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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

hh birmingham post nov 2019

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.”

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”.

Brexit Trumped

Donald Trump has always been the person who courts controversy regarding himself as a plain speaker and a disruptor of the status quo. His state visit to the UK this week will be like a large pebble being dropped in to a pond that is the current political turmoil surrounding Brexit with repercussions being felt long after his visit. Prior to his visit, Trump ordained Boris Johnson who is regarded as the darling of the conservative party and favourite to be May’s successor ignoring the other 12 candidates standing alongside him. Assuming that Boris becomes the next leader of the conservatives and so Prime Minister will he achieve change given the arithmetic that May faced in Parliament will not change. I understand that negotiations can be difficult and there is merit in tackling the difficult subjects first. However, there are two main elements for the UK leaving the EU and perhaps May should have insisted on discussing the divorce bill and the future relationship in tandem, rather than making one dependent on the other as demanded by the EU. Trump, even on his first visit to the UK said that the UK should not pay the EU £39 billion that was demanded but instead the UK should “walk away” if it does not get what it wants. Parliament is paralysed as it cannot agree on what it wants or does not want other than there is a desire that there must be a deal with the EU.  But is Trump right? Should the UK walk away as even last week Sir Peter Marshall (former Assistant Secretary-General of the Foreign and Commonwealth Office) ,said again “by the EU insisting on discussing the financial settlement first and phasing the discussions it has broken the rules within Article 50 which provide that the EU should negotiate and conclude any withdrawal agreement taking account of the future relationship with the Union.” Thus, there should not have been phasing of the discussions. Will the next Prime Minister accept the EU’s redline that the withdrawal deal cannot be reopened or will he/she take Trump’s advice and walk away if discussions are not reopened knowing that there is then only the WTO rules to fall back on. Ultimately, will the next Prime Minister be a disruptor or be someone who maintains the status quo

Currency: How Much is It Worth?

Colin Rodrigues, the Managing Partner of Hawkins Hatton Corporate Lawyers explains the value of currency in his latest article "Currency: how Much is it Worth?" A link to the same can be found here: Made in the Midlands

How Much is it Worth?

The value of a country’s currency is an indicator as to how that country’s economy is perceived by the rest of the world. Put simply it is the principle of supply and demand. The stronger the currency is the more that currency is in demand. Thus, if a currency is in demand it means that people require that currency for many reasons including facilitation of their investments within that country. But does this also mean the stronger the currency the stronger the country’s economy is? As with everything in economics, the answer is never clear cut as one question leads to another. Looking back at history there have been periods of economic growth in countries when their currency has been devalued. Does this then mean that the devaluation in sterling since the referendum will lead to another economic boom in the UK economy? To answer this question consideration needs to be given to the structure of the UK economy and how strong it is in services and how much weaker it is in manufacturing, borne out by the fact that there is a current account surplus in one and a deficit in the other. When looking at a current account deficit this is the difference between the exports and imports. Thus, in reality this is how much the UK owes to the rest of the world because it is not producing sufficient goods and services to trade in order to meet its own demand for goods from other countries. The lower value of sterling will make cheaper UK exports but you still have to take your goods to market in order to sell them and if nobody knows your goods are for sale it does not matter how cheap they are nobody is going to buy them. So even if you do get to market there will be a time lag between the intention of investing within a country and reaping the benefits of the same notwithstanding that there will be a lower cost of production and labour. Will this investment into the UK lead to better productivity something which the UK has suffered from? London has long been a world financial centre, does this mean that with Brexit the UK will no longer be the spearhead for foreign investors when looking to find a foothold within Europe, whether in respect of services and or manufacturing. Global banks have already started to move operations to Paris, Frankfurt, Amsterdam because there may be knock on costs to importing UK products and services through tariffs. But the know how surrounding financial services which has been built up in London is not easily going to be replicated abroad.   I have talked about the value of sterling, current account deficits and what you cannot forget is a country’s credit rating, as this effects the ability for a country to borrow in order to fund its current account deficit.  An obvious point is that whenever a currency falls it does make imports more expensive. A good thing some would say as it encourages consumers to buy home grown products. But over the last 20 years the UK economy has changed and evolved to include “just in time” delivery and, as such, now a large percentage of food and energy is sourced from abroad. This immediately means that unless wages go up the money in consumer’s pockets is worth less because disposable income will have gone down due to higher prices for food and energy. Will this mean that if people are feeling poorer then the consumer stops spending which in turn causes a weakening in the UK economy as the UK economy is consumer led. Overall, the lower value of sterling will have advantages to exporters but only if they continue to invest to improve productivity through skills and training and capital investment, otherwise, the UK economy will find that this under investment will lead to a systematic slow-down in the UK’s ability to compete with other faster growing economies.

How Will Brexit affect Mergers and Acquisitions?

Businesses planning to expand or restructure through M & A in 2019 will do so against a background of changing political, trading and social conditions. The fear is that Brexit will lead to a recession in Quarter 4 of 2019 and bring an end to the recent boom of the mid-market M & A sector. Uncertainty is the challenger of business and still questions remain as to whether the UK will leave with a no deal? Will there be a second referendum? Will there be a change in UK government? What will the trading relationship with EU look like? What will be the impact on the pound/exchange rates? Whatever the responses to these questions, on 29 March 2019 businesses will need to adjust, adapt and embrace the changes and during this transitional period it is inevitable deal volumes will fall. Hence 2019 is predicted to see M & A at somewhat of a standstill. Major Banks have announced their exit from London to cities such as Paris, Amsterdam, Frankfurt and Dublin. This will lead to a loss of £700 billion of financial assets in Quarter1 2019 to insurers and other financial services companies in the UK. Add to this the fact manufacturers with significant capital investments in the UK (such as Nissan) are contemplating whether they remain committed to the UK or shift their operations elsewhere due to the uncertainty of Brexit. That said the Brexit situation is not the same as the situation UK businesses found themselves in during 2007/2008 as a consequence of the global financial collapse. There are certain UK sectors which will be unscathed by Brexit and it will be “business as usual”. These are markets which have little or no recourse to Europe in relation to imports/exports or workers. The expectation is also that the Private Equity market will not be impacted by Brexit as its primary consideration is the strength of a management team. The UK is an important contributor to the world stage and this will not change due to Brexit. The UK continues to lead in technology closely behind the US hence making such companies attractive to acquisition. The UK is also rich with companies in the SME sector where there is no natural succession exit hence the companies will need either a trade exit or management buy out. The outlook for M & A in the UK therefore remains promising despite the challenges faced.

