Midlands businesses seek funding for growth, despite economic climate
Nearly half of mid-sized businesses in the Midlands will seek funding for growth in the next year, despite the current economic climate.
According to BDO’s Rethinking the Economy survey, 48% of companies in the region intend to look for investment by the middle of 2023, with 40% putting fund raising plans in place in the next 12 to 18 months.
The research of 500 mid-sized businesses showed that the top two sources of funding for Midlands businesses are debt finance (34%) and bank loans (31%), with private equity as well as crowdfunding also on the financial radar.
Roger Buckley, M&A partner at BDO in the Midlands, said: “Regional businesses are facing a plethora of challenges that keep on mounting in the face of high inflation and an impending recession. Despite this, there is still a clear appetite to seek and secure investment, as businesses look towards multiple sources of funding to meet strategic aims.
“With the investor market equally as ambitious in the region, eager to support entrepreneurial companies that wish to scale up at pace, we expect this level of interest by companies to have a positive effect on investment activity in the Midlands over the coming 12 to 18 months.”
The survey also highlighted the growth intentions of regional businesses, with nearly a quarter of companies stating that they intend to expand internationally in the next 12 months. Of those businesses that currently operate overseas, 19% plan to expand their presence.
Buckley added: “Operating internationally brings with it a multitude of tax and regulatory considerations that can differ from one territory to the next. However, the financial rewards for establishing a strong footprint in complementary markets can be significant if planned and funded in the most appropriate way and Midlands businesses are clearly keen to capitalise on the opportunities this brings.”
East Midlands local economy to be levelled up with historic billion pound devolution deal
Local leaders in large parts of the East Midlands will be given new powers to improve transport, boost skills training and build more attractive and affordable homes through an historic, first of a kind county devolution deal signed with the government.
Levelling Up Secretary Greg Clark will sign the deal with Derbyshire and Derby, Nottinghamshire and Nottingham, which will see the area appoint a directly elected mayor, responsible for delivering local priorities, backed by a new £38 million per year investment fund, totalling £1.14 billion over 30 years.
The deal delivers on a commitment made in the government’s Levelling Up white paper published early this year to shift in powers and resources away from Whitehall to local communities.
In addition to the agreed funding being under local control rather than control from Whitehall, a new Mayoral Combined County Authority will be created, with control over the core adult education budget, to boost skills in the region, as well as the ability to increase control over transport infrastructure.
The new mayor will also be granted powers to drive regeneration, with compulsory purchase powers and the ability to designate Mayoral development areas and establish Mayoral Development Corporations to promote growth and build new homes.
Levelling up Secretary Greg Clark said: “The East Midlands is renowned for its economic dynamism and it has the potential to lead the Britain’s economy of the future. For a long time I have believed that the East Midlands should have the powers and devolved budgets that other areas in Britain have been benefitting from and I am thrilled to be able to bring that about in Derby, Derbyshire, Nottingham and Nottinghamshire.
“I am impressed by the way councils in the region have come together to agree the first deal of this kind in the country, which will benefit residents in all of the great cities, towns and villages across the area of Derbyshire and Nottinghamshire.
“Taking decisions out of Whitehall and putting them back in the hands of local people is foundational to levelling up and this deal does that.”
The new East Midlands Combined County Authority will also be granted control of over £17 million of additional funding for the building of new homes on brownfield land in 2024/25, subject to sufficient eligible projects for funding being identified, and a further £18 million has been agreed to support housing priorities and drive Net Zero Ambitions into the area.
In a joint statement, Ben Bradley MP, leader of Nottinghamshire County Council, Barry Lewis, leader of Derbyshire County Council, Chris Poulter, leader of Derby City Council, and David Mellen, leader of Nottingham City Council, said: “We welcome the £1.14 billion devolution deal from the government on offer for our region. It’s fantastic news.
“We want to make the most of every penny so this can be used to make a real difference to people’s lives.
“As Leaders, we have all fought for a fairer share for our cities and counties, and a bigger voice for our area, to give us the clout and the influence we deserve, and to help us live up to our full potential.
“This deal would help make that a reality, creating more and better jobs through greater investment in our area, with increased economic growth, better transport, housing, skills training, and an enhanced greener environment, as we move towards being carbon neutral. These are what we all want to see, and we will work together for the common good of the East Midlands.
“We haven’t always had the same level of funding or influence as other areas, which has held us back. This is a golden opportunity to change that and put the power to do so in our own hands.
“There is a lot still to be agreed, and this is the beginning of the journey, not the end. We’re determined to build on this deal over time, as other areas have done.”
This will be the first ever Mayoral Combined County Authority, a new model of devolution provided for in the Levelling Up and Regeneration Bill. Implementation of this deal is dependent on Parliamentary approval of the Bill and necessary secondary legislation, as well as a public consultation.
This marks another important milestone in the government’s commitment to ensure that every area in England that wants a devolution deal can get one by 2030, as promised in the Levelling Up white paper published earlier this year.
