants or patronage of charities, however in this modern world, where there is a craving for instant recognition, one wonders how anyone could create such longevity. Put simply, do not look for instant gratitude, continue to strive for greatness. In the context of business, recognition should follow from loyalty, a strong work ethic and a selfless pursuit to follow standards for the greater good of any organisation that you are part of. As we enter in the United Kingdom, with a new King and Prime Minster, then we need to hold on to those lessons and apply them in our work life in order to continue to help all of those around us, whether work colleagues, customers, suppliers or the general public in order to ensure, whatever sphere our business operates in, whether we are a small or big cog, that we play a part to move that business, that work place, that company, that partnership forward so that we continue to keep the Great in Great Britain in memory of our late Majesty.

Back to the Future - Part 2

You may recall that sometime ago I wrote an article entitled ‘Back to the Future’ which was not a homage to the film, but a comparison to the economic woes of the 1970s and what is presently happening to the UK economy. This is my follow up to that article.

Currently in the news, unions are balloting members to go on strikes to fight for higher wages, in a backdrop where the Bank of England (“BOE”) is predicting that the current, “9% annual rising inflation, is more likely to be 11% later this year”. Even in the legal profession barristers are walking out of cases in protest for higher wages. So, it is not just the post office and railway workers who are feeling the economic strains but it spans across all sectors of the economy.

The question is now, not when will the UK hit a recession, but how long and deep will it be? We may just need to accept that inflation is not transitory despite the BOE claiming this for a long time. The reason for this is that inflation is not wholly down to our domestic economy, but as a result of imported inflation through rising fuel and supply chains issues which have been exacerbated by the stop start of the Chinese economy (to avoid Covid) and the impact of the war in Ukraine has had on food supplies.  

Given the big beast known as inflation has arrived and continues to ravage the UK economy, we need to make sure that what is left is not picked off by the other predator being stagflation, which was also around in the 1970s. Then we had a recession (no-growth) and rapidly rising prices without any increase in productivity. The flip side of a recession is more unemployment, so less wages and consequently less spending and less demand. But, without productivity gains, the issue you have is that the recession may continue longer, whilst productivity only occurs through business investment in people and systems.

Having executed Brexit, the UK must go back to being that flexible open economy, otherwise we will not get workers into the UK to fill some of the less skilled and desirable jobs that are needed to keep the economy moving forward. Workers in the economy produce more than they consume, unlike dependants, who consume more than they produce. There will be less workers with a falling birth rate in England and Wales of 4.1% since 2019. Whilst there will be more dependents as the ‘baby boomers’ generation come up to retirement age and the workers who came into the global economy from places like China, are now also looking to retire.

So the question is will we see a re-shoring of UK businesses to combat supply chain issues and movement of labour into the UK to help soften the recession and increase productivity so easing the demand for higher wages as well as reducing the higher prices of goods and services?

Workshop of the World

Workshop of the World” was a phrase used for England’s industrial prowess first coined by Disraeli in the House of Commons in 1838. A great deal has changed since and China has now become “the factory of the World” because it literally makes everything and makes it in abundance.

China has the advantage of cheap labour and low regulation, whilst the West has lost such benefits striving to improve the lifestyle of its citizens and it is instead shackled by wage pressures as a result of the higher inflationary environment making it virtually impossible for the West to compete with China on price. Therefore, the West has to continue on the well-trodden path of innovation through research and development (“R&D”).

America has just passed the “CHIPS and Science Act” in an attempt to catch up China’s investment within the semiconductor field. Both China and America are trying to wrestle away their economic dependency on Taiwan and South Korea, the two world players in semiconductors accounting for more than 82% of worldwide production of the same. This bold policy by America is aimed at recapturing ground in the ever-increasing battle to attract more lucrative and highly skilled job creation and inward investment, which drives all industrial economies.

The irony is that the silicon chip was invented in America as far back as 1958, yet it allowed its innovation to be squandered and instead be taken up by  South Korea who used the tried and tested formula of R&D to become the world leader in technological innovation through a simple strategy of  collaboration between government, industry and academia.

Sceptics may say that America has come to the party too late as China has already started down this road with its “Made in China 2025” programme which has seen China seize dominance in areas such as semiconductors, 5G and AI. Even Europe whilst very slow to move direction has made a start through the “Europeans Chips Act” aimed at attracting talent and investment into Europe for these new cutting edge technologies.

It is important for Government policy for the next UK Prime Minister to not focus on re-election policies of tax cuts and short term giveaway measures in order to increase their poll rating for re-election for 2024/2025, but instead, focus policy on strategies of investment to continue to attract foreign investment into the UK.

Tony Blair will be remembered for his mantra of “education, education, education” and  the message to the next Prime Minister and UK PLC is “investment, investment, investment” so that the UK can continue to strive for the productivity gains that it deserves and  that will be demanded if the economy is to curb the inflationary cycle and dampen down wage inflation. Then the next Prime Minister may be remembered for overseeing a new golden age for UK PLC through innovation especially given the backdrop of the Bank of England’s prediction that the UK will be in recession from Autumn of this year until at least 2024

Big Sheds

I am not talking about archetypal garden shed, but instead very large warehousing and factory sites over 100,000 sq ft. There is a trend moving towards these very large factory spaces loosely dubbed “big sheds”. In the past, big sheds were mainly used as part of assembly lines or a prelude to modern factories, but now big sheds are moving away from these traditional uses to more of storage, distribution and assembly hubs. There is still a place for these large factories a good example is the i54 near Wolverhampton, when you see what JLR have created. Taking the UK as a whole, finding locations for big sheds is not an easy task especially given the timeline required to not just find the right location but construct the big shed. Developers are taking the opportunity to build big sheds speculatively knowing that there is going to be purchasers who will either buy or take it on lease upon practical completion this is because land cannot easily be created to accommodate big sheds, which need to be supported by the UK road networks. Will the trend of big sheds continue when inflation is estimated, by some commentators, to be 18% next year. Will the Bank of England will have to increase interest rates to stop importing inflation and so increase borrowing cost. This may dampen down demand weighed up against cost savings from economies of scale and efficiency savings that come with increased productivity in one hub. This does make sense in the backdrop of the supply chain crisis where stock allows suppliers to be more productive.

Perfect storm could scupper economic recovery

It has been some time that I have talked about the big beast stalking the long grass of the UK economy. But we can all now see that inflation has pounced not just in the UK but also in the global economy as it ravages all of the 38 countries in the OECD (Organisation for Co-operation and Development) to a greater or lesser extent. Being in the midst of inflationary pressures, the question people are all asking is when will it end? But to answer this we need to know what has led to the current situation. In one word: Covid. This has played a large part as it has caused the “workshop of the world” (a phrase originally coined for the UK economy at the start of the Industrial Revolution) China to effectively shut-up shop to prevent Covid outbreaks. This is still the case in large parts of China, making the distribution of goods very erratic. At the same time as furlough fuelled the Western world’s demand for consumable sourcing became an issue given in China’s zero policy on Covid. Then there has been quantitative easing (QE) which the UK, the EU and the US have all adopted due to the pandemic by in effect printing money in the form of government bonds with a view to stimulating economic recovery. Just to put this in focus, it is estimated that the UK has spent 375 billion pounds, which is equivalent to 20% of the UK’s GDP with QE. The combination of these two factors has meant there is more money chasing fewer goods, which inevitably leads to higher prices and now there is an ongoing war in Ukraine which is causing disruption to the global markets, not just wheat and grain but also things like neon and palladium as well as for oil and gas. All of which, again, leads to less supply to meet current demands, so prices have to go up. So, we can all see what the causes are and we can all feel the effect even if it is just putting petrol in a car. We have to give some thought to the fact that if there are any other factors that come into play to derail growth, we could then be in recession for longer than anticipated, which is reinforced by the shrinkage of the UK economy by 0.3%. This is, however, not reflected in unemployment as we still have full employment. But if we do get wage inflation without increasing productivity, it will be a foregone conclusion that the recession will ravage much more of the UK economy than anticipated.

Cause and Effect

It has been some time that I have been talking about the big beast stalking the long grass of the UK economy. But we can all now see the beast of inflation has pounced not just in the UK but also in the global economy as it ravages all of the 38 countries in the OECD (Organisation for Co-operation and Development) to a greater of lesser extent. Now being in the midst of inflationary pressures, the question people are all asking is “when will it end?” but to understand that we will need to know what has led to the current situation. In one word “Covid” has had a big part to play as it has caused the “workshop of the world” (a phrase originally coined for the UK economy at the start of the Industrial Revolution) China to effectively shut-up shop to prevent Covid outbreaks. This is still being done now in large parts of China, so making the distribution of goods very erratic. Whilst in the western world furlough fuelled the demand for consumables which were now getting harder to obtain because of China’s zero policy on Covid. Then there had been quantitative easing (“QE”) which again the UK and to be fair the EU and the US have all adopted due to the pandemic by in effect printing money in the form of government bonds with a view to help stimulate economic recovery as well as pushing businesses and so stem job losses. Just to put this in focus, it is estimated that the UK has spent 375 billion pounds which is equivalent to 20% of the UK’s GDP with QE. The combination of these two factors has meant there is more money chasing less goods, which inevitably leads to higher prices and now there is an ongoing war in Ukraine which is causing disruption to the global markets, not just wheat and grain but also things like neon and palladium as well as for oil and gas. All of which again leads to less supply to meet current demands so prices have to go up. So, we can all see what the causes are and we can all feel the effect even if it is just putting petrol in a car. We have to give some thought to the fact that if there are any other factors that come into play to derail growth, which will then mean we will be in recession for longer than anticipated albeit this is not being reflected in unemployment as we still have full employment but that is a discussion for another day in terms of the war on talent but if we do get wage inflation without increasing productivity, it will be a full gone conclusion that the recession will ravage much more of the UK economy than anticipated.