Hawkins Hatton Newsletter May 2019

Hawkins Hatton Newsletter May 2019

Corporate M&A Trends and Developments

As contributors to Chambers we have written an article on the latest trends and developments within the M&A Market, the link to the article can be found here: Corporate M&A Trends and Developments

More Space for AE Aerospace

AE Aerospace has just achieved its 5th anniversary since its MBO in January 2014.  Hawkins Hatton Corporate Lawyers were retained by AE for the MBO and since then, it has acted in the purchase of another company and various building acquisitions. Peter Bruch, MD of AE Aerospace said that “Hawkins Hatton were recommended to us and we have been delighted that they have been part of our team.” AE Aerospace is a world-class supplier of high-quality precision machined components to the aerospace, marine and defence industries.  The company supplies across the Civil Aerospace supply chain to Rolls Royce, UTC / UTAS, Collins Aerospace, Goodrich, Siemens & Moog, with products being used on Airbus, Boeing and Bombardier aircraft.  Additionally, in relation to Defence Aerospace, supply extends to BAE Systems Tornado, Lockheed Martin JSF and Eurofighter.  Supplies in Defence Naval include on Type 45, Type 26, QE Class Aircraft Carriers and USA Littoral Combat Ship. Since the MBO, the company has grown sales seven fold and more than doubled staff, developing a positive reputation in the market, leading to an increasing orderbook and the need to move to a larger facility in Network Park, Duddeston Mill Road, Birmingham. Colin Rodrigues from HH said that “AE Aerospace has made significant improvements to its business over the past few years and we are very happy to put our name behind them”. Peter Bruch went on to say that: “The new property is four times larger than before, we have increased our manufacturing capacity by 50% and we plan to double our turnover in the next 3 years.  We look forward to completing more projects in the future with Hawkins Hatton as our Corporate Lawyers.

More Turmoil on the High-Street

It was just last week that we heard about Debenhams being taken into private hands by its lenders. This means that the PLC has entered into administration. This is just another casualty on the high street during what are difficult times, especially given that Brexit is also fuelling consumer fears. It is unfortunate that Mike Ashley was not successful in his bid to buy Debenhams. He had claimed to have a solvent solution and openly stated that he would keep open the majority of stores and protect 90% of the jobs within Debenhams. Mike Ashley’s interest stemmed from the fact that Debenhams would complement his purchase of House of Fraser. Mike Ashley is complaining about the board of Debenhams not taking their fiduciary duties seriously by not exploring his offer and not including him in any discussions around the pre pack.  The irony is that he purchased House of Fraser and Evans Cycles through that same pre pack process. Many people are not going to know or understand how one day a company can be trading and then the next day it goes into administration but continues to trade under the auspices of a different owner. In essence a pre pack administration is a form of insolvency process whereby a company arranges to sell its assets to a buyer before formally appointing administrators to facilitate the sale. The reason why a pre pack is preferred is that it does avoid the issues of losing credibility with suppliers and customers during any administration process and it allows for the continuity of the whole operation by keeping the employees on board without whom the business would very quickly collapse. Clearly this is not going to be the end of Mike Ashley’s conquest of the high street but whatever happens next it is good to see that we have an advocate who believes there is money to be made in the retail space through bricks and mortar rather than simply having an online presence.

How Much is it Worth?

The value of a country’s currency is an indicator as to how that country’s economy is perceived by the rest of the world. Put simply it is the principle of supply and demand. The stronger the currency is the more that currency is in demand. Thus, if a currency is in demand it means that people require that currency for many reasons including facilitation of their investments within that country. But does this also mean the stronger the currency the stronger the country’s economy is? As with everything in economics, the answer is never clear cut as one question leads to another. Looking back at history there have been periods of economic growth in countries when their currency has been devalued. Does this then mean that the devaluation in sterling since the referendum will lead to another economic boom in the UK economy? To answer this question consideration needs to be given to the structure of the UK economy and how strong it is in services and how much weaker it is in manufacturing, borne out by the fact that there is a current account surplus in one and a deficit in the other. London has long been a world financial centre, does this mean that with Brexit the UK will no longer be the spearhead for foreign investors when looking to find a foothold within Europe, whether in respect of services and or manufacturing. Global banks have already started to move operations to Paris, Frankfurt, Amsterdam because there may be knock on costs to importing UK products and services through tariffs. But the know how surrounding financial services which has been built up in London is not easily going to be replicated abroad. Overall, the lower value of sterling will have advantages to exporters but only if they continue to invest to improve productivity through skills and training and capital investment, otherwise, the UK economy will find that this under investment will lead to a systematic slow-down in the UK’s ability to compete with other faster growing economies.

Hawkins Hatton's Sterling Dinner at Weston Park on Thursday 21th March 2019

Photographs of the attendees of Hawkins Hatton's Sterling Dinner at Weston Park.    

Hawkins Hatton's House of Commons dinner 14th March 2019

Photographs of the attendees of Hawkins Hatton's House of Commons Dinner.

Just what the Doctor Ordered

Manjit Jhooty is the founder of “Jhoots Pharmacy” which is regarded as one of the leading independent pharmaceutical chains in the West Midlands. This achievement has been reflected in the number of awards won by Jhoots in relation to patient service and meeting the needs of the local community.  Jhoots has used a simple but effective combination of being able to offer a full range of essential, advanced and enhanced NHS Services using its own experienced staff. In order to continue the expansion of Jhoots Pharmacy, Manjit has taken the bold step to move Jhoots Banking to HSBC UK on the basis that the bank will continue to support Jhoots in its continued development within the West Midlands. Partho Bose, (Senior Business Development Manager with HSBC UK in the Black Country & Shropshire) said that: “HSBC UK has had a long history of supporting businesses within the health sector. Given how strong the Jhoots name is within the pharmacy sector it was a good fit for both the bank and for Jhoots Pharmacy.” Manjit Jhooty (founder director of Jhoots) said that: “The business of Jhoots has always been based on service and patient care so knowing that HSBC UK has similar values, I genuinely feel that together we will make a strong team to continue to make a difference within the health sector.”  In order to assist in the rebanking of Jhoots Pharmacy, HSBC UK appointed Hawkins Hatton Corporate Lawyers to assist them in this matter. The rebanking of Jhoots Pharmacy with HSBC UK had to be concertinaed into a tight timeline. Colin Rodrigues (Corporate Partner) said: “When we were initially tasked with undertaking this matter for the bank I was not sure whether or not it would be feasible to achieve the tight timeline, given the number of properties involved and how big the pharmacy chain was. In any event, everyone at HH put together and worked around the clock to ensure that not only were the deadlines met but that the desired outcome for both Manjit and the bank were met.”  

How Will Brexit affect Mergers and Acquisitions?