New powers will help to improve local skills which will meet the specific needs of the local economy, helping to boost the region financially. In addition, there will be greater powers to drive regeneration creating more affordable housing for local people, making the area a more desirable place to live, work and visit.
East Midlands Chamber Chief Executive Scott Knowles said: “Our region is home to a wide range of fantastic businesses, from large industrial powerhouses to innovative university spin-outs, and everything in between.
“What they now need is the political apparatus that removes obstacles to decision-making, enhances our ability to attract investment and ultimately creates a more business-friendly environment.
“The announcement of a devolution deal for Derbyshire and Nottinghamshire provides a huge opportunity in this respect. It will help these counties to take strides forward in productivity and innovation, enabling firms to drive the economic growth that creates jobs and wealth locally.
“For too long, our region has lagged behind when it comes to being backed by central Government, with our recent analysis in partnership with East Midlands Councils highlighting how the region ranked either bottom or near the bottom for spending on transport, health, education, social protection and economic affairs.
“It’s reassuring to know many of these themes are covered by the East Midlands MCCA and that businesses will be represented within its governance structure. Following today’s announcement, it’s essential Government remains open to additional proposals for innovative structures that enable Leicester and Leicestershire to also optimise investment from the centre for local deployment.
“This is an exciting time for our region and we look forward to hearing more about how our local political system evolves to not only close the present funding gaps and imbalances, but drives the growth that allow all those who live, work and play in the East Midlands to prosper.”
Private equity investor acquires Leicestershire’s CTS Group
Palatine has successfully exited its investment in CTS Group, the fast-growing provider of testing, inspection and geoengineering consulting services to the construction and infrastructure sectors.
Leicestershire-headquartered CTS has been acquired by Oakley Capital, the pan-European private equity investor.
Palatine made a partial exit from the business in 2021, with the sale of its insurance claims management division to HomeServe plc for £53m. Together the transactions represent a return of 5.8x for Palatine’s investors.
Since its initial investment in 2018, Palatine has grown CTS into a leading business in the UK. Revenues have more than doubled over the last three years, through Palatine’s investment in digital transformation, talent acquisition and a highly successful buy and build strategy. With Palatine’s backing, CTS has made nine acquisitions adding complementary services and geographic scale to its offering.
CTS has also benefited from Palatine’s approach to ESG strategy, which has seen the business create an in-house ESG coordinator position and realise significant reductions in its carbon footprint through fleet electrification and digitisation initiatives.
Tony Dickin, partner at Palatine, said: “We have enjoyed a highly collaborative, productive and successful partnership with Phil and his team, based on a shared early belief in CTS’ potential to become a nationally-leading force in its market.
“This excellent outcome is a major milestone in what we are sure will continue to be a remarkable growth story for CTS and its new partners.”
In parallel with the acquisition of CTS, Oakley Capital has invested in Phenna Group, a global Testing, Inspection, Certification, and Compliance (“TICC”) sector business. CTS will become part of Phenna Group upon completion of both deals. The existing CTS management team will continue to lead the business within the wider group.
Phil Coles, CEO of CTS Group, said: “Over the last four years of partnership, Palatine has proven itself to be an outstanding and highly supportive investor. Together we have achieved remarkable growth, scaled the business significantly and enhanced our proposition to customers. All of this has paved the way for further long term success as we become part of a larger, ambitious, international group with the backing of Oakley Capital.”
Palatine was advised by Clearwater (corporate finance), Browne Jacobson (legal) and Deloitte (tax).
IoD appoints Paul Hooper-Keeley to lead Derbyshire and Nottinghamshire branch
The Institute of Directors (IoD) has appointed Paul Hooper-Keeley to lead its Derbyshire and Nottinghamshire branch.
Paul is Managing Director of Intervallum, a provider of finance director, chief financial officer and non-executive director services. Intervallum supports businesses through turnaround situations, growth and exit transaction projects.
He has been a board-level director since 1996 and was the IoD’s 25th Chartered Director, qualifying in 2000.
Paul has served as an ambassador for the IoD’s Greater Birmingham branch and holds non-executive director positions with B: Music and Lichfield Garrick Theatre.
He is a Fellow of the Chartered Institute of Management Accountants (CIMA) and holds an MBA from Edinburgh Business School.
Paul said: “I want to help to build better directors in this branch. This starts from the aspirations at student level in our universities to right across the spectrum of age and experience. We will build a community of directors and put on events that add value to their careers and businesses.”
IoD members range from start-up entrepreneurs to directors of large SMEs and international companies, as well as the public and third sectors.
East Midlands business confidence holds steady despite challenges
Business confidence in the East Midlands fell one point during August to 11%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported lower confidence in their own business prospects month-on-month, down 11 points at 4%. When taken alongside their optimism in the economy, down 6 points to 2%, this gives a headline confidence reading of 11%.