Hawkins Hatton Newsletter June 2022

Newsletter June 2022

Summertime and the Feeling is Good

Just like in that Mungo Jerry song we are coming up to the summertime and if in the summertime, when the weather is hot… we are all looking to enjoy the sunshine and summer break in some way. Notwithstanding, I usually comment on business trends and economic pressures on the economy, I thought this time it may be appropriate in the prelude to summer to talk about a staycation, as this would make for a seasonal article. Many of us at the moment, are experiencing the effect of the cost of living crisis just as we have started to emerge from the Covid crisis which has paralyzed both the economy and the world at large in terms of trade and travel. Of late, I have seen a trend in staycation and as I said it is a combination of many factors including Covid and the cost of living. Though it may also be that people’s sentiment may have shifted towards having more shorter breaks within the UK rather than just grabbing that two weeks in the sun. I am not saying that holidays are dead I am simply saying that more people are trying to get away more often and the easiest way to do this is to get away locally even if it is just overnight. There is compelling evidence to show that there is a real change in travel trends since the lockdowns. It has even been suggested that within the UK online searches have increased by over 500 percent compared with last year. This is further backed up by the Staycation Market Report 2021, which indicated that over 50% of this people in the UK taking a holiday would do so in the UK whether this be as I said the shorter breaks or that two weeks in the sun. With all this talk about staycation it is no wonder that there is a very buoyant market for businesses that offer staycations. Two particular sectors that I have seen a growth in as a result of direct experience with clients is leisure on the water and caravan parks. Both industries have one thing in common, which is once you have got over the capital commitment which is the main barrier to entry, the advantage is that they do not need a lot of labour to maintain what they do and what is noticeable is that HSBC UK Bank Plc have been spear heading finance for caravan parks throughout the country. “Ian Coulson (Area Director, Business Banking Western Midlands of HSBC) said “as a bank we do not try and follow trends but we look for clients and sectors where we can provide the best support and there are so many benefits for staycation not just the reduced environmental footprint and the money that is put back into the local economy”

Prescription for Good Health

Jhoots Pharmacy has long been known as the leading independent, community pharmacy chain within the Midlands. Jhoots have done this through offering an efficient and reliable service for all of their patients and customers.   Manjit Jhooty (CEO of Jhoots Pharmacy) has prided himself in ensuring that everyone is given the time and attention they deserve by ensuring Jhoots Pharmacy tailor their services to meet everyone’s individual needs.    In order to continue to help Jhoots Pharmacy in their expansion they have taken support from HSBC UK Bank Plc (“HSBC”) who have had a good relationship with the pharmacy chain and have continued to support them over the years. Thus, it was a natural step for HSBC to continue to provide support for Jhoots Pharmacy and as part of their reorganisation in order to allow the pharmacy to continue to offer its full range of Essential, Advanced and Enhanced NHS Services. Manjit said “it goes without saying HSBC have the skill set and experience to deal with pharmaceutical sector but what makes the bank different is the personal approach and the genuine interest they have in their customers which reflects how I look at my customers within my business.” Partho Bose (Senior Business Development Manager at HSBC) said “working with Manjit has always been a pleasure because he is focused in his goals which means things have to be done at a pace in order to allow him to move onto other things.” In order to deliver the deal, HSBC used Hawkins Hatton Corporate Lawyers who are a panel firm for the bank. Manjit specifically wanted HSBC to use Hawkins Hatton as he knew their skill and reputation for delivering a deal on time. Colin Rodrigues (Corporate Partner at Hawkins Hatton) said “having done a pervious deal for the bank for Manjit, I do know that there is no room slippage when starting a transaction. In this particular transaction, not only there was a lot to do but the time frame was very tight thus, we had to work as cohesive team to deliver the deal for the bank and Manjit.”

Déjà vu

The government has announced its new “Energy and Security Strategy”. Obviously, the focus will be on renewals and nuclear. But will eight new nuclear power stations ever to be commissioned even if there are going to be located on the existing power stations? Will the new offshore wind farms come into the fore? That’s why I say déjà vu, it is as if we are back where we started on the energy debate. It was just the other day in the “COP26” in Scotland where the UK restated its aim of net zero. Thus, in reality there is nothing new in the strategy being put forward for the short term. Is this a missed opportunity given that everything is focused on the long term? As we will all know all it takes it’s a change in the government, for policy decisions to be consigned to the bin, especially when some of these policy decisions do not affect the term of that current government but instead successive governments. Any nuclear power station will take at least 15 years to come online even once the planning and finances have been agreed. Part of the energy security debate has to take in account how to fix supply and not just look at how to generate supply. In the short term there are very easy wins when looking at energy saving installations which will save money on energy consummation. The UK's housing stock is one of the most energy inefficient in Europe despite years of government grants to improve the situation. Surely there has to be a dual approach. Even if the government is not going to focus more on energy saving improvements, I suppose it is a good thing that the government is looking at a new offshore grid and hydrogen to replace natural gas. However, the government needs to be bolder as back in 1973 the oil crisis led to “Messmer plan” which made France focus on nuclear energy as a means of power generation. It is the lack of investment in the UK which will cause further bill shocks in the future. If the government invested in nuclear and alternative renewables even though bills are at the heights there are now which could not be anticipated a few years ago the UK consumer would be getting a better return. This sounds contrary but some of the earlier wind generation contracts which looked expensive at the time are now paying dividends as they are generated electricity at prices lower than the current energy price. So maybe a bold approach with energy saving measures framed in a radical approval process for new projects could be the solution but as always only time will tell as the government has to follow through no matter what the short-term cost are going to be as there will be long term gain then we can avoid déjà vu.

Hawkins Hatton Newsletter March 2022

Newsletter March 2022

UK ENGINEERING FIRM TO INVEST IN STRATEGIC MACHINERY WITH FUNDING FROM HSBC UK

Westley Group, one of Europe’s largest privately-owned foundry and engineering groups, is set to further invest in new CNC machinery following an eight-figure funding package from HSBC UK.

The funding from HSBC UK will support the Group’s UK business plans to add further value to its foundry activities through machining more of the castings it produces for its worldwide customer base.

In addition, the financing allows Westley Group to grow further into existing and emerging markets for their highly complicated products; most of which are safety-critical in application. This will allow a number of new jobs to be created in skilled machining operations across its 4 manufacturing sites.

Westley Group is a trusted world expert in heat, wear and corrosion resistant alloys for a wide range of strategic equipment and safety critical applications; servicing a range of industries including defence, marine, aerospace, oil and gas, architecture and general engineering. One of their key markets is the UK’s and overseas’ surface and sub-surface strategic naval defence market.

James Salisbury, CEO at Westley Group, said: “This agreement with HSBC UK allows us to expand our services by investing in new machinery and upgrading our facilities to grow the Group’s offering to our customer base – it gets us even closer to our customer and their own finished product”.

“The products we produce are subject to some of the world’s most stringent of testing criteria. They are also incredibly complicated from a metallurgical and geometrical perspective. Our customers rely more and more on our expertise to deliver a finished product including all testing and certification”.

Keith Webb, Deputy Regional Director and Head of Manufacturing for the Midlands at HSBC UK, added: “Westley Group has a clear commitment to manufacturing excellence and we look forward to further supporting the development of this well-established business that is a leader in its field, whilst helping to create new jobs within the UK and supporting its plans for business growth.”

Colin Rodrigues, Corporate Partner at Hawkins Hatton said: “Every agreement brings its own unique traits and differentiation requirements. We worked closely with Mike Richards, FD to determine the factors that would be required to get the deal done. That meant we had to complete the agreement expediently, which was a challenge given the number of commercial properties”.

Westley Group was recognised as one of the UK’s top 200 private companies with fastest-growing international sales in the 2021 Sunday Times HSBC International Track 200.

Good food, good wine and good company at HH event

‘Twas the night before Christmas’ In fact, it was a whole month before Christmas, and some, when Hawkins Hatton Corporate Lawyers decided to hold their ‘Sing for your Supper’ dinner. This event was never normally held in November, in fact, it was always held in early spring. Given the intervention of the pandemic, this dinner was not able to be held in the spring of 2020 or 2021. Instead, HH thought rather than waiting for spring 2022, they would hold a pre-Christmas event to try and share some of the magic of Christmas with their clients and professional contacts. The event at Weston Park has been held there for over 10 years by HH, and has become one of the iconic events which people put in their business calendars. HH corporate partner Colin Rodrigues said: “Our event is simple – it is good food, good wine and good company with friends, so what is there not to like? Given how difficult the pandemic has been for a lot of people, HH thought by sharing some Christmas joy early, it would be the perfect way to mark the countdown to the start of the festive season. Litigation partner Harminder Sandhu added: “HH has been built on strong values of client service which means a lot to Colin and I, and when we see our clients and professional contacts in one room, we know we are amongst friends.” View the original Express and Star news article here

Tyger Tyger Burning Bright

No, not that William Blake famous poem or Chinese New Year but is it that beast stalking the long grass of the UK economy known as inflation. There is one thing I always beat the drum about which is productivity and now I have added inflation to this ensemble. It is impossible to ignore that inflation is currently running at over 5% as I can see the real effects working at the coal face with business clients. I do not have a crystal ball, economists and policy makers are saying the current inflation rate is only ‘transitory inflation’ and it will be gone before we really suffer from its long-term effects. It is only because I was a child of the Thatcher generation that I am able to say I have seen it before. In those times inflation averaged over 12% and some prices doubled if not trebled. There are many reasons that contribute to the current rate of inflation, including a contracting market in energy suppliers or the cost of ‘big-ticket’ items increasing because of supply chain issues. All the things I have mentioned for the current rate of inflation are very similar to those of the 70s where we had a weak pound, a fuel crisis and the government injecting money into the economy through high wage settlements for public sector employees. In the same way during the last 24 months the government has borrowed record sums to deal with COVID and prevent a free fall in the economy. The real difference now though is interest rates have not increased to counter-act inflation but will the macroeconomic policies see a comeback in the UK under the conservative government? Unlike the Thatcher era, when the ‘Iron Lady’ went into battle with unions to put a stop to higher wage growth, we cannot follow the same route, because unions are not as strong as they were, so instead we need to reward productivity. It is only with improvement to productivity that we will be able to move forward. That is why we should take the opportunity in this new flexible office and home working environment to maximise productivity by working smarter and keeping that big beast at bay. It is an old adage, more for less and get rewarded. Unless we now adopt this strategy, we will find other countries will leave the UK behind.

Integrated Pest Control

Integrated Pest Control. Its all in the name as Gareth and Catherine Turner have been running their business called “Integrated Pest Control” (“IPC”) for many years and have developed both an efficient and integrated business in all matters, pest control. Given how efficient and well run IPC have been and continue to be they were targeted by Rollins Pest Control who are the number one brand in the USA for pest control. Gareth and Catherine Turner embarked on their venture with the assistance of Hawkins Hatton Corporate Lawyers in order that they achieved their goal with minimum fuss but most of all in the knowledge that they were legally protected in all respects from what seemed very daunting legal documents. Gareth Turner said “I have known Rollins for a very long time and I know how they do business, and as such Rollins and IPC are a good fit together as we can continue to grow on the quality of clients we have knowing that Rollins are big enough to give us the continued support to enable our services to be offered to new clients on a wider geographical footprint.” Colin Rodrigues (Hawkins Hatton) said “I am always delighted to help clients especially when they are new to HH as lots of people who know HH are going to be familiar with our service but when you have a new client who is not familiar with how we do things then they get to understand the process it brings a smile to my face and the rest of the team, as we know we have done a good job for them.”

Tea is certainly the best drink of the day

The Bettavend philosophy has always been focused on exceeded customers' expectations through high levels of customer service.
Geoff Rouse has continued to strive to use this philosophy to create a business which for nearly 35 years has been supplying fully inclusive refreshment systems and ancillary services. Bettavend is now regarded as one of the more established and highly successful, independent, regional vending companies within the UK. This has meant it was just a natural progression for Vicki Appleby and Ben West to undertake a management buyout of Bettavend from Geoff Rouse (“MBO”).
In order to undertake the MBO, Geoff instructed Colin Rodrigues of Hawkins Hatton Corporate Lawyers to assist him and his wife, Jeanette, in helping to deliver the MBO for them. Hawkins Hatton Corporate Lawyers worked alongside David Gamblin, who has been Geoff’s accountant for a number of years and helped him make instrumental decisions to build his business.
Geoff said that “the extensive knowledge and experience of Ben and Vicki within Bettavend over a number of years meant that they were the ideal candidates for the MBO, given their mantra of providing a high-quality service on behalf of Bettavend and always putting the needs of Bettavend’s customers first and foremost”.
Colin Rodrigues said: “I have only known Geoff for a short time, but I soon realised that not only is he a good entrepreneur, but he genuinely cared about his business and all those who worked within it. He really wanted to ensure the continued success of Bettavend through the stewardship of Ben and Vicki”.
Ben and Vicki said: “we have always known that Bettavend are fast, efficient and customer-focused as these are the traits we picked up from Geoff and we intend to continue to ensure that Bettavend carries on as one of the leading suppliers of vending products which exceed people’s expectations of taste and flavour. That is why tea is sometimes the best drink of the day, especially when it is dispensed by Bettavend”.
David Gamblin said: “like with any business, if you can get the basics done well then it gives time for everybody to focus on the added value, and I am sure that Ben and Vicki will continue Geoff’s journey into the future”.