Businesses planning to expand or restructure through M & A in 2019 will do so against a background of changing political, trading and social conditions. The fear is that Brexit will lead to a recession in Quarter 4 of 2019 and bring an end to the recent boom of the mid-market M & A sector. Uncertainty is the challenger of business and still questions remain as to whether the UK will leave with a no deal? Will there be a second referendum? Will there be a change in UK government? What will the trading relationship with EU look like? What will be the impact on the pound/exchange rates? Whatever the responses to these questions, on 29 March 2019 businesses will need to adjust, adapt and embrace the changes and during this transitional period it is inevitable deal volumes will fall. Hence 2019 is predicted to see M & A at somewhat of a standstill. Major Banks have announced their exit from London to cities such as Paris, Amsterdam, Frankfurt and Dublin. This will lead to a loss of £700 billion of financial assets in Quarter1 2019 to insurers and other financial services companies in the UK. Add to this the fact manufacturers with significant capital investments in the UK (such as Nissan) are contemplating whether they remain committed to the UK or shift their operations elsewhere due to the uncertainty of Brexit. That said the Brexit situation is not the same as the situation UK businesses found themselves in during 2007/2008 as a consequence of the global financial collapse.  There are certain UK sectors which will be unscathed by Brexit and it will be “business as usual”. These are markets which have little or no recourse to Europe in relation to imports/exports or workers. The expectation is also that the Private Equity market will not be impacted by Brexit as its primary consideration is the strength of a management team. The UK is an important contributor to the world stage and this will not change due to Brexit. The UK continues to lead in technology closely behind the US hence making such companies attractive to acquisition. The UK is also rich with companies in the SME sector where there is no natural succession exit hence the companies will need either a trade exit or management buy out. The outlook for M & A in the UK therefore remains promising despite the challenges faced.

Newsletter December 2018

502245 Newsletter December 18 A4 4pp_v5

The Shop That “Jack” Built

For those of you who are my age you may recall a shop called Kwiksave which is still around.  I regarded Kwiksave as one of Britain’s original discount stores.  Tesco is now taking the fight back to Aldi and Lidl by creating its own version of a no-frills supermarket under the brand name Jacks which Tesco has just recently unveiled. Some of you may be thinking why is the name Jacks whereas those of you who follow back stories may know that the founder of Tesco was Jack Cohen and he started the Tesco brand in the 1920s, so there is no more fitting way to give tribute to Mr Cohen than by naming Tesco’s new venture Jacks. Supermarkets have already had a foray into the convenience store sector, which has long been saturated by independent shopkeepers and cooperatives. Will Tesco win this new fight against the German discounters? Lower prices and scale will be the answer to this question and this will only become apparent when we know how many new stores are rolled out throughout the UK and become established.  In the short term it is expected that 10-15 stores will be opened in the next 6 months. The idea behind Jacks is very similar to the model of Kwiksave, Aldi and Lidl in that it will be smaller in size and will carry a more limited product range under its own label of Jacks.  The shopping habits of UK consumers have changed as a result of the arrival of Aldi and Lidl in that brand appeal within shops has been outweighed by value for money.  Indeed consumer habits have changed within the supermarket sector generally, as there is a cross-section of consumers who are attracted by constantly low prices across the range which the German discounters have promoted so well. In order to keep costs down the Jacks stores will not be aesthetically pleasing but more basic and functional. Is there place in the discount sector for another player to come in and take on the established German discounters?  Is this Tesco taking on Aldi and Lidl at their own game rather than trying to adopt the historic tactics of attracting customers by cheaper petrol, 3 for 2 offers and loyalty schemes? Sainsburys on the other hand has taken a different route by trying to add new dimensions through its takeover of Argos and potentially Asda in the New Year subject to getting regulatory approval.  That is not to say that Tesco has not tried to conquer the food sector in different ways as it was not so long ago that Tesco took over the “Booker’s” cash and carry. It will be very interesting to see next year what happens when figures are published about consumer spending in the supermarket sector how much of every £1 spent continues to go to Aldi and Lidl and how much is taken by Jacks.

The Shop That “Jack” Built

For those of you who are my age you may recall a shop called Kwiksave which is still around.  I regarded Kwiksave as one of Britain’s original discount stores.  Tesco is now taking the fight back to Aldi and Lidl by creating its own version of a no-frills supermarket under the brand name Jacks which Tesco has just recently unveiled. Some of you may be thinking why is the name Jacks whereas those of you who follow back stories may know that the founder of Tesco was Jack Cohen and he started the Tesco brand in the 1920s, so there is no more fitting way to give tribute to Mr Cohen than by naming Tesco’s new venture Jacks. Supermarkets have already had a foray into the convenience store sector, which has long been saturated by independent shopkeepers and cooperatives. Will Tesco win this new fight against the German discounters? Lower prices and scale will be the answer to this question and this will only become apparent when we know how many new stores are rolled out throughout the UK and become established.  In the short term it is expected that 10-15 stores will be opened in the next 6 months. The idea behind Jacks is very similar to the model of Kwiksave, Aldi and Lidl in that it will be smaller in size and will carry a more limited product range under its own label of Jacks.  The shopping habits of UK consumers have changed as a result of the arrival of Aldi and Lidl in that brand appeal within shops has been outweighed by value for money.  Indeed consumer habits have changed within the supermarket sector generally, as there is a cross-section of consumers who are attracted by constantly low prices across the range which the German discounters have promoted so well. In order to keep costs down the Jacks stores will not be aesthetically pleasing but more basic and functional. Is there place in the discount sector for another player to come in and take on the established German discounters?  Is this Tesco taking on Aldi and Lidl at their own game rather than trying to adopt the historic tactics of attracting customers by cheaper petrol, 3 for 2 offers and loyalty schemes? Sainsburys on the other hand has taken a different route by trying to add new dimensions through its takeover of Argos and potentially Asda in the New Year subject to getting regulatory approval.  That is not to say that Tesco has not tried to conquer the food sector in different ways as it was not so long ago that Tesco took over the “Booker’s” cash and carry. It will be very interesting to see next year what happens when figures are published about consumer spending in the supermarket sector how much of every £1 spent continues to go to Aldi and Lidl and how much is taken by Jacks.

Hawkins Hatton Newsletter September 2018

501823 Newsletter September 18 A4 4pp_v3_PROOF

Counterplas continues injecting vigour into plastic injection

Counterplas, has long been one of the Midland’s and UK’s leading technical, plastic injection moulder operators, who has over many years, built a strong and enviable reputation in its industry for innovation and excellence. Counterplas has not only continued to expand its product range, but it has bolstered its expansion by acquisition. Paul Isherwood, managing director of Counterplas, has been at its helm enabling the company to stay ahead of its competitor’s through the manufacture and design of new products, using the latest energy efficient machines for plastic injection moulding. Mr Isherwood has now negotiated Counterplas acquisitions of a leading competitor. Paul Isherwood said “I have, for a long time, had respect for Showpla Plastics and how it operates as a specialist plastic injection moulder within the Midlands. For me, it just seemed that the Counterplas wrapper around Showpla Plastics would neatly encapsulate the expansion of Counterplas, in one fell swoop. Thereby creating a showcase plastic moulding business, which would become the benchmark for quality and innovation within the plastic injection moulding industry.” Pete Simpson (Partner of Bache Brown Accountants), who has long been the go-to business advisor for Paul Isherwood and Counterplas said that “I have known and worked with Paul for a long time, and so I have a good understanding of how he conducts his business. Therefore, Paul would only look to expand Counterplas through an acquisition where there is a true synergy. That is why the incorporation of the Showpla business within Counterplas will continue to strengthen what is already a formidable business”. Hawkins Hatton Corporate Lawyers (HH) has acted for Counterplas for a number of years as its corporate counsel, Colin Rodrigues (Partner at HH), said “with the event horizon of Brexit fast approaching, I have always been a strong advocate of investment as a way to improve productivity. Knowing the business of Counterplas and Showpla and the industry in which they operate, investment is the key to productivity and as such, the combination of the two businesses will create a stronger and more highly efficient business.”

Capital investment is the way forward post-Brexit

At a risk of repeating myself, this is a topic which I have commented on previously, but this is something that I am very passionate about.  This is with good reason because being a corporate lawyer, I deal with business clients daily. As such, I feel that I am in the front line when trying to understand what the stresses and strains are for SME businesses. Productivity has long been associated as one of the main things that is holding back the UK economy. Last week McKinsey produced a report which was not given the coverage it deserved within the business community, which I can only attribute this to the fact that there has been a lot of background chatter around Brexit. The McKinsey report was on “Advanced Manifesting Technologies”. Technology is evolving faster than ever, through mediums such as artificial intelligence and 3D printing. Therefore, there needs to be innovation and investment within the manufacturing sector if it is to keep up with its ever-changing competitors. An economist’s understanding of what “productivity” means would be associated with the output that is generated by an employee for each hour that they work. This may seem very obvious, but as with everything, productivity is the most important factor that will translate to the bottom line, being the profit made by a company. If you get a chance to review the McKinsey report, it will come as no surprise that when it compares the UK to Germany, that there is a difference of approach which can be put down to more than cultural differences. Within the UK, it can be seen that we favour labour to create our productivity, whilst in Germany the focus for productivity relies on investment in new technology for equipment and software. One thing for sure, is that the UK focus on employees has led to full employment. A cynical view could be that this full employment also means that productivity cannot grow any more within the UK, as there are not the people available to fill the jobs required by the economy. This may not sit well with the outcome of Brexit, given that the current UK labour force is going to be constrained by its ability to increase its capability and quality of output. Whereas robots can be made to work faster or slower where needed, without incurring significantly higher costs, other than their initial cost of purchase and installation. My observation, is that this new Brexit era will allow manufacturers to have a chance to re-focus on capital investment in order to upskill the existing UK workforce to use newtechnology, and maintain full employment, given that the economy is at maximum capacity. What is clear is that there will be lack of additional workers coming into the UK economy to help increase productivity. The next issue is going to be where the money is going to come from for this new capital investment, as some of the foreign investment into the UK may already have been diverted away as a result of Brexit. Therefore, I would encourage all SMEs to look at capital investment in order to help them move their businesses forward in the short to medium term. Colin Rodrigues is head of the Corporate Team at Hawkins Hatton

Productivity

At a risk of repeating myself, this is a topic which I have commented on previously, but this is something that I am very passionate about. This is with good reason because being a corporate lawyer, I deal with business clients daily. As such, I feel that I am in the front line when trying to understand what the stresses and strains are for SME businesses. Productivity, has long been associated as one of the main things that is holding back the UK economy. Last week McKinsey produced a report which was not given the coverage it deserved within the business community, which I can only attribute this to the fact that there has been a lot of background chatter around Brexit. The McKinsey report was on “Advanced Manifesting Technologies”. Technology is evolving faster than ever, through mediums such as artificial intelligence and 3D printing. Therefore, there needs to be innovation and investment within the manufacturing sector if it is to keep up with its ever-changing competitors. An economist’s understanding of what “productivity” means would be associated with the output that is generated by an employee for each hour that they work. This may seem very obvious, but as with everything, productivity is the most important factor that will translate to the bottom line, being the profit made by a company. If you get a chance to review the McKinsey report, it will come as no surprise that when it compares the UK to Germany, that there is a difference of approach which can be put down to more than cultural differences. Within the UK, it can be seen that we favour labour to create our productivity, whilst in Germany the focus for productivity relies on investment in new technology for equipment and software. One thing for sure, is that the UK focus on employees has led to full employment. A cynical view could be that this full employment also means that productivity cannot grow any more within the UK, as there are not the people available to fill the jobs required by the economy. This may not sit well with the outcome of Brexit, given that the current UK labour force is going to be constrained by its ability to increase its capability and quality of output. Whereas robots can be made to work faster or slower where needed, without incurring significantly higher costs, other than their initial cost of purchase and installation. My observation, is that this new Brexit era will allow manufacturers to have a chance to re-focus on capital investment in order to upskill the existing UK workforce to use new technology, and maintain full employment, given that the economy is at maximum capacity. What is clear is that there will be lack of additional workers coming into the UK economy to help increase productivity. The next issue is going to be where the money is going to come from for this new capital investment, as some of the foreign investment into the UK may already have been diverted away as a result of Brexit. Therefore, I would encourage all SMEs to look at capital investment in order to help them move their businesses forward in the short to medium term.

The Link to Zinc

The NFM Group is one of the Europe’s major zinc alloy producers and specialises in the manufacturer and distribution of prime grade zinc alloys (“NFM”). NFM has over the years established a reputation as a serious and reliable partner in the buying and trading of non-ferrous metals and related by-products, scrap and residues. NFM stepped into the UK market and purchased Brock Metal who also supply primary zinc alloys across Europe even though they are based in Cannock. The purchase of Brock Metal was from Chelyabinsk Zinc Plant (“CZP”). CZP are the largest producer of zinc and zinc alloys in Russia. Claude Bever, Managing Director of NFM, said “this acquisition demonstrates NFM’s focus on further growing the profitability of its core niche zinc alloys business. Brock Metal’s know-how and experience complements our existing activities. It will allow us to position NFM for new business opportunities and to enhance customer relationships in a global manner.” NFM was assisted by Colin Rodrigues of Hawkins Hatton Corporate Lawyers and David Webb of Edwards Accountants. Hawkins Hatton were responsible for assisting in the negotiation and completion of the transaction in legal terms, whilst Edwards Accountants ensured that all financial matters were properly considered. Colin Rodrigues said “having worked with NFM previously, I know that it prides itself in the pursuance of excellence which is its USP. Thus, in a constantly changing world with Brexit the more flexibility a business can have will simply translate to the fact that it can more easily adapt to this change in conditions in order to meet the needs of the market.”