Talking Point - London financial market changes

In the same way Royal Dutch Shell is evolving into focusing on new energy technologies from battery, wind and solar, so is the London financial market. The oil giant is abandoning it’s Shetland oil project as a result of the economic case not being strong enough even though Shell had a 30 per cent stake in the project. Shell has also given up its dual listing for the UK and Netherlands to now just have a UK listing. Within the London market, the concentration of companies has always been focussed on the stalwarts of oil, gas, mining and banking. It now wants to become Europe’s main financial hub for FinTech. The stock market rules in London changed in December as a result of the previous fanfare heralded by the Chancellor Rishi Sunak, when he expressed his desire to perform financial services through Big Bang 2.0 as well as improve the UK’s position as a place to do business through detailed reports from Lord Hill and the Kalifa Review of UK FinTech published earlier this year. It is clear the direction of travel for London is now a course that will be divergent to the EU with a wider focus on global trade and attracting global capital into the UK. With that in mind, the December changes to the listing regime in the UK are designed to meet the UK’s desire to be the leading exchange for FinTech and technology companies. It is hoped these changes will help cement the UK’s position as a leader of growth and innovation for the expansion of technology companies in the London Market. In very general terms, there has been a balanced approach by ensuring listed companies in the High Growth Segment being one of the three segments of the Main Market in the London Stock Exchange, now have an entry value of £30 million rather than £700,000 to help create trust within those listed companies. This is then balanced out by allowing those companies to have a dual share structure, which allows founder shareholders to retain voting control which may be disproportionate to their stake in the company albeit it is only for the first five years from listing. Moreover, the minimum free flow, being shares in public hands has fallen from 25 per cent to 10 per cent.” Clich here to view the original Express and Star article

The New Vintage

‘The New Vintage’ Midland dealmakers believe that a combination of a fast-recovering economy, almost fabulous amounts of money ready to be lent and invested, pent-up demand, owner-managers looking to sell, corporates looking to buy, and huge interest from overseas buyers are making the prospects for mergers & acquisitions (M&A) in 2022 look excellent. “The last year’s been a manic one for M&A, full of giddy pricing, aggressive deals, and happy sellers,” says Roger Buckley, corporate finance partner at BDO. “Those fundamental drivers for strong M&A activity in 2022 are still here. The wall of money looking for a good homes means high levels of activity, and high sale values. It’ll be tough to be a buyer, but a great time to be a seller.” “The pipeline for 2022 looks strong, and I expect another bumper year for transactions,” adds David M Jones, corporate finance advisory partner at Deloitte. “Theprimary motives for dealmaking remain unchanged for 2022. We saw a huge rally from late 2020 into 2021, and I expect this to continue into the New Year. All things considered, it’s a year to look forward to.” “Dealmaking momentum for 2022 has been building since the summer: we’ve never spoken to so many privately-owned companies,” says Paul Bevan, managing director at Breeze Corporate Finance. “For us next year will transcend all the years I’ve been advising on transactions.” There are solid grounds for this optimism. If we project the number of M&A deals involving Midlands-based businesses on current trends, 2021 should end with more than 800 transactions, up by about a fifth on 2020’s total and in line with volumes last seen in 2018. And they look like quality transactions: the value of these 2021 deals, where the price tag is known, is £8.6bn, compared with £4.9bn in 2020. The first three months of the coming year could follow 2021 in being the busiest quarter, driven by owner-managers looking to exit or de-risk before possible changes to Capital Gains Tax in March. In the year to December, there were 453 full or partial exits in the region. “The pandemic has changed some owners’ outlook on life,” adds Paul Franks, managing partner at Beech Tree Private Equity. “We’ll see an increase in businesses to market as owners either look for full or partial private equity exits, partly to facilitate growth, but also take some value off the table, to live life now, not at some future point when they sell the business. The pandemic has shifted the ‘I’ll do a deal next year’ mentality to doing something now.” Click here to view the full article.

Hawkins Hatton Newsletter December 2021

December 2021 Newsletter

Hawkins Hatton’s “Sing for Your Supper” Dinner at Weston Park on 11th November 2021.

Photographs of attendees at HH’s pre-Christmas dinner at Weston Park on 11th November 2021

Hawkins Hatton’s “Sing for Your Supper” Dinner at Weston Park on 4th November 2021.

Photographs of attendees at HH’s pre-Christmas dinner at Weston Park on 4th November 2021

Hawkins Hatton’s “Sing for Your Supper” Dinner at Weston Park on 4th November 2021

Photographs of attendees at HH’s pre-Christmas dinner at Weston Park on 4th November 2021

Hawkins Hatton’s “Sing for Your Supper” Dinner at Weston Park on 11th November 2021

Photographs of attendees at HH’s pre-Christmas dinner at Weston Park on 11th November 2021

Good food, good wine and good company at HH event

‘Twas the night before Christmas’ In fact, it was a whole month before Christmas, and some, when Hawkins Hatton Corporate Lawyers decided to hold their ‘Sing for your Supper’ dinner. This event was never normally held in November, in fact, it was always held in early spring. Given the intervention of the pandemic, this dinner was not able to be held in the spring of 2020 or 2021. Instead, HH thought rather than waiting for spring 2022, they would hold a pre-Christmas event to try and share some of the magic of Christmas with their clients and professional contacts. The event at Weston Park has been held there for over 10 years by HH, and has become one of the iconic events which people put in their business calendars. HH corporate partner Colin Rodrigues said: “Our event is simple – it is good food, good wine and good company with friends, so what is there not to like? Given how difficult the pandemic has been for a lot of people, HH thought by sharing some Christmas joy early, it would be the perfect way to mark the countdown to the start of the festive season. Litigation partner Harminder Sandhu added: “HH has been built on strong values of client service which means a lot to Colin and I, and when we see our clients and professional contacts in one room, we know we are amongst friends.” View the original Express and Star news article here

Back to the Future

Not the famous film with the DeLorean, and that synonymous cinematic scene throwing Marty McFly back in time through the use of the mystical flux capacitor. I mention this because sometimes it seems like we are back in the 1970s, notwithstanding we are in 2021. Growing up in the 70s, I can recall the soaring energy prices, power cuts, bin strikes, food shortages and rising inflation that were associated with the 1970’s. That is why there are so many comparisons between the challenges faced in 2021 and those in the 1970’s. There are myriad reasons we can attribute to why all these things are happening, whether this be as a result of Brexit, Covid-19 lockdown, structural changes in the UK economy, the global supply chain crisis and so forth. You may recall earlier this year I said “is that big beast back, stalking the long grass of the UK economy ready to pounce on the unwitting consumer”. I think we can all agree that the real threat to the UK’s economic recovery is inflation, notwithstanding the recent backroom chatter about stagflation when the Furlough Scheme was wound up. I am not a doom-monger but I do see the real-world effects that are faced by corporate clients in the current economic climate. Developer clients are struggling not just with manpower, but soaring prices in raw materials and are insisting that buyers of commercial property exchange sooner rather than later to try and tie in the price increases otherwise they have to be passed on. Higher wages are not resolving the shortage of skilled workers, but this is a political decision as a result of Brexit which is compounded by some of the other factors already mentioned. However, that does not explain why the cost of living in September has fallen 3.1% when the smart money was on an inflation increase albeit the underlying trend may still be one of increasing inflation for the remainder of 2021. Maybe the fall in September was due to the expiration of the “Eat Out to Help Out” scheme which meant that costs of eating out increased thereafter. Given I am not a soothsayer or skilled in the dark arts of economic predictions. However, I hope that the current inflationary pressures we are seeing in the UK economy are brought under control quickly to avoid the UK’s chances of finding economic growth being smothered in a post-Brexit world. What is also an irony is that the UK have just signed up to a new trade deal with New Zealand when in fact it was back in the 1970’s and the UK joining the EEC which resulted economic links the UK had with New Zealand were being severed. So it is like going back to the future, in so many ways.

Success Flocks to Green Sheep Group in Exciting MBO

Green Sheep Group, manufacturer of the UK’s market leading bedside crib SnüzPod from the Snüz brand, and multi-award-winning natural mattress brand The Little Green Sheep, has secured future growth through a management buyout led by CEO Roger Allen. Named as a Sunday Times Fast Track Top 10 (2017) as well as being awarded The Queens Award for Innovation (2018), Green Sheep Group has focused on restructuring the business to deliver a strong business to consumer proposition targeting digital native parents in search of the very best innovative safe sleep solutions for their family. To provide best in class end to end customer experience, Green Sheep Group expanded its fulfilment operation with a new first class distribution facility in Redditch in December 2020 ensuring the scalability of its fulfilment and final mile delivery to consumer operation. Roger completed the Management Buy Out in August 2021 to secure a majority stake in the group with a view to expanding GSG’s reach globally with its proven direct to consumer proposition. Strengthening the board, Roger appointed Chairman David Wood, a highly experienced executive both in the UK and internationally, in particular the USA, who brings almost 30 years’ experience in the retail and consumer sector. Roger engaged the assistance of our firm and MDP Accountants to help structure and deliver a deal which was supported by HSBC UK Bank plc. Colin Rodrigues our Corporate Partner  said: “this MBO just demonstrates that some of the keys to success in retail depend on having good products with a good distribution network, and GSG have that in spades”. Arran Jones (Director of MDP) said: “I have worked with Roger for a very long time and I can genuinely say that he knows what he wants and how to get a deal done, so it was a pleasure working with him”. Roger Allen commented: “from very humble beginnings, GSG always had global aspirations as we as a brand want to ensure our products find their way into the homes of parents to make their lives just that little bit easier. That is why it is all about quality and design for me. We have an excellent team working extremely hard for parents and their little ones”.

Ngeneration moves to new premises aided by Hawkins Hatton

nGeneration started its business at Castle Court, Castlegate Way in Dudley. Since then, nGeneration has become synonymous with providing cutting edge and highly effective IT projects serving its unique cross industry knowledge of the UK retail and hospitality markets. To enable nGeneration to do this it has a large dedicated team of engineers, project managers and trainers. nGeneration has also created its own “nCare IT support” service to provide a 24/7 everyday support desk using its own nationwide field engineers in order to meet the needs of its customers. All of this key support has benefited nGeneration’s customers by reducing their operating costs and allowing those customers to improve their quality of service. All of this success has been down to the husband and wife team of the late Bernard Cronin and Caroline Cronin-Brunt. Since the death of Bernard Cronin, Caroline has continued to expand the business with the help and assistance of John Bowen. The next stage of expansion for nGeneration has been for it to move to its new flagship premises at Vaughan Park, Sedgley Road East, Dudley. The new premises move was assisted by Hawkins Hatton Corporate Lawyers who have been with nGeneration throughout its journey. The new premises at Vaughan Park was opened by Andy Street, Mayor of the West Midlands. Caroline said “the new premises was a testament to everything that Bernard and I have worked for over time and the success of nGeneration has been due to the hard work and team effort of everyone within nGeneration”. Colin Rodrigues (Corporate Partner, Hawkins Hatton) said “nGeneration is one of those businesses that had success written all over it. Having known both Bernard and Caroline from when they started the business I know that the new flagship office will enable nGeneration to continue its future expansion and do what it is good at by delivering effective service to exceptionally demanding clients”. Ngeneration moves to larger premises aided by Hawkins Hatton Express and Star Article

Dispute Resolution

In the context of business disputes one of the main objectives should always be to reach commercial resolutions rather than engaging in protracted litigation. Time spent focusing on disputes is valuable time diverted away from more productive areas of running a business. The court process can be unpredictable and no matter how strong the case may be it does not necessarily lead to a successful outcome in court. We are dealing with a Court of Law not a Court of Justice and as both sides cannot be right there should always be scope for reaching a sensible commercial compromise. One way to achieve this is to “lay your cards on the table” rather than hold back as the more information that is volunteered at an early stage the stronger the platform to persuade your opponent of the weaknesses in their claim. It is all too easy to become entrenched in a position or matter of principle and lose sight of the wider commercial relationships especially with other businesses. At each stage of any dispute the main consideration should be how to extract your-self from the process by agreeing terms which are commercially acceptable. Often this can be as simple as paying a sum of money to your opponent to extinguish the risk and time associated with the issue rather than incur that sum in legal fees. In these challenging economic conditions (in light of Brexit and the pandemic) you see frequent disputes for unpaid invoices for work rendered or products supplied. Often parties seek to raise performance issues to delay payment. The secret is always to document the commercial relationship whether that is agreeing a comprehensive specification or delivery and payment terms. When an issue arises all evidence should be preserved and subsequent discussions documented (whether by email or text) in particular where there is some form of acceptance or acknowledgement from your opponent. Contemporaneous evidence is the key to determining factual issues and achieving the overall objective of resolving the dispute. dispute resolution December 2021

Large Sheds

I am not talking about your archetypal garden shed. I am talking about very large warehousing and factory sites which are over 100,000 square foot. From speaking with our clients and seeing the nature of work that is coming across my desk and others within the firm, I can clearly see that there is a trend which is moving towards these very large factory spaces which are loosely dubbed “large sheds”. In the past, these kinds of large sheds were mainly used as part of assembly lines or a prelude to modern factories, but now the trend is moving away from these traditional uses to more of storage, distribution and assembly hubs. Though, there is still a place for these large factories, especially when you look at the i54 near Wolverhampton, and seeing what JLR are creating. When taking the UK as a whole, finding these kinds of spaces is not an easy task especially when you think of the time line that is required to find the right location and construct the large shed. What I tend to see now is that developers are taking the opportunity to build large sheds speculatively knowing that there is going to be a client who will either buy or take it on lease upon practical completion. At HH we have acted for a number of clients who have taken large sheds with the key being, easy access to motorways. An example of this was Medicom who took a large shed in Northampton and now employ 250 people from that premises producing over 1.5 million masks per day. Granted, more businesses are now more geared up to service the trends of the online purchaser but without a large shed you are not going to be able to create the economies of scale and benefit from the efficiency savings that come with increased productivity. Large sheds are not just required for servicing the UK consumer, but given the uncertainties which Brexit, manufacturers and suppliers are now having to hold more stock. This has seen a growth for some of our clients such as Masterfreight Limited and Conway Packing Services Ltd who specialise in freight forwarding as well as the importation and exportation of cargo along with warehousing facilities whether for businesses generally or for specialist sectors. With large sheds, it is not a question of whether there is going to be enough land to accommodate the same, but instead the question should be, is the UK road network resilient enough to cope with the increase in users and what happens when there are more drivers who cause more accidents on the roads. Will this be the cause of more congestion or will the new working practices of home working balance out the increase in road use.

31st January 2020

And the world did not stop turning for the UK PLC. We are nearly 21 months on since Brexit, with another Cabinet reshuffle and having the same discussions about the new normal, returning to work, and whether or not there will be another lockdown. But what is the reality for London as a financial hub and the UK standing as a global centre of excellence in financial services? So many questions, with really only one correct answer, which is “only time will tell”. Like any great city, London and the UK financial services, continues to evolve. I remember the “Big Bang”, which gave deregulation to UK financial markets, where London embraced on screen trading back in the mid-80s. That is why foreign firms are still looking to take over UK businesses, where takeovers are at their highest level since 2018 according to data from the Office for National Statistics. Just look at “Morrisons” and “RSA”. “RSA” may not be a household name, but “RSA” is a 300-year-old insurance company. All of this goes to show that the UK is a good place to invest and do business. Not only for skilled workforce which may seem in short supply in some sectors, but because, more importantly, of the ease at which some businesses can set up and trade. So, the fact that financial services were left out of the Brexit deal due to the Government’s focus on tariff free trade for goods could actually be a good thing. Looking back through history, I remember when the UK fell out of the ERM on “Black Wednesday” back in September 1992, costing the UK the loss of nearly all of its gold reserves. The pound became cheaper against world currencies and imports became more expensive. Yes, there were inflationary pressures, just as there are now. Looking back twenty-nine years ago, there are so many comparisons to where London is now. Physical infrastructure can move, but knowledge, know-how and innovation, which forms part of London’s DNA, will always stay in London. Just look at the innovation the “LSEG” have created through “Turquoise”, which offers a broad range of 4,500 stocks with access to 19 major European and emerging markets as well as US stocks, all through one interface. The UK may never find the holy grail of “equivalence” status with the EU that it craves so badly, so this does mean that, as a result of “Big Bang 2.0” and the “Hill Report”, you are going to find that there will be advantages to allowing the UK market to freely regulate itself and start to deregulate further aspects of financial services, which may cause divergence from the EU. This divergence will not be a bad thing if it allows the UK to continue to grow in strength as a world player in financial services, because of its geographical location, spanning both the American and Asian time zones. The difference is the UK is a country which can make decisions quickly, whilst the EU is that super tanker which will take a long time to get consensus from its 27 member states before it can start to change direction. So, with a global outlook focused on the two key markets of the US and Asia, London’s future in another 30 years may not just be brighter and stronger, but very different to that of the EU.

Hawkins Hatton Newsletter September 2021

September 2021 Newsletter

Hawkins Hatton Newsletter June 2021

June 2021 Newsletter

Is the Big Beast Back?

It was in the 1970s when the spectre of inflation stalked the UK economy like a big beast in the long grass when the rate of inflation was as high as 25%. But what exactly is inflation? We mostly associate inflation with Latin American countries like Argentina and Nicaragua. Though this view is not wholly wrong, as in simplistic terms if demand for goods outstrips supplies, then prices increase as demonstrated by Alfred Marshall’s supply and demand curve, for those economists among you. In the UK, inflation is measured by the Office for National Statistics (“ONS”) and they report to the Government to look at the Consumer Price Index (“CPI”) when deciding which levers to press in order to control inflation, albeit the control of monetary policy has been given to the Bank of England (“BoE”) who set interest rates. The CPI is a measurement of the weighted average of goods and services which we consume in the UK which then translates into the cost of living, as the CPI measurement includes housing, food, transport and utilities. It was just reported by the ONS last week that in the last 12 months to April 2021 the CPI has increased by 0.7% to 1.5%. This increase was more likely than not helped by the rise in fuel prices from the 12-year low this time last year as a result of the first lockdown when most people will recall that there were no cars on the road. According to the BoE, this rise in inflation should settle down later in the year and then fall back to 2% in 2022 and 2023. However, this is not a settled view of all economists that this overshoot in the inflation target will only be temporary. Though do not get me wrong, some inflation is a good thing, as when you look at economies such as the UK, which are consumer-based, inflation will then help to boost consumer demand. On the other hand, as with most things, too much of something, including inflation, will have negative effects. Inflation will start to reduce the value of money and savings so you are not able to buy as much with your pound as you did in the prior year. When you translate inflation on to a global platform, the issue that becomes more acute as inflationary pressures will determine the value of the countries’ currency. This means that without higher interest rates to counteract inflation, a countries’ currency will start to devalue and imports will become more costly and so the cycle continues. This all then starts to have the negative effect in regards to investment and so productivity which will ultimately affect GDP and in practical terms, companies will use their free cash to plug cash flow strains. So it is a question of waiting and seeing whether or not the inflationary beast is going to bring an end to a decade of low interest rates.

What is always clean and shiny but now is gleaming

No, not that William Blake famous poem or Chinese New Year but is it that beast stalking the long grass of the UK economy known as inflation. Fidelis has long been known as one of the regional key players within the commercial and industrial cleaning sector. Covid aside, we all know how important having a clean working environment is for both employees and potential customers and clients. Fidelis was set up by Lloyd Ansermoz over 10 years ago. Lloyd has had a lot of experience within the sector and with his guidance, he continued to grow Fidelis into an established name and market leader in its sector so no wonder React Group decided that Fidelis would be its perfect partner. The React Group who has its routes within the industrial cleaning sector, has very high expertise in dealing with hotels, prisons, crime scenes, cruise ships, public spaces and private hospitals. Mark Braund, Managing Director of React Group said that “Every growth strategy takes part in stages, and we’re delighted to unveil the next phase of ours being the acquisition of Fidelis. Given that this has been our first real acquisition, we are pleased to find that it has already delivered a significant increase in the scale of our commercial cleaning and hygiene services offering.” Lloyd Ansermoz, Managing Director of Fidelis said, "Just like React Group, who go beyond everyday expectations in business, I have always done the same as this demonstrates that you can meet the challenges that are put in front of you. That is why I have always believed that the very best training creates the opportunity for everyone to learn and develop, both in their current roles and in their ongoing careers and this merger with React Group will deliver just that. The strength and combination of what we both have will be a force to be reckoned with within our sector”. Lloyd Ansermoz used Hawkins Hatton Corporate Lawyers to assist him in this transaction from a legal perspective and MDP Accountants on the financial side. Colin Rodrigues from Hawkins Hatton Corporate Lawyers said that, “just like every deal, there are always unseen complexities and problems which need to be overcome but where there is a strong desire to do a deal, you tend to find that an accord can be reached. Knowing Lloyd and how he does business, I know that Fidelis will be a jewel in the crown of React Group.” Arran Jones from MDP Accountants said that, “Lloyd and the team at Fidelis set out a strategy for growth and worked tirelessly to meet their goals. This transaction reaps the rewards for the team and it was a pleasure to assist during the whole process."