A High Street Called Titanic

We are at a watershed moment in the economic development insofar as the UK high street is concerned. Britain built an empire on trade and were fondly known through-out the world “as a nation of shopkeepers”, but has this all changed with the dawn of an internet-savvy generation? In a recession everyone understands that retail will be under pressure as people want to keep their money in their pockets. However, by all measures, whilst the British economy has slowed down we are not in recession. In fact, the job market is tight and inflation is also falling. What then is causing the sea change in the high street? Is it the direct costs of having a footprint in the high street as compared with having a distribution centre? Or, is it a change in our shopping habits as the internet savvy generation are now older and have more disposable income. The old stalwarts of the high street have been consigned to the dustbin of change as we have moved into new waters.  We all remember Woolworths when that went into liquidation, but of late there seems to be a plethora in names such as BHS, Maplins, Toys R Us, Poundworld, House of Fraser and now Homebase.  Warnings of this collapse on the high street have been broadcast, even the British Retail Consortium as far back as two years ago warned that there would be 900,000 jobs lost in the retail sector. Everybody would like to blame the national minimum wage and business rates as these are the two largest costs retailers face. I agree that these costs contribute to the difficulties for retailers, as compared with internet retailers who may instead use distribution centres and less employees. The other catalyst for change is shopping habits. We are still in a cycle of consumption, it is just that consumption has moved from the high street to online. There are many reasons for this but the main one has to be accessibility. High street retailers need to innovate and create a stronger online connection if they are to survive.  They need more convenient ways to assist their customers over and above click and collect.  High street retailers will then need less staff and floor space.  You need less bricks and mortar in expensive high street locations if retailers change their business models. It should not be forgotten that this squeeze on the high street is not confined to retail shops but to financial services, as many banks have started to push their online offering in preference to having a branch operation, which inevitably leads to less bank branches through-out the country and staff. It is not a question of how to stop this decline in the high street, but instead to focus on how we can rejuvenate the high street with new and different offerings, for example leisure and pop-up restaurants within empty retail spaces as well as looking at housing. This will only work if there is a genuine desire to re-invent the high street and not just focus on business rates which generate £30bn or so, and form nearly 5% of the entire UK tax take.

Central Extrusions

Rob Thorpe, who has vast experience of plastic extrusions and is a founder of a successful plastics business known as Cooga based in Telford, has now branched out by taking over Central Extrusions, who as its name suggests is based in the heart of the Black Country. Central Extrusions is already in good shape given that it has over 20 years knowledge and expertise in the manufacture of flexible extrusions, and it has a reputation for supplying high quality glazing gaskets Nationwide. That is why Rob focused on Central Extrusions as he felt he could continue to the expansion of the company building on the existing reputation by using his own skill sets. Rob was assisted by Hawkins Hatton Corporate Lawyers who undertook the negotiation and completion of the transaction on his behalf. Hawkins Hatton also assisted HSBC, who assisted with funding the deal. Colin Rodrigues from Hawkins Hatton said “having worked with Rob and seeing his wealth of experience within the plastic sector, I know that he will ensure that the growth of Central Extrusions will continue on the upward trajectory.” Rob Thorpe said “I am privileged to have the opportunity to oversee the next phase of Central Extrusions’ expansion in order to ensure that it becomes the leading national firm within the UK for plastic extrusions.”

A Long Hot Summer

You have to go back to 1976 to find a long hot summer. However, maybe this year will be a record-breaker regardless of the amount of sun, due to the heat that is emanating from the White Paper recently released on Brexit, detailing life for the UK post-Brexit. “A Common Rule Book” is the backbone of the “Chequers Plan”, which was formalised in the White Paper but at the cost of UK services, as the opening gambit for UK negotiation with the EU. This stance must have been adopted due to the EU insisting that the UK would be having its cake and eating it, by putting forward “Mutual Recognition” for UK services which proposed two separate but comparable systems. However, there are only a few more months left to do a deal on UK services. The UK’s economy derives 80% of its income from UK services; clearly the EU is aware of that. Is this the UK showing strength and turning its back on the EU in respect of a deal on UK services in return for a soft boarder in Northern Ireland post-Brexit? However, this would mean less market access for UK services within the EU and inevitably fewer jobs and lower tax revenue. Cynics may say that the UK is capitulating to EU demands. Instead, the UK is giving up on UK services in the hope that the EU will give up on freedom of movement of people and permit the UK to have freedom of movement of UK goods. The problem with this gambit is that it has got to be agreed by the EU and has to be implemented post-Brexit. This proposal envisages that the UK will collect tariffs on behalf of the EU but it is unlikely that the EU will do the same for the UK. It also means that the UK is signing up to the EU rules without a voice on how these rules are made, so is this a “single market” in everything but name? In 1992, there was the famous phrase "It's The Sun Wot Won It" referring to the Conservative win. Following its interview with Donald Trump who said that a UK trade deal with the US will be unlikely based on the White Paper because the US is dealing with the EU, will the Sun in this hot summer change a soft Brexit into a hard Brexit?

Hawkins Hatton Newsletter June '18

HH Newsletter June 2018 (2)

Rollins has a new Guardian

Rollins Inc. specialises in pest control services and on a worldwide basis it has more than two million customers. Rollins Inc. started on the acquisition trail within the UK by purchasing Ames Group based in the Midlands and Safeguard Pest Control based in London and the South East. Rollins Inc. has now purchased Guardian Pest Control who are based in Lincolnshire. It is the intention of Rollins Inc. to have a national footprint within the UK in order to compliment its 700 locations within the United States, Canada, Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Mexico, and Australia. Guardian Pest Control was founded in 2002, and it has been using its expertise to ensure the safety and peace of mind of workers, owners and tenants of a variety of sites, including business and commercial properties, agricultural sites and domestic premises within Lincolnshire and around the rest of the UK. Steve Leavitt, the President of Rollins Emerging Opportunities Group, again led the purchase of Guardian Pest Control and was assisted by his colleague Matt Whiting, who is the Managing Director of Acquisitions. They said that their previous acquisitions of Ames and Kestrel have given them a good foundation to build on within the UK and Guardian Pest Control was a natural fit to these businesses. Steven said that “we are very excited to add Guardian to our family. The depth of talent that has been developed under Adam Hawley attracted us to pursue this opportunity. We are confident that the team at Guardian will complement and enhance our growing team in the pest control industry.” Adam Hawley, one of the founding directors of Guardian Pest Control said that “It’s exciting times for the team at Guardian with new opportunities and investment to come. Rollins has a good reputation for ‘doing things right’ and that was a big factor for me in choosing to sell to them.” Hawkins Hatton Corporate Lawyers were engaged by Guardian Pest Control. Colin Rodrigues of Hawkins Hatton said that “this transaction presented some logistical hurdles which had to be overcome, given the fact that the clients were on the other side of the country to ourselves, and that there were a number of different shareholders. However, given HH are used to dealing with clients from all parts of the UK as well as abroad, we managed to overcome these factors to present an organised completion for Rollins Inc. when its directors came over to the UK to complete.”

A High Street Called Titanic

We are at a watershed moment in the economic development insofar as the UK high street is concerned. Britain built an empire on trade and were fondly known through-out the world “as a nation of shopkeepers”, but has this all changed with the dawn of an internet-savvy generation? In a recession everyone understands that retail will be under pressure as people want to keep their money in their pockets. However, by all measures, whilst the British economy has slowed down we are not in recession. In fact, the job market is tight and inflation is also falling. What then is causing the sea change in the high street? Is it the direct costs of having a footprint in the high street as compared with having a distribution centre? Or, is it a change in our shopping habits as the internet savvy generation are now older and have more disposable income. The old stalwarts of the high street have been consigned to the dustbin of change as we have moved into new waters.  Warnings of this collapse on the high street have been broadcast, even the British Retail Consortium as far back as two years ago warned that there would be 900,000 jobs lost in the retail sector. Everybody would like to blame the national minimum wage and business rates as these are the two largest costs retailers face. I agree that these costs contribute to the difficulties for retailers, as compared with internet retailers who may instead use distribution centres and less employees. The other catalyst for change is shopping habits. We are still in a cycle of consumption, it is just that consumption has moved from the high street to online. There are many reasons for this but the main one has to be accessibility. High street retailers need to innovate and create a stronger online connection if they are to survive. High street retailers will then need less staff and floor space. It should not be forgotten that this squeeze on the high street is not confined to retail shops but to financial services, as many banks have started to push their online offering in preference to having a branch operation, which inevitably leads to less bank branches through-out the country and staff. It is not a question of how to stop this decline in the high street, but instead to focus on how we can rejuvenate the high street with new and different offerings, for example leisure and pop-up restaurants within empty retail spaces as well as looking at housing. This will only work if there is a genuine desire to re-invent the high street and not just focus on business rates which generate £30bn or so, and form nearly 5% of the entire UK tax take.