BBBC

Not our national treasure, but the “British Broadcasting Company”, fondly known as “auntie”. Firstly, there was “Big Bang 2.0”, being Rishi Sunak’s desire to reform financial services, now is it “Britcoin” as a second? I cannot help thinking that, now the shackles of regulation from the EU are starting to fall away, the UK may be entering into a renaissance period as far as financial services are concerned in its transition away into modernity. Britcoin is a good example of this and hence the analogy “BBBC” which I have coined for this article. Britcoin will be a digital version of the Pound and having the same value as the Pound. Cryptocurrencies are simply digital currencies in which transactions are verified ‎and records maintained by a decentralized system. The main difference between Britcoin and other cryptocurrencies is the fact that Britcoin will be regulated by the UK Government and benefit from the guarantee given to it by the Bank of England. But with regulation comes the usual debate of privacy. Authoritarian countries like China have been looking at, and developing, digital currencies for the last five years. China has even started piloting trials of its digital currency, being DCEP. Countries such as Tunisia and Caribbean islands, such as Antigua and Barbuda, Grenada, St Kitts and Nevis and Saint Lucia, already have their own version of Bitcoin, with Sweden following hard on their heels. Only last week, the largest cryptocurrency exchange business, known as Coinbase, listed on the Nasdaq giving Coinbase a larger market capitalisation than BP or General Motors. So surely it is just a question of time to see which digital currency will be widely accepted to be one of the dominant world digital currencies. If Britcoin goes ahead it will sit alongside cash, but in time I have no doubt that Britcoin will be the electronic currency of choice to be used by UK consumers and businesses alike. With this change to digital currencies, some of the big losers could be the traditional bastions of financial services, being the long-established banks. They will have less capital in the form of deposits because Britcoin will require the user to open an account with the Bank of England. It may have been a good thing that the UK did not get “equivalence” for financial services as part of the Brexit deal. The UK is now going to be forced to think long and hard of ways in which to continue to maintain its place at the top table for global financial services. I am only hoping that the UK becomes a disruptor within the global financial services sector in order to stay ahead of Europe and be regarded as an innovator. But irrespective of whether or not this innovation comes to pass, it is good to hear the chorus of innovation cheering loudly from the side lines, hopefully in time we will hear this chorus being sung even more loudly front and centre.

UK Must Cash in on Upturn

HH's latest Editorial: Hawkins

One Year On

Last week marked 12 months since the first UK lockdown and how life has changed for both business and individuals alike. This is not only a time for reflection but also a time to focus on recovery now over 50% of the UK population has been vaccinated meaning there is a light at the end of the Covid tunnel. But what next? We are surrounded by the very same challenges we faced before we went into lockdown comprising of potential trade wars with China and disputes with Europe now framed in a post Brexit world. Of more concern, we now also have a huge bill to pay as a country for the borrowing which kept the country afloat during the Covid storm. One thing that is certain is that there will be a recovery. As the UK economy is nothing if not resilient but the starting point is very low. I say this with a heavy heart as last year the UK economy contracted by nearly 10% which was the largest contraction seen since the ‘Great Frost’ in 1709 though the world was very different almost 300 years ago and the UK’s position within it was also very different. The UK economy has been kept afloat during the crisis using the usual levers of fiscal stimulus of not increasing the tax burden to pay for increased borrowing and monetary policy of pumping eye watering sums into the UK economy. The growth rates for the UK economy have been forecast to be between 5-6%. If the forecasts turn out to be accurate or even half true, it could mean that the UK could outperform Europe. This would mean that UK plc has to be ready to capture this spurt of economic growth and turn it into something tangible. It is incumbent on all business owners as well as the financial sector to ensure that businesses start to look at new prospects which they are able to exploit. We should not forget that the UK is the 8th biggest manufacturer in the world so we must use that double edged sword of investment to cut through and improve UK productivity by new methods of working which have been learnt through the pandemic. We have to bear in mind that there are also new export opportunities given that a lot of businesses who previously traded with Europe (simply because it was on their doorstep), have to consider potentially onshoring elements of their production in order to preserve efficiencies. Do not forget, a lot of employees harbour visions of starting up their own businesses because they know they can improve on what they have learned from their employer. It is this entrepreneurial spark that needs to be nurtured. I am not harking back to the Thatcher era but I genuinely do believe that investment within businesses and support for employees will reap dividends especially when added to new ways of working to increase productivity.

Caring is Sharing

Nizam Bata, the Managing Director of IBC Healthcare Limited is passionate about what IBC has achieved within the healthcare market and the fact it is one of the premier Health & Social care providers in the Midlands, providing support to hundreds of individuals with learning disabilities, complex needs, autism and mental health issues. IBC also holds contracts with over 20 Local Authorities and Clinical Commissioning Groups. To continue with its ethos of delivering care in a way which makes a difference to all who receive it, IBC has expanded by taking over Lester Hall Apartments based in Leicester. Lester Hall Apartments is an existing care home which provides accommodation for people with a range of complex needs including learning disabilities, autism, physical, mental health and alcohol and drug dependency. Nizam was assisted by Hawkins Hatton Corporate Lawyers in terms of legal advice. Nizam commented that, “this transaction was one of the more difficult deals I have done in recent years as I realised it is not just a question of sharing my expertise with an existing health care provider but ensuring all aspects of what we do here at IBC can be properly transferred into Lester Hall Apartments such that the identity of Lester Hall will continue and be strengthened by IBC.” Colin Rodrigues, Corporate Partner at Hawkins Hatton said, “healthcare is a sector we as a firm have a lot of experience in and what made the transaction enjoyable was the refreshing approach taken by Nizam in trying to ensure that no hurdle was too high to overcome and that with care and diligence and a degree of understanding, the transaction gave an outcome which suited all parties.” Akbarali Bata, accountant to the IBC group said, “with any healthcare business, sustainability is always key and looking at Lester Hall Apartments, it was clear to see that it was a well-established business which did not have a lot of historical baggage which would need to be cleared out.”

Employed but not working

Last week the Supreme Court, which is the UK’s highest court, made a unanimous landmark judgment which will have far reaching effects on everyone in the gig economy. This long-awaited decision was 5 years in the making when it ruled that Uber drivers who worked for the ride hailing app, were not self-employed workers but rather employees of Uber. On the face of it, this may not seem to matter very much but the repercussions are immense in that those drivers, if deemed self-employed, would not be entitled to minimum wage, holiday pay, sick pay, and all the trappings that are expected with the protection of employment unlike independent contractors. This concept of employment status was controversial as there are tests which have always been used to determine whether or not a person is employed or self-employed and the gig economy has stretched the orthodox thinking to its limits. However, this case has brought clarity to the concept of employment status within the gig economy. The court used various tests and it found that Uber not only set the fares which affected how much drivers could earn, it also monitored their performance and penalised drivers who rejected too many requests. This meant that the drivers were akin to employees as the only way they could earn more money is by working longer hours. Therefore, it was a question of ‘control’ exerted by Uber over the drivers which was pivotal in the judgment. There will be a large number of similar cases which will follow this precedent not only those which were stayed pending the outcome of this decision. The wider impact of this judgment will be felt by all in the gig economy not just the Uber drivers however it does raise difficult questions which the judgment tried to address including when these workers became employees. Again, a very innocuous question but very difficult to answer. Though the importance of this question cannot be overlooked because it goes to the root of the time that is counted for ‘working time’, ‘minimum wage’ and such like. In the case of Uber, it was when the driver was in the relevant location with the app switched on but what about those people with multiple apps such as Just Eat, Deliveroo and such like? Are these people also employed by multiple employers at the same time? This judgment already impacted Uber’s share price but no doubt it will bounce back if Uber switches to driverless cars. This case followed previous case law where courier drivers also benefitted from employment status but it is not just the UK that has to decide these difficult questions. Similar questions are occurring within the EU at present who no doubt will follow the precedent laid down by the court. The ripples caused by this case are far reaching as now Uber will face liability to pay 20% VAT because it will be deemed to be a transport driver rather than an intermediary.

As Easy as Riding a bike

Lea Adams has continued his business success when he started back in business in a completely new sector of cycles. He recently took over Greyville Enterprises Ltd which was a major UK distributor of cycles to trade from their base in Lichfield. Greyville, since its inception in the 1970’s has prided itself on the supply of components and accessories making sure that there was an extensive range of brands of products for dealers within its toolbox. Without being deterred by any headwinds that Covid has brought, Lea has continued to peddle hard to maintain the momentum and only stopped to bring on a new team member, being Euro-sports Merchandise Ltd which have been providing top sporting brands throughout Europe with a wide range of merchandise for retail, corporate and membership. Lea Adams (MD of Greyville) said, “the combination of merchandising and cycling go hand in glove together as whenever you see any cyclists, they are always wearing some of the latest cycling wear and as you know, many cyclists are also fans of other sports. So I wanted to tap into their DNA and be able to have a holistic offering products and services to sports fans.” Colin Rodrigues, (corporate partner of Hawkins Hatton Corporate Lawyers) said, “I have known Lea for many years and he is one of the really focused business clients I have acted for as he is undeterred by obstacles and simply wants to achieve the goal he has set without if’s or but’s, in fact, he makes it as easy as riding a bike.”

Equivalent is not always equal

With Brexit over and still in the midst of Covid-19, we have not yet seen the full implications of the free trade deal struck with the EU on the premise of ‘zero tariff and quota’. It goes without saying that the post Brexit custom rules with their reams of new forms and certificates have caused despair due to delays at the border despite reduced traffic due to the national lockdown. But, and it is a big ‘but’ which relates to services, the current EU trade deal favours goods for the simple reason the UK has a deficit in goods with the EU but there is no mention of services even though the UK has a surplus. The Chancellor, Rishi Sunak last week announced that the City should get ready for “Big Bang 2.0”. This reference by the Chancellor is his prelude to his vision of the de-regulation of the City. The Chancellor must be thinking about the original phase of de-regulation put in place by the Thatcher government. If the City can replicate the original Big Bang, London may be able to steal a march on Europe with all of its clunky rules. This will mean a divergence between the City and the EU which will prevent the UK from trading into the EU because it is the EU who decides whether or not the UK rules are equivalent to those in the EU. If I am right then we should have divergence sooner rather than later in order that the UK can find its own path  whilst the EU is in a hiatus  trying to consolidate its own position on financial services and not yet having the skill set to replicate London’s offering. I appreciate there is always going to be fall out to Paris, Frankfurt etc but in order for the City to remain the dominant force within Europe and the world, there is no time to waste. The UK has to ‘grab the bull by the horns’ within the current reviews on the ‘Independent Fintech Strategic Review’. The original Big Bang made the UK a rival for New York and Big Bang 2.0 needs to ensure that the UK stays the dominant force throughout Europe and the world even if there is divergence rather than through equivalence.

Ctrl Alt Delete

Last week the EU revealed new proposals to regulate big tech firms though the “Digital Services Act” (“DSA”). The DSA uses the guise of curbing dis-information and hate speech to leverage control over tech giants such as Amazon, Facebook, Google and Twitter but will this ever be a success? What is going to be interesting is to see how the new President elect, Joe Biden, will view the EU flexing its muscles over the US tech giants. Donald Trump frequently clashed with these tech giants, but he was a strong advocate that no foreign countries should control these US businesses, it was for the US to do and the US alone. There is no doubt that the DSA is intended as a worthy piece of legislation as according to Ursula von der Leyen (President of the EU Commission), the DSA intends to “rewrite the rule book in the digital rule books”. As without regulation, there is no protection for the consumer. When looking at the tech giants, will the cost of this regulation for example in the case of eBay and Amazon simply be passed on to the individual sellers using their site and so ultimately the consumer rather than the tech giants themselves? If this happens, then the DSA will not be getting to the root of the problem but instead just be another layer of administration that needs to be dealt with. The irradiation of dis-information and hate speech are laudable attributes in any society but this has to be balanced with the freedom of speech and the practicalities of having legislation which can be enforceable at all levels. The DSA aims to increase “platform monitoring” and incorporate “take down responsibilities” whilst ensuring that there is a “restriction on the collection of data” unless the data is made accessible to business users active in the same space. There will be a new concept of “gatekeepers” however gatekeepers, being the tech giants will be prevented from using data received for advertising services. It is also intended that there will be curbs to prevent pre-installation of tech giants installing their own application on hardware devices. An unintended consequence of the DSA could be that when the tech giants try to addresses the dis-information and hate speech, they create regional variations of their offerings in the same way that Google is available in Hong Kong, Taiwan and Macau but not in mainland China. It is not going to be possible for human intervention to review for example the 500 million tweets that are made every day. This can only be done by changing the algorithms and so instead of having diversity, Europe may find that the EU becomes more homogeneous in respect of big tech. Start-ups may also find it more difficult to raise funding through private equity within a more restrictive e-commerce environment. One thing that can be said for sure is that will the Silicon Valley giants will not easily give up their algorithms. Instead, you are more likely to find that regional variations offered within the EU are more inferior to those within the rest of the world just like not having Google in mainland China and so this could be the gradual eroding of European enterprises rather than a restart through ctrl alt delete.