Will the Bullring and Merry Hill ever meet up?

We all know the retail sector has been impacted by the growth of the online offering year on year. Take Amazon by example, which started off just selling books and DVDs, and now sells virtually everything you can think of. But it has not stopped there, Amazon is also looking to enter the grocery market as demonstrated by its purchase of Whole Foods in America. Maybe this is why Sainsburys is looking to buy Asda, after Sainsbury’s successful acquisition of Argos, in the same way Tesco bought Bookers to defend against the potential online threat. The above said, only a few weeks ago two of the UK’s largest property shopping centre owners in talks over a merger, since December 2017, suffered a set back. Hammerson, the owner of shopping centres like Bullring and Brent Cross were looking to take over Intu, the owner of shopping centres like Merry Hill, Trafford Centre, Metro Centre and Lakeside. Is this set back a further indication of the tough times on the high street? The run up to Christmas 2017 was not exactly full of festive cheer for retailers. In money terms if the deal between Intu and Hammerson completed, we would have seen a sum of £3.4 billion paid by Hammerson. From a corporate perspective, what is very unusual is that Hammerson made a formal takeover bid for Intu. Under the Stock Exchange Rules, Hammerson would need to complete on the bid given it had been accepted by Intu’s board. However, the board of Hammerson advised its shareholders that the deal is not such a good idea hence they should bring a stop to it going through by voting against it. If we drill down into the issues around what caused this change in sentiment, it could be down to the recent spate of high profile administrations such as Maplin’s, Toys R Us and of late the recent difficulties Carpetright is facing, to name but a few within the retail sector. But is this the real reason as administration of anchor tenants has always been a risk, (remember BHS). Thus, the retail space has been a difficult sector for its members for a number of years, not just since last December. One thing certain is that players like Intu and Hammerson will have the benefit of analytical data which will enable them to understand their tenants turnover within their shopping centres, given that rents are usually linked to turnover. If this information has always been available to Hammerson, then why is it now trying to move away from the Intu deal? Surely Hammerson’s original motivation for the deal, namely to concentrate upon having the best shopping centres within the UK, showcasing the best tenants, is still a powerful reason to do the deal? This would have surely better insulated Intu and Hammerson from the problems that are prevalent on the high street such as the administrations that I have already mentioned. Maybe, it is not just about size it is also about not having a concentration or a propensity for tenants who are constantly being squeezed, as surely an anchor tenant in the Bullring may also have leases within Merry Hill and the other locations. Therefore, this could be storing up trouble as currently administrations only represent a loss of income of around 1% for companies like Intu and Hammerson and the merger could see this figure rise. We all know that Debenhams and House of Fraser are currently also facing pressures. What is clear is that Hammerson will seek to dispose of some of its assets and re-invest the monies into other premium sites. Who knows, as when all of this started Klépierre, a French company, were looking to pay £5 billion for Hammerson but this was rejected by Hammerson as it felt it undervalued its business. This may come back albeit through another suiter.

Leaky Roof

Pensions to some people are like fixing the leaking roof whilst the sun is shining, in advance of waiting for the storm to come. But for nine million people in the UK, they will find that work has already started to fix that leaking roof when it comes to their pensions. To put it another way, since 2012 and the dawn of auto-enrolment, work-place pensions have ensured that there is a minimum amount that employees have to save for their retirement. Auto-enrolment has now increased from 2% to 5%, where the employer contributes 2% of that 5% total. The natural consequence of this increase in auto-enrolment is that there will be less take-home pay for the employees each month. This is not as dire as it sounds given that the employees are building up their pension pot for their retirement, where in some cases none previously existed. The real question is will auto-enrolment change the savings culture within the UK so it is similar to that of some of our continental cousins, such as the Germans. The change in savings culture was one of the intentions of auto-enrolment. Within the UK, all of the businesses subject to auto-enrolment have already done the hard work by setting up the relevant schemes and ensuring they are compliant. There is no denying that businesses will feel the effect of the increase, but this is something they can plan for. The real hope is that their needs to be a sea change in the savings culture on the basis that people are more aware that they can no longer be reliant on the state pension income to see them through their retirement years. But the acid test as to whether or not there has been a sea change will come next year when auto-enrolment will rise to 8% in April 2018. In respect of this 8%, there will still be an increase for employers from 2% to 3%, but the employees will be bearing the 5% contribution. So, if employees continue to embrace this new era of work-place pensions and decide to continue contributing and not opting out of work-place pensions, notwithstanding the squeeze on take-home pay, then I think we will have seen a cultural change to savings at long last in the UK. Looking around workplace today, I can already see that people’s expectations on life expectancy has changed and that given the strength of the silver pound, pensioners will not want to compromise on their expectations for holidays, leisure, food and such like. Therefore, they need to make sure that their expectations can be sustained and workplace pensions goes some way to achieve this.

Hawkins Hatton's Free Trade Dinner At Weston Park On Thursday 23rd March 2017

Photographs of the attendees of Hawkins Hatton's Free Trade Dinner at Weston Park on Thursday 23rd March 2017...

What A Catch

Rollins Inc. is a premier global consumer and commercial services company which has an international footprint stretching more than 700 locations from the United States, Canada, Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Mexico, and Australia. Rollins Inc. specialise in pest control and provides essential pest control services and protection against termite damage, rodents and insects to more than two million customers. Rollins Inc. started its expansion process within the UK by purchasing Safeguard Pest Control based in London and the South East. Within the same week Rollins Inc. also acquired two other businesses namely Ames Group, based in the Midlands, and Kestrel Pest Control, based in Hampshire. Steven Leavitt, the President of Emerging Opportunities of Rollins Inc. spearheaded the purchase of Ames and Kestrel with the assistance Matthew Whiting, who is the Director of Acquisitions. They said that having acquired Safeguard into the Rollins Inc. family, it was a pleasure to continue the expansion by the introduction of Alan Read (director and founder of Ames) and Richard Borlase (director and founder of Kestrel). Alan Read said “I created the Ames Group from scratch and gave it my all and as such, the Rollins Inc. family was a natural choice for me when I decided I wanted to continue to grow my business but with the support of a large organisation.” Richard Borlase said “I found it remarkable that once Rollins Inc. decided to take over my business we completed within days rather than weeks. It is amazing how when you meet an organisation as determined as Rollins Inc. that it can achieve what may seem impossible.” Alan Read (Ames Group) and Richard Borlase (Kestrel) both separately and independently engaged Hawkins Hatton Corporate Lawyers to manage their respective transactions simultaneously. Hawkins Hatton delivered consecutive completions within days of each other. Colin Rodrigues (Corporate Partner at Hawkins Hatton) said “it is not very often that you get consecutive transactions to the same entity but having met Rollins Inc. I can see they will be a force to be reckoned with in the coming years within the UK Pest Control Industry.”

To Budget or Not to Budget

Last week’s budget may have contained surprises for some, but not for others. With a few more million saved here and a few more million spent there, but no ‘rabbits out of the hat’. But when it comes to budgeting there is going to be a big bill for leaving the EU and people have speculated that it may be as high as 60 billion euros, or as little as zero. What is surprising is that such an important factor affecting Article 50 is only now coming to light, and has not been more fully debated. Baroness Faulkner, the chairman of the EU Financial Affairs Sub-Committee of the House of Lords, said recently that if there is no withdrawal agreement pursuant to Article 50 then there is no obligation on the UK to pay. This may have come as a surprise to many. The Sub-Committee did take expert advice but found that this was conflicting, and as such used its own lawyers to decide the principle of whether or not there is a payment due on exiting the EU. Based on the principles of the Vienna Convention on the Laws of Treaties there is no obligation to pay. This is because the obligation is contained only within treaties and not within Article 50 itself. Article 50 deals with exit, but is silent on the question of payment. There are no courts that can regulate or definitively decide on this matter. The only exception would be if an individual member state decides to take the UK to the International Court of Justice in The Hague, on the basis of losses suffered as a result of the UK’s exit. Despite the above, given that the EU is a political beast and the Prime Minister is committed to signing a withdrawal commitment, we all know that a payment will probably have to be made to secure an orderly exit, and one which ensures limited market access and participation in some EU programmes. Without such a payment from the UK there will be a 12% hole in the EU budget.

HH Newsletter March '18

HH Newsletter March 2018

Jaw-Jaw Not War-War

When Winston Churchill coined this phrase, it was with a view to the fact that talking was always a good solution to fighting. You may be thinking why I have quoted him, but what will happen if there is a trade war post-Brexit? The difficulty for the UK is that we will no longer have the protection of the EU trading block post-Brexit. The USA are about to impose the biggest set of restrictions on trade for more than 40 years. Donald Trump last week actioned his campaign promise of “putting America first”. He is hoping to achieve this within the next few days when tariffs will be placed on aluminium at 10% and steel at 25% which is imported into the USA. You may think that these tariffs are designed to prevent the cheap influx of Chinese steel into the USA however, Chinese steel imports into the USA count for less than 3% which may come as a surprise to most people. This decision by Donald Trump may have unintended consequences. Donald Trump’s chief economic advisor Gary Cohn resigned as the director of the National Economic Council in protest of this decision. Mr Cohn’s departure is regarded as a significant loss as he was seen as a moderating influence on Donald Trump. When the announcement was first put forward by Donald Trump, there were no exceptions to the tariffs. He has since relented by exempting Canada and Mexico. This may be seen as a cynical ploy to help the USA’s negotiation of the NAFTA. Given that the EU is one of the biggest importers into the USA of steel and aluminium, they have already hit back by announcing they will report America to the WTO but given that Donald Trump has announced these tariffs under the guise of statutes which provide that tariffs can be imposed for national security reasons, the WTO may not be able to look behind the same. What is of more concern is that once tariffs come into play, what will happen to the steel and aluminium which is destined for America. This will have to go somewhere, otherwise steel prices within markets will fall considerably. No wonder the EU are considering imposing their own tariffs on imported American goods. This unfortunately is the thin end of the wedge as if you really want to protect the steel and aluminium market within your own country or trading block, you need to have safeguarding measures which will inevitably lead to the imposition of similar tariffs and this is how trade war will start. Let’s hope there is more jaw-jaw to prevent the trade war.

Equality

“Equality” is a very simple word which you think would resonate with most people. It is not unreasonable to expect to be treated equally or, at the very least, in the same way as you would treat others. Equality of pay you would think is also a very simple concept yet applying this to women has proved a challenge in our modern age.  According to the Office of National Statistics, the recent average pay for full-time female employees was 9.4% lower than for full-time male employees. The only good news is that this gap has continued to narrow from the heights of 17.4% in 1997. In my view, we are now at a watershed moment in history. This glacial change commenced after the Second World War when women started to join the workforce. At this point in time there was still no equality between the sexes in pay terms, and it was only in the late 60’s where government studies identified the immense inequality and things started to change. We are all familiar with the film and the stage play “Made in Dagenham”. The essence of this film captures the real-life events of the strike by women sewing machinists at the Ford Car Plant in Dagenham over equal pay. The upshot of the actual events in Dagenham lead to Government statutory intervention through the Equal Pay Act 1970 (“EPA”). You would think given the effluxion of time since the EPA that the barrier to women’s equality would have fallen. The gender pay gap has been laid bare and brought to public attention through the recent events surrounding Carrie Gracie and her treatment by the BBC. The Carrie Gracie event is going to continue to snowball, which can be demonstrated by the fact that Tesco have just come under the spotlight and could be facing an eye-watering claim that may go into billions of pounds. By early April this year organisations which employ 250 or more people will be required to declare their gender pay gap. That is when the true extent of the differences between the average earnings of male and female workers will be exposed.

Cee-Norm Have Plugged into Succession

Cee-Norm UK Limited (Cee-Norm) was founded by Mr Tony Potts and his wife Rosemary Potts. Cee-Norm is the sole UK distributor of Bals industrial plugs and sockets, and is one of the UK leaders in this market. Cee-Norm prides itself on supplying valued products of a high standard to its customers. Cee-Norm has recently started a new chapter in its 25 year long journey, as one of its existing shareholder Bals Elektrotechnik GmBH (Bals) has acquired further shares in the company from Mrs Rosemary Potts, becoming the majority shareholder, with a view to taking over all of the shares in the not too distant future. Bals is an independent family business based in Germany which produces industrial plug-in devices and plug-in systems for the global market, as well as setting new technical standards. Bals products are highly valued worldwide, and Cee-Norm is just one of its many distributors around the globe. Mr and Mrs Potts have continued to build a strong and successful relationship with Bals for many years, so it was natural for them to facilitate Bals’ acquisition of the majority shareholding. Tony Potts, Managing Director and shareholder of Ceenorm, said: “having worked in this industry for more years than I care to mention I can say, based on my experience, that this business will continue to grow and I wish Bals every continued success”. Wolfgang Bals, CEO of Bals, said “running a family owned business means a lot to me, and knowing that Tony and Rosemary have trusted my group with the stewardship of their business demonstrates the faith they have in our relationship and together we will continue to make Ceenorm the success story that it is today”. Hawkins Hatton Corporate Lawyers helped to negotiate the transaction with Brian Bates of Harvey Telford & Bates Chartered Accountants, who have been longstanding advisors to Ceenorm, along with HSBC Bank Plc who have helped to support and fund previous acquisitions. Colin Rodrigues, Partner at Hawkins Hatton Solicitors, said “I have worked with Tony and Rosemary for a number of years and I have seen the company go from strength to strength. Knowing that there is going to be continuity for Ceenorm’s customers and suppliers, will not only mean it is business as usual, but their trusted business partnership will continue as usual”. Brian Bates, Accountant, said “when dealing with succession issues for clients it is not all about numbers, it is about relationships. When there is a strong business relationship, inevitably things are easier to negotiate”. Jon Forster, Relationship Director at HSBC, said “Ceenorm has been a customer of HSBC for many years and it has been rewarding to know that the bank’s support has helped Tony and Rosemary fulfil their business goals”.