Many changes over 15 years of success for Hawkins Hatton

Birmingham Post_10-12-2020

Hawkins Hatton Marking 15 Years and Remaining Positive

Hawkins Hatton Marking 15 Years and counting

Hawkins Hatton Newsletter December 2020

Hawkins Hatton Newsletter Dec 2020

Jaw Jaw

This is a title I have used before as it is from that famous phrase, “to Jaw Jaw is always better to than to War War.” It is one of those enduring quotes that resonates over generations. The fact that talking and negotiating is better than war. I am sure most people will agree that the consequences of war and the devastation it causes are long lasting. Last week it was announced by Boris Johnson that, “the days of cutting the UK’s defence budget are over.” This may seem contrary to the phrase mentioned above but is definitely a welcome announcement during this year of Covid. At the very least this will be another factor that will help create long term growth in the UK economy. I am saying this because there will be at least £16 billion spent over the next 4 years. Not only will this money be spent on modernising the UK’s military, but there will be investments in new projects such as space and cyber. This transformation has a two-fold effect of not just enhancing the UK’s military capability but more importantly, if done correctly, will lead to more UK innovation. Innovation is an important part of the make-up and fabric of the UK’s DNA as a nation. It is through this cutting edge innovation where there is need to be the best, that you will get the trickled out effect of technology into the private sector and hopefully into everyday goods and services that the consumers will want to buy. A good example of this are the satellites which are used for sat-nav’s. After all, it is the consumer that is the beating heart of the UK economy and this may just be the shot in the arm that the UK economy needs. Space and Cyber are going to be the new grounds that need to be conquered rather than just a physical land grab. This announcement of military spending, with Brexit looming, is welcome on the basis that even if we fall short of the claim this spending will create 40,000 jobs, it has to be good news for a variety of industries such as UK aerospace and ship building. I say all of this because it has been 50 years since it could last be said that the UK were holding their own against the USA and the Soviet Union when it comes to the Space Race, but the sun has long set on those days so if this new start is not going to be squandered it could be a new dawn for the UK in so many different ways.

Making the UK more resilient

Medicom is a global brand based in Canada but with a worldwide footprint stretching into Europe and the UK. Medicom has always been committed to making the world safer and healthier by providing consistent, reliable protection through its brands and superior materials and manufacturing processes. Now with the worldwide pandemic of Covid-19 it has become more important to find partners who you can rely on. Medicom is moving into the UK to assist in the provision of medical equipment on a local basis to help the UK become more resilient in facing this current pandemic and any future pandemics which may come to fruition. As part of the move into the UK Medicom has decided to open the base of operation within Northampton in order to use this as a separate location to try and reach all parts of the UK. Medicom used Hawkins Hatton Corporate Lawyers to assist it when taking the lease of premises (112,750 sq ft) at Brackmills Industrial Estate in Northampton. Hugues Bourgeois, a director of Medicom said “We had a short window in which to finalise the deal though it was important to find a firm that could move at the pace we wanted to and ensuring that they covered off the commercial points in a manner which was not tied up in a legalistic wrapper. We found that firm when we instructed Hawkins Hatton” Colin Rodrigues, Corporate Partner of Hawkins Hatton Corporate Lawyers said “It is always hard to meet the expectations of new clients but at Hawkins Hatton client service is at the forefront of everything we do so to us it is always pleasing when we are able to assist clients with achieving their end goals which is in our legal DNA”

PDQ for PDX

PDX Logistics has for 26 years been synonymous for warehousing, distribution and logistics, as such, it was natural for Möbile to have targeted PDX Logistics as a natural fit for its expansion beyond the West Midlands, in order that Möbile can better serve its customers in the South of England. Möbile, throughout its history which dates back to the late 1970s has continued to expand its business, but it has maintained its ethos of “People.Powered.Logistics”. Matthew Marriott, managing director of Möbile, said “there is no wizardry involved in the formula of People.Powered.Logistics, it is just simply hard work and commitment and ensuring you do the right thing every day”. Möbile was assisted by Arran Jones of MDP Accountants who said “I have worked with both Matthew Marriott and Ian Jolly of Möbile and I have found them to be quite visionary in their sector.” Hawkins Hatton Corporate Lawyers also assisted Möbile by delivering what was a difficult transaction in a clear and concise way and avoiding the obstacles which could have beset the whole deal. Colin Rodrigues of Hawkins Hatton said that “Matthew Marriott and Ian Jolly’s sorcery with their ethos and its combination with PDX will transform Möbile into a national player in its sector in the post-Brexit years.”

A Gripping Deal for Pilers

Maun Industries Ltd has a long history dating back to 1944 and is the UK’s largest manufacturer of pilers and precision hand tools. It has just continued their innovation and secured its future growth for the long term through Tim Scholes. Tim Scholes, whose background has always been business, has continued his entrepreneurial streak by closing a gripping deal for Maun Industries. Tim has 35 years of project-based consulting experience, which he is going to bring to bear within Maun Industries. Tim was attracted by Maun Industries’ combination of specialist products and highly skilled workforce which he wants to help continue to develop by introducing new product ranges and customers through innovation, design and technology. Tim was assisted in this transaction by Pippa Hawkes of BSN Chartered Accountants, who helped Tim structure a deal which worked for all parties. Pippa said that “with Tim’s experience, Maun Industries is certain to grow and increase its global footprint beyond the 200 countries which it already services.” Hawkins Hatton Corporate Lawyers also assisted Tim by ensuring the deal was dealt with in both a timely manner and with a commercial outlook. Corporate partner, Colin Rodrigues said “knowing Tim and his capabilities, he will not only continue to nurture Maun Industries, but he will ensure that its evolution will be world beating to guarantee that Maun Industries is synonymous with quality worldwide.”

Click-Tax

At the moment I am not in any way trying to be a soothsayer or predict what is going through Richie Sunak’s mind. Being a corporate lawyer, I come across businesses from many different sectors within the UK’s economy. From what I have seen I consider the engine for UK PLC is too fragile to suffer major changes from increases in tax. The reason why I mention this is because not only does UK PLC have to service its borrowings but these have to be reduced if we are ever going to balance the books. Accountants can say with authority that taxes are raised through income, national insurance, sales, property, corporations as well as increases in capital to name but a few. However, in reality the main tax take comes from income tax, national insurance and VAT. You can always look at other areas of tax such as corporation tax but in reality, would Richie want to risk reducing foreign direct investment into the UK by making it more unfavourable in tax terms compared to other competing countries. This means you are only left with the trio of income tax, national insurance and VAT as being the main leavers to increase tax revenues. From this trio there is probably not much more scope to look at the highest earners whose 1% accounts for about 27% of all income tax in the UK, whilst increasing the average workers tax may not be conducive to votes in a ballet box. This means that it will come back to VAT or national insurance. I appreciate a lot of tinkering can be done around the edges of tax collection from different sources but in reality, will the UK after Brexit through Richie Sunak go through with online sales tax to help high streets as part of a wider review into business rates reform. There is no doubt there has been a significant shift in the last five years with regard to consumer habits from bricks and mortar to online. It is this online sales tax that if correctly structured could help plug the hole in the UK’s finances. This is the question especially given the push back from the USA on the French digital services tax legislation which was signed off by President Macron in July last year and which proposed a tax of 3%. In fact, this tax has been suspended until the end of this year due to the USA immediately resisting it saying the tax was aimed squarely at major American tech companies including Google, Facebook, and Amazon. Just think, will Richie be able to impose the sales tax and hope that the UK can still strike a free-trade deal with the USA especially given that it looks like the talks on the UK EU trade deal will not prove fruitful. What is clear is that this online sales tax will have to come into force at some point whether it is through one of the EU countries or through the UK. Given that the UK economy is consumer led it seems to me that the UK is the obvious stalking horse for such tax and if we are no longer part of the EU a sensible discussion with the USA as part of a free-trade deal could secure that tax within the UK.

Legal Tie Up

Rik Pancholi of Pattersons Commercial Law, based in Ratby just outside Leicester, orchestrated the merger of his firm with Ashteds Solicitors who are also based in Leicester. Pattersons Commercial Law is renowned in the East Midlands for Corporate and Commercial legal expertise within sectors ranging from Accountancy, Financial Services and Retail to E-Commerce and Healthcare businesses to name but a few, Ashteds has maintained a strong reputation in Dispute Resolution and Corporate Insolvency lead by Ashwin Mody. Rik Pancholi (MD of Pattersons Commercial Law) commented that “I followed my instincts when looking to merge with Ashteds as I always wanted to find another firm which would be a perfect fit for Pattersons Commercial Law in order to further compliment the advice we offer to our clients.  Ashteds were the perfect marriage partner and together we will be stronger in the depth and breadth of advice we are able to offer going forwards under the Pattersons brand.” Ashwin Mody (MD of Ashteds) said “I have been in the legal sector for over 25 years so you can say that I have seen many things in my career but like the old adage goes, doctors make bad patients so I decided when embarking on this merger, to instruct Hawkins Hatton Corporate Lawyers to deal with the sale as, having made the big decision to merge with Pattersons Commercial Law, I was content to leave the contractual negotiations with them.” Colin Rodrigues (Corporate Partner at Hawkins Hatton) said, “unlike most transactions where from time to time you find problems can escalate into deal-breakers, there was a real desire from both Pattersons Commercial Law and Ashteds to ensure that nothing should be a problem which could not be resolved and looking at the personalities and make up of both firms, I can genuinely say that the merger of these two firms is not a marriage of convenience but instead, the coming together of two reputable legal firms to create a formidable legal force within the East Midlands.”

Chambers Real Estate 2020 UK Guide

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Années folles

We started the year coming off a high from a business point of view knowing that the 2019 election gave Boris his majority which would put an end to the uncertainty of Brexit on the basis that the political paralysis was now broken. Then came the talk of the Budget and the pre-tax planning about removal of ER (aka Entrepreneurs Relief) which would hit SME owners hard. The results of this speculation consumed many professionals, both accountants and lawyers alike and took over as the main driver for their clients.  This concern did not prove unwarranted as the lifetime allowance for ER was reduced from £10m to £1m. This means that in a business sale in excess of £1m, the proceeds will be taxed at 20% and not 10%. This even made my speculations to the ER changes look too conservative and reminded me of a valuable lesson of always preparing for the unexpected. This is what those clients did in their pre-budget planning where they were able to do so. The detail of the changes to ER has been lost by the press in their budget commentary by the talk of emergency funding for the NHS, the ability to claim sick pay, business interruption loans, business rates being abolished for firms within leisure, hospitality and the retail sector and such like. But all of this is needed as you do not need to be an economist to know that the UK growth in 2020 will be severely curtailed as a result of the Coronavirus and will most likely be the slowest since 2009 as a result of the banking crisis. That brings me back to the point I always focus on which is productivity and how to do more with less. Businesses should learn and heed well the lessons taught from the Coronavirus, as businesses still need to function and deliver goods and services but with a contracting workforce so productivity improvements will have to be delivered if businesses are to survive and come through the shock of Coronavirus. It is at times like this that spark innovation as business has to “think out of the box” to deal with situations which it normally does not need to face maybe because a lot of businesses were within their own comfort zone. The message to businesses is to focus on the “bounce-back” and keep applying those productivity improvements and innovations in order to ensure that this decade can try and emulate some of the “Roaring Twenties” in the last century through the collaboration between the political elite and business to engender growth in order to prevent this decade from being another lost decade. 

Good Deal

Marex Spectron completed another acquisition. This time it was for a London-based Tangent Trading Ltd (‘Tangent Trading’). Tangent Trading is a leading scrap metals trading firm which can trade its roots back to 1985. Tangent Trading specialises in non-ferrous scrap metals trading, with a focus on copper and aluminium markets. A long-term member of the London Metal Exchange, Tangent Trading has an international network of customers and suppliers across Asia, Europe and North America. Tangent Trading will continue under the leadership of Darren Leigh and Robert Borland, who join Marex Spectron’s global metals franchise, which boasts one of the most experienced teams and broadest product ranges across base, precious and ferrous metals worldwide. Ian Lowitt, Marex Spectron Chief Executive, commented: “The scrap metal market is a new and exciting direction for our business as we continue to invest in and grow our market-leading metals franchise. This acquisition is part of a strategy focusing on expanding our offerings and developing our business in sustainable commodity sectors. We believe the recycled metal markets are poised for growth as environmental sustainability becomes more important to clients. Given the scale of our global network and balance sheet, there are significant opportunities to further develop the Tangent Trading business – making it an excellent fit for Marex.” Darren Leigh, CEO of Tangent Trading added: “We are excited to join the Marex Spectron family. Not only will we have access to new technologies and services, we will be in a great position to further enhance, strengthen and expand our global offering.” Tangent Trading were assisted by Hawkins Hatton Corporate Lawyers who have worked with Tangent Trading for several years and have detailed knowledge of their background and operating model. Colin Rodrigues, Corporate Partner of HH said “as with any deal, time is the biggest enemy and there was a lot of ground to cover in a very short period of time, yet this was achieved as there was a true meeting of the minds between the parties”. David Price, Director of Price Pearson Accountants commented: “it has been a pleasure to work with Tangent Trading from the outset. Price Pearson have a long history with Tangent Trading and have a special affinity for them. We are delighted to help achieve the shareholders goals of continued growth and expansion through this acquisition by Marex Spectron.

Exit Brexit Growth

As we can finally see an end in sight to Brexit, we must now start to look to the future of the UK economy and try and influence the best way for the UK to deal with the challenges it will face in the post Brexit world. This leads me to an issue which I always express a strong opinion about as it is something I look to improve within my own firm on a continuing basis. In a word it is “productivity”. This has long been the curse of the UK economy as there are inefficiencies in what we do in the UK at work. Will the UK get back to the growth it achieved in the last decade? This was over 2% in real terms which can be translated down into the doubling of living standards every 35 years. But since the turn of the century, the UK growth figures have been well below this. Economists have mused and politicians have pondered over the reasons why productivity has been so low in the UK. Consensus has centred around the fact that the UK has been more focused on ensuring that (since the last financial crisis) those who are able and willing to seek employment gain employment and so the UK is close to full employment. Another conundrum is that, notwithstanding we have almost full employment within the UK, inflation is still at an all time low. In the post-Brexit world with the UK no longer being the magnet it once was for the younger mobile Europeans; the UK may not continue with this full employment so now the UK must concentrate all its efforts on productivity otherwise inevitably firms within the UK will have to raise prices to deal with demand. So, here is hoping that in a bid to achieve growth after Brexit we all play our part in lobbying those in the corridors of power so they do not just stop at HS2 Phase One but also agree to Phase Two. We need to encourage the government to give the green light to the building of the third runway at Heathrow and put more effort into improving the railways, rolling stock and the network of roads. Though in my view, what will make the most difference to productivity is 5G as this has the capability of improving connectivity and so hopefully be the long-awaited boost in the arm to UK plc which can make the real difference to the UK’s productivity. We can all do our part and we should ensure that businesses continue to invest in plant and training for future capability. But as with everything, big or small, it comes at a price. So, if there is an increase in taxes in the fourth coming budget, as some suspect, let’s hope that the extra revenue is put to good use to create this extra capacity for the UK’s post Brexit economy as a spring board for future growth.

No Toil for Tollgate

Tollgate Products Limited recently went through a management buyout under which the existing owners principally led by Edward Sneade (all of whom helped steer Tollgate over the last 45 years) made way for the existing management team to come in and continue to build on Tollgate’s success and experience. The management team led by Donna Nicholas, included Darron Shepherd, Phil Shieber and Angela Thompson, all of whom are long standing employees of Tollgate and have contributed to it being a leader in the UK within the cubicle hardware sector. This status has been achieved through Tollgates’ excellent service and flexibility whilst never compromising on its ability to be responsive and providing unrivalled customer support. Donna Nicholas said “as a team, Darron, Philip, Angela and myself, have always worked together to help deliver the results and customer service that people expect from Tollgate. Therefore, for us, it is the start of a new journey and something which we have long relished and are keen to ensure that we fulfil.” In order to facilitate Tollgate’s MBO, the management team enlisted the help of Hawkins Hatton Corporate Lawyers and HSBC UK Bank Plc. Stuart Smith, an experienced senior commercial manager within HSBC led the transaction on behalf of HSBC and said that “as with any MBO, it is all about the management team and their ability to work together as a team in order to put the needs of the business first. Having looked at Donna and the rest of her MBO team, I am confident in saying that they will continue to make Tollgate a success and ensure that it achieves the recognition that it deserves for its superior products and services.” Colin Rodrigues (Corporate Partner of Hawkins Hatton) said “I have long known that the name and reputation of Tollgate is that of a one-stop-shop for cubicle and architectural hardware. What I did not appreciate is how vast and diverse the business of Tollgate is and having worked with Donna and the rest of the MBO team, I can clearly see that their ambitions for the success of Tollgate will be realised and thereby create an even stronger and better business focused on its strong product range and loyal customer base.

Déjà vu

I recall writing an article last year headed “Jaw Jaw Not War War” based on that famous quote from Winston Churchill when talking about potential international trade wars. It is déjà vu that at the start of 2020, when looking back at the tension in 2019 that existed between the US and China over trade and how this started to affect the world economy as a whole, that we are back here again, but this time between the US and EU, whilst China and the US have started to resolve their trade differences by the “Phase One” deal. The trade war is now a lot closer to home as this month, the EU and the US are meeting in America to discuss a long list of trade issues which are causing tension between the two trading blocks. This has the possibility to become the biggest news story of 2020 if agreement cannot reached quickly as it effects products as esoteric as artisan cheese and single malt whiskey. The tension on the US side has started to build up due to the French digital service tax (“DST”). The DST is a 3% tax on the revenue of digital companies providing advertising services within France, which was given effect by President Macron in July 2019. To avoid a drastic outcome that would more likely effect the EU more than the US, it is hoped that Phil Hogan, the EU Trade Commissioner, will be able to get a reset on EU/US trade relations, but this will only be achieved if they can sort out the big issues that have caused the US to impose these tariffs. These tariffs have come about due to the unease felt by the US over aircraft subsidies that have been given by the Europeans to Airbus and the fact that now Airbus has just overtaken Boeing as the biggest aircraft manufacturer in the world by the number of planes sold. If progress cannot be achieved, as I said, it will be the EU that suffers more because of the very nature of the US economy being more insular and closed, as opposed to the EU which is more driven by export. As with everything over trade, any resolution will be politically driven, especially given the backdrop of the pending election in the US and Trump’s mantra of “America first”, so if anything, the EU may only in reality, achieve a mini deal, a similar deal to the one that Japan has recently done with the US and/or a deal similar to that with China the “Phase One” deal, though only time will tell.

A Towering Success

It was at the beginning of 2019 that HH launched its London venture. This was undertaken in the first instance by an inaugural dinner held in the Palace of Westminster at which some key contacts and clients were invited. Since the launch earlier this year, HH has continued to build on expanding its footprint within London. This has also been demonstrated by its recent event which was held in the Engine Room at Tower Bridge at which over 60 key contacts attended including some famous names such as Bobby Zamora and Mark Noble as well as the “tax timelord” Peter Rayney (Deputy President of the Chartered Institute of Taxation). HH has concentrated on developing its relationships with its London contacts by using the same tried and tested formula of good client service and transparent fees all of which is framed around commercial advice. HH has not taken its focus away from its Midlands roots and has continued to also expand its professional contacts and client base within the Midlands. All of this has meant that HH has been involved in a number of key transactions which have earned their place as being some of the major or prestigious transactions of that kind in that sector within the Midlands region. The three main areas HH continues to focus on are; M&A, Real Estate and Dispute Resolution. HH works well with other firms in respect of employment and private client work. HH has gained recognition for its areas of specialisms from clients, professional contacts, including accountants and financial institutions. HH is going to commemorate its 15-year anniversary next year, it has been a long journey in a short time and it has been a long ladder to climb. Colin Rodrigues, Corporate Partner said: “you have to keep moving forward as time does not standstill and in these ever-changing times, you are only as good as your last deal. In recent years, we have seen many people in firms come and go, as long as you stay true to your principles you are always able to move forward and innovate which is the key to being an effective law firm”. Harminder Sandhu, Managing Partner said: “in 15-years, I have seen so many changes, but change is always good as it keeps everybody on their toes. I still have a passion for law and as long as this continues, I will always strive to ensure that HH continues to achieve the goals and recognition that it deserves.” https://www.hawkinshatton.co.uk/wp-content/uploads/2019/11/hh-birmingham-post-nov-2019.pdf

Funding for schools

Schools Advisory Service (SAS) is the UK’s largest insurance services provider within the educational sector, insuring over 4,000 schools nationwide. The reason why SAS continues to be the market leader in its industry is because SAS puts relationships with its customers, at the heart of its business model. John Brady, (the MD of SAS) said “I have always ensured that my unique understanding of insurance and specialist support services required by customers within the educational sector has meant that I can ensure that year on year, SAS will continue to meet the needs of our customers and so, remain relevant to them as it is our goal to ensure that we support them.” To this end, John Brady turned to Shawbrook Bank rather than the usual list of high street lenders, as he wanted somebody who understood his business in detail, as he believes that whenever you do business, relationships are the key element. With Shawbrook Bank’s support, SAS will continue its growth so that not only will SAS remain relevant to its customers, but it will also become synonymous whenever anybody talks about insurance within the educational sector. SAS utilised the services of Hawkins Hatton Corporate Lawyers who have, for a number of years, been the cornerstone of legal support within SAS’ business. Colin Rodrigues (Corporate Partner at Hawkins Hatton Corporate Lawyers) said “I agree with John that relationships are a cornerstone of business dealings and it has been a great pleasure for HH to help John in a small part in his journey to ensure that SAS achieves and continues to achieve all of its goals within its business.