New Year, New Money

Is 2018 going to be the rise of the crypto currency (virtual currencies) or just another New Year fad? The crypto currency is an up and coming entrant into the financial market place, spear-headed by “Bit-coin” which was worth in the region of 00 at the start of 2017 and near the end of 2017, it had a reported value of nearly ,000. Like most things which go up, they also come down and at the start of this year Bitcoin fell back by ,000 but then rose again by a further ,000 per coin as a result of the founder of PayPal, Peter Thiel increasing his investments in it. I know to some the idea of an unregulated virtual commodity may seem a little etheric. But in essence, that is exactly why some people prefer the idea of the crypto currency, as in a recent survey by Blockchain “30% of millennials if they were given £1,000 to invest said that they would rather invest in the crypto currency (such as ‘Litecoin’, ‘2Cash’ and ‘Ethereum’ to name but a few of the current 700 available crypto currencies) rather than in government stocks or bonds.” It begs the question of how the crypto currency works if there is no central bank to guarantee it. But like with anything, if someone is prepared to buy it then it has a value, hence crypto currencies rely on peer-to-peer trading to maintain value. That is probably why it is easier to think of crypto currency as an asset class or a commodity rather than as a currency. Even though there are so many crypto currencies available, they still only form a very small part of the financial market. But like any commodity, as the market place grows, and the commodity becomes more liquid, trading of the same also becomes more expansive. In my view, once this happens I am sure we will see a lot more millennials starting to trade in these crypto currencies. In fact, the New York Stock Exchange is looking to follow suit to some other exchanges and list a number of funds linked to Bitcoin, hence once crypto currencies enter the financial lexicon of the mainstream, everyone will be more familiar with terms like “ICOs” (Initial Coin Offerings). This however could be a double-edged sword as once crypto currency becomes mainstream, regulators such as the bank of England will want some kind of say over how these crypto currencies are traded, as they are in effect financial instruments. Currently, 100,000 plus users per day are purchasing crypto currencies.  Thus, the regulator will not want to leave these people exposed. The other problem with crypto currencies is scalability. Even now, some of the exchanges, such as Binance, closed to new registrations as recently as 4th January 2018 to allow for infrastructure upgrades. So, interesting times, let us see what the future holds.

HH Articles '17

HH Articles 2017

X-Ray Specs

Wolverson X-Ray (“Wolverson”) has been established for 85 years and is the leading independent supplier of innovative imaging equipment and associated healthcare products. Wolverson has always prided itself on providing quality and value to the NHS and private health care consortia through the supply of technically advanced imaging products. In order to help Wolverson continue to keep ahead of business demands and remain as the market leader in this sector, the shareholders of Wolverson proceeded with a management buy in (“MBI”). The MBI was led by Andrew Hodgetts along with Graham Haslam, Frank Cousins and Gurpal Matharu, who are now the new directors and shareholders of Wolverson, with their X-Ray specs on they knew the future prospects for the business. Andrew Hodgetts commented that “when you have a business like Wolverson, which has been going as long as 85 years, you do not suddenly become the new business owner, instead you are the custodian of the business for the next generation and as such, it is our duty to help maintain the well-being of Wolverson so it will continue for another 85 years.” Graham Haslam commented “it is not just how long the business has been going, but all about innovation and development and the directors and I are fully committed to continue to help innovate and develop Wolverson for the benefit of all Wolverson customers and employees.” In order to fund the MBI, Wolverson obtained funding from HSBC and were assisted by Hawkins Hatton Corporate Lawyers Limited. Debbie Harper (Area Director, Business Banking at HSBC) said: “Funding for the future is a core part of what we do at HSBC and Paul Dawson worked hard to structure a deal for the MBI team. We look forward to working with Wolverson as the team continues to build the business for future generations.” Colin Rodrigues (Corporate Partner at Hawkins Hatton Corporate Lawyers) stated “as with any corporate transaction, the key to success is to ensure that the instructions from the clients are fully reflected within the legal documentation. A lot of time can be spent arguing over clauses when in reality, the practical and commercial approach soon distils any issues within a contract so they can be agreed between principals.” The directors of Wolverson particularly recognised the input of the outgoing directors, Peter Davies and David Young, stating that “Peter and David have been fantastic role models to us as demonstrated by the growth of the business during competitive times in the healthcare business. We will always be grateful for their achievements and will aim to continue to progress the business to these high standards.”

Productivity

A word which is sometimes misunderstood. Here in the UK business leaders, economists and financial institutions always talk about productivity. But what is it, how is it measured and why is it important. Lots of questions and hopefully within this article you will find an insight into these questions. An economist may look to define productivity as profits and dividends and/or outputs made by businesses per hour, coupled together with wages, which figures are then compared with other businesses and/or countries. But being a lawyer, I look at things in a slightly different way to that of an economist. As such, it may be easier to define what productivity is not rather than what it is, as it does not measure how idle a country is compared to another. Within the UK we have low productivity as compared to a country like France, but when I look around at my clients they are far from being idle. In my view, the difference in productivity between the UK and France can be explained by the fact the French labour system is very rigid and is orientated by its unions. It is much like the UK prior to Thatcher coming into power. If you have a difficult labour market there is no choice but for businesses to invest in technology as an alternative to labour. You should also bear in mind that the structure of the UK economy is very different to that of the French economy. As a result of the last recession, the UK’s service based economy dipped in productivity terms and has never really recovered. The conundrum for the UK is that we have low employment. In fact, some economists think we have full employment given our employment rate is at 5% compared with 15% in France. Yet the workers in France are paid more than their UK counterparts. Again, this could be down to the strength of collective bargaining through the French unions. So, the real question for the UK may be, is more employment better? At the end of the day, one thing certain for economic growth is you do need sustained productivity. It is in this backdrop of Brexit that we have to hope that policy makers will make the post-Brexit world better for businesses by allowing them to continue to invest so that they can continue to grow and reduce their levels of debt. This is a simple goal which can be easily translated into the policy going forward. The only way the UK National Debt will reduce is either increased productivity by making more per hour, or spending less so we do not need to borrow as much.

HH Newsletter December '17

HH Newsletter December 17