A new extension for AMG

AMG is the oldest, privately owned building contractor in Wolverhampton whose heritage goes back over 120 years. In its long history, AMG has seen many changes within its industry and weathered many storms. Richard Green (the MD of AMG), wants AMG to continue its growth and expansion of the company into the future. Stanford Construction (“Stanford”), was founded and run by Nigel Turner. Stanford has a strong reputation within the construction industry for trusted service and satisfied customers. Richard Green felt that Stanford would be a good partner for AMG as it shares the same core values as AMG. With AMG’s focus being on larger contracts up to £10m, Stanford is a perfect fit to the AMG stable as it will compliment clients of AMG who need services on small works of up to £1m in value. AMG has had a long association with Hawkins Hatton Corporate Lawyers and it was only natural for Richard Green to ask them to continue to provide assistance when he decided to embark on this venture of taking Stanford into the AMG stable. Richard Green said that having good advisors around you makes corporate deals goes easier in the same ways, as having good contractors allows projects to run smoothly.

Hawkins Hatton Cool Britannia dinner at Tower Bridge on 31 October 2019

Photographs of the attendees of Hawkins Hatton Cool Britannia dinner at Tower Bridge.      

A Brisko Deal

Taurani Holdings Group (THL) is regarded by everyone in the industry as one of the UK’s most competitive and custom, steel stockholder specialists specialising in wholesale, large quantity and bulk-order steel supply. Its flagship company Brisko Metal resources has already got steel supply capabilities and its dispatch depot in Ipswich provides competitive steel supply for UK and global buyers, clients and customers. In order to continue the growth of the group, it has recently taken over ParkerSteel, whose existing business within the UK means that the group can now supply a wide variety of steel and aluminium products to industries across the south of England. ParkerSteel built its reputation on high quality steel designed to suit the needs of various manufacturing and construction industries. Given the synergies between Brisko and ParkerSteel, it made sense for THL to look to ParkerSteel when it was looking to expand its operation within the UK. Lalit Premchandani, the MD of Brisko, said that “with the combination of the two businesses now working together as one, we will be a formidable presence within the steel industry, able to meet customer’s expectations and requirements for steel processing services with tight deadlines”. THL was assisted by Hawkins Hatton Corporate Lawyers, Colin Rodrigues, corporate partner said that this was a particularly difficult deal, given the size of the transaction, the number of locations through which they operated, the number of employees and the very short window within which we had to complete the deal. But as with everything, provided that a logical approach is taken, difficulties can be overcome and a swift completion was achieved.” Ed Thompson, from Lancaster Haskins LTD, who provided corporate finance advice to THL, said that “every deal has its unique attributes and this one was no exception, however, working as a team, we have managed to achieve the outcome that everybody was looking for.”

A new specialism

Jerroms Accountants and Business Advisers (“Jerroms”) have recently embarked on a new journey which has seen them move from their old office to a new purpose-built building in Lumaneri House, Blythe Valley, Solihull. Jerroms’ journey has been the vision of its four directors; Mark Eden (Managing Director), Lucas Markou, Neill Currie and Richard Horton who have spearheaded Jerroms into becoming one of the go to firms in the Midlands for business and financial solutions which is not based in Birmingham City Centre. Jerroms continue to further their journey, having recently merged with Blue Sky Corporate Finance, headed up by Paul Heaven, to gain their own in-house specialist corporate finance division. This complements their existing service provision and means that Jerroms can now offer a full suite of financial and business advisory services, from accountancy and tax planning to corporate finance and wealth advice. Jerroms has grown significantly over the last few years and during this time they have been aided by sound commercial advice from Hawkins Hatton Corporate Lawyers, who have assisted them in achieving their goals.   Mark Eden said “we aim to position Jerroms as a shining light in the world of business advisers within the Midlands and it is good to work with a strong legal team”.

The future is bright, the future in white goods is Axon

Axon has long been regarded as the UK’s leading wholesaler of quality catering equipment since its inception over 30 years ago. Axon’s reputation is legendary given its ability and expertise to source the highest quality and widest range of white goods and catering equipment for businesses far and wide. Axon has always understood that being a trade dealer means that you cannot simply compete on pricing, you need a service. As such, Axon supports its trade customers every step of the way to ensure that the process for them in purchasing goods, is made as smooth as possible and that their orders are efficiently dealt with. Jan Allen, who has been with Axon for many years has now led the management buyout through which she is now going to help continue the smooth running of the business and build on the strength and core values, which Axon has always had. Jan Allen said: “in the same way that Axon is a reliable partner for their trade customers, we needed reliable partners to help assist us through the process and we found that in Chris Steele and Harvey Owen from Nicklin LLP as well as Colin Rodrigues from Hawkins Hatton Corporate Lawyers”. Colin Rodrigues said: “any management buyout is fraught with difficulties and just because the parties know each other well, it does not mean that there are no obstacles to overcome. Sometimes conversations are more difficult with people you know than third parties, but Jan was able to negotiate the roadblocks to help achieve a successful outcome”. Chris Steele and Harvey Owen said that “whenever you are looking to buy, figures play a big part in the transaction, but provided that you have sensible cashflows and protections which are based on a solid foundation, then you tend to find that everything will go according to plan subject to always having an element for contingencies”.

Momentous Ruling

We have all heard and digested the news that the Prime Minister acted “unlawfully” when he took the decision to prorogue Parliament. Since then, each faction within the Brexit debate has sought to interpret the judgment to support their point of view. All that aside, there is no getting away from the fact that the judgment is a momentous one which constitutional law students in years to come will get to know in detail. In order to cut through the fog that is the political cries surrounding the judgment (which has led to questions as to whether there should be a written constitution and whether the role of the monarchy has ceased), it may be easier to examine how this quagmire arose. If our own written constitution is not at fault, then what is? Is it our politicians or even the electorate itself? These are strong statements made not with a view to provoke anything more than a debate and thought with the reader. Our political system is based on “first-past-the-post” in terms of voting and the long-held belief is that this creates a strong government. However, since the credit crunch in 2007 political views have been less polarised until the rise of the Brexit debate. Even political parties who are diametrically opposed to each other, worked together and formed a coalition (the Tories and the Liberals). Is this the source of the current political troubles as shown by a bitterly divided House of Commons (a division which is not just on political lines)? Yet the Commons is united on one front, namely its opposition of the government given that Boris to date, has lost every one of his key votes since becoming PM. The obvious question to the “man on the Clapham omnibus” is; why does the Commons not throw out the government and call for a new election? Clearly you expect the government to call for elections but as a result of the Fixed-term Parliaments Act (“FTP”) the government needs a two-thirds majority and are being held back by the Commons. On the face of it, this does not make sense but assuming the FTP is repealed (a big assumption) this would give discretion back to the Prime Minister to call an election or allow the majority of MPs to change the government or allow for elections where a vote of confidence by a government is lost. At present the FTP is preventing all these options hence if it were not for the FTP, we would not be in this situation.

The Title of my New Book

I usually prepare an article a week in advance of having to submit it on the basis that I take my inspiration from the latest world events and how they affect UK PLC. This has been one of those rare occasions when knowing what has happened in the last 14 days and what is yet to happen, I know everything I am commenting on will be over taken by new events. “Do or Die” or “Dead in a Ditch” could be the book titles where the “Big Boss” called Borris is the lead who uses a secret weapon called the “Proroguing Missile”. Who could have predicted the events that have just unfolded in parliament? Could this also be the basis for a real-life soap opera based on political intrigue, with the audience being the EU and the rest of the world? Staying with the book analogy, the main theme is based around rivalries of three families who are vying for control. The Tory family, have “clipped” their critics tantamount to a “mob hit” and cleared out dissent by removing the whip from 21 MPs when they least expected it. Whilst the other fractious family known as Labour are trying to coalesce around their “Don” Corbyn and the smaller SNP family, cannot be ignored as they are using the adage of “the enemy of my enemy is my friend” when having had a “sit-down” with the Labour family.  The power struggle within the Labour family is still rumbling on beneath the surface meaning that they are not ready to take on the Torys in the “shoot-out” known as the election. Will the Labour family continue to play for time with the SNP under their new alliance or will it break down if something more unexpected happens and we find that the proroguing missile was not the only new weapon in Boris’ arsenal? I will leave it to you to speculate whether these other weapons could be the “Big Boss” stepping down and allowing the Don to seek the extension from the EU knowing that because the Labour family is divided the Don may be “whacked”, not by his family but by the “gangbusters” known as the electorate when the election inevitably happens.

Free Trade Rules Africa

The countries within the African continent are on the verge of entering into a new deal for free trade, which will hopefully be the spur that drives the continent into realising the potential that has always existed within Africa. Since the roll back of the colonial tide in Africa, cohesion between the African countries left behind has been difficult due to rivalries between nations and political divides some of which have never been reconciled. However, in recent times China has focused in on the African continent with the view to gaining access to the rich resources of the African continent. Over 80% of Africa’s exports are shipped overseas, mainly to the European Union (EU), China and the US. This new free trade deal has a very original name being ‘’The African Continental Free Trade Area’’ (“AfCFTA”). With the back drop of Brexit, will this give the UK, with its historic links in the African continent, an opportunity to find many new trading partners sitting within one trading block? The purpose of AfCFTA in their words is to “Accelerate intra-African trade and boost Africa’s trading position in the global market by strengthening Africa’s common voice and policy space in global trade negotiations.” Nigeria has just joined AfCFTA along with South Africa. This means that the largest nation in Africa and the most developed nation in Africa are now part of AfCFTA, making up 52 out of the 54 nations in Africa, giving access to a population of over 1.25 billion people. It is hoped that in time when AfCFTA has completed the operational phase it will be a formidable force on the basis that it will be the largest free trade area in the world allowing intraregional trade between the African nations to grow from around the existing 15% to maybe replicate the figures between the countries in North America which is currently about 40% and in Western Europe which is about 60%. AfCFTA will obviate the need for VISAs and break down barriers of trade. There will always be barriers to trade though I do appreciate there will be tough negotiations trying to agree and adopt common standards, but if countries like Nigeria can put aside their concerns about being a dumping ground for other low cost African nations, there will be a bright future for AfCFTA.

Hawkins Hatton Newsletter July 2019

Hawkins Hatton Newsletter July 2019

Never too Big to Care

John Brierley, (MD of Signis Group) spearheaded the formation of the Signis Group back in 2014 by bringing together various businesses including “tri.x” and “Reconstruct”. The purpose of this group was to provide both online procedure manuals as well as providing safeguarding, child protection training, consultancy and independent children's services in one entity. John had a lot of knowledge and experience within the social care sector and he wanted to continue to grow the group. That is why he felt it was a natural step for him to find another partner for the Signis Group. The new partner is Carter Brown which John knew was fast paced and dynamic enough to help continue the growth of the Signis Group. Carter Brown is based in Mansfield and has its roots within children and family work. Carter Brown’s ethos revolves around providing a high-quality service and offering specialised expert witness assessments for family law cases. It has developed and expanded across the UK to become the largest provider of multidisciplinary assessments, widening its specialism to include reporting directly to Local Authorities and within Criminal Law, Asylum and Immigration, Mental Health Tribunals, Panels and Pre-Proceedings. Hawkins Hatton assisted John Brierley and Signis Group in the legal process. Colin Rodrigues said that: “having worked with John for over 10 years on various matters it has become clear to me that it is not just a question of having a vision it is a question of delivering that vision and making it become a reality and John has this unique ability to do both.” John Brierley said that: “having formed the Signis Group and ensured that it was relevant within the sector of social care for children I wanted to ensure that there would be continued success so it seemed natural to pass the baton on to Carter Brown who would help the Signis Group grow and expand to have a national footprint”.