East Midlands businesses identified their top target areas for growth in the next six months as evolving their offering (34%), investing in their teams (22%) and diversifying into new markets (21%).The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.A net balance of a third (33%) of East Midlands businesses expect to increase staff levels over the next year, up 20 points on last month.Overall UK business confidence fell nine points during August to 16%, its lowest level since March 2021. Firms’ outlook on their future trading prospects was down 32 points to 5%, and their optimism in the wider economy dropped six points to 6%. The net balance of businesses planning to create new jobs also decreased five points to 16%.While every UK region and nation reported a positive confidence reading in August (except the South East, where confidence dropped 15 points to 0%), only three recorded a month-on-month increase in optimism. The three regions were the North West (up 26 points to 44%), South West (up 12 points to 23%) and Yorkshire (up nine points to 23%), with the North West now the most optimistic region overall.Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “It’s encouraging to see confidence among East Midlands firms remain steady, despite the multitude of economic headwinds they continue to face.
“In order to remain resilient, it’s crucial that they keep a close eye on working capital and make themselves aware, if they’re not already, of the many funding options available to ensure fluctuating demand doesn’t have a damaging impact on their cash flow.“We’ll be firmly by the side of businesses across the region to help them navigate the challenges that lie ahead.”
Business confidence declined across all four of sectors in August. Confidence within the retail sector declined the most this month (13%, down 18 points), with the service sector also seeing a significant nine-point decrease (15%). Other sectors saw moderate decreases, with manufacturing down by four points (16%) and construction (26%, a fall of two points), in line with recent trends.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence declined for a third consecutive month as firms continue to face economic challenges in the period ahead and as inflation concerns intensify. Despite edging lower this month, the outlook for both wage and price pressures remains elevated. However, there are some brighter points as the demand for staff remains positive, and firms reported lower concerns about staffing issues and the pandemic.”
Value of fraud declines in the Midlands
The number of alleged fraud cases exceeding £100k heard in Crown Courts across the Midlands dropped from 27 cases with a total value of £20.3m during the first half of 2021 to 16 cases with a total value of £13.7m for the same period in 2022, according to KPMG UK’s Fraud Barometer.
Looking across the alleged fraud cases heard in the Midlands between 1 January and 30 June 2022, the general public remained the most common victims, suffering losses amounting to £1.5m across eight cases. Businesses and government agencies were the two other main class of victims, with alleged losses amounting to a combined £2m across six cases.
The primary perpetrators were professional criminals, this is consistent with the national trend observed for the first half of 2022.
There was a notable change in the absence of alleged fraud committed against financial institutions, a contrast to H1 2021 when the value of alleged fraud amounted to £1.1m. Another notable change was the decrease in the number of cases allegedly perpetrated by individuals in management roles or employees, down 53% from 15 cases to seven in the same period.
Julie Bruce, Forensic lead for KPMG in the Midlands, said: “As the cost-of-living crisis continues to bite, members of the general public in particular need to stay alert for instances of fraud. The data has highlighted that fraud can take many forms and will have a lasting impact on those who have fallen victim.
“It is paramount that business and organisations ensure that they have anti-fraud controls and deterrents in place to defend fraudulent activity.”
Case studies to reach the region’s courts during this period include:
- A prominent businessman abused his role as a pension trustee and allegedly invested £10m from employee pension schemes into his new motorcycle business.
- A couple were jailed after defrauding the public purse in a scheme that exploited government systems designed to support businesses. The pair allegedly submitted over £7m in fake invoices which allowed them to claim over £1m in VAT from HMRC.
- A man has been jailed after scamming almost £500k from unsuspecting victims in a fraudulent car-selling scheme.
Rolls-Royce SMR signs agreement with Dutch company
Derby-based Rolls-Royce SMR has signed an exclusive agreement with the Dutch development company ULC-Energy to work together to deploy Rolls-Royce Small Modular Reactor (SMR) power stations in the Netherlands.
Rolls-Royce SMR and ULC-Energy believe nuclear energy can accelerate the transition to a clean, affordable, and reliable energy system in the Netherlands.
ULC-Energy intends to develop nuclear projects deploying modern, state-of-the-art, modular reactors that are based on proven technology. The Rolls-Royce SMR has been selected by ULC-Energy as its SMR technology provider of choice.
The Rolls-Royce SMR applies proven nuclear technology to provide affordable, secure, low carbon electricity and heat; building on capability and experience in manufacturing, energy systems and nuclear reactor design and construction.
90% of the Rolls-Royce SMR is built in factory conditions, limiting on-site activity primarily to assembly of pre-fabricated, pre-tested, modules which significantly reduces project risk and has the potential to drastically shorten build schedules.
By signing the agreement, the parties have formalised their alignment and will be working closely together to advance application of this technology solution over coming years.
Tom Samson, CEO of Rolls-Royce SMR, said: “This is an important and exciting step forward towards deploying Rolls-Royce SMRs in the Netherlands. Working under the agreement with ULC-Energy, as a developer who will deploy our technology, we will pursue a range of opportunities to provide affordable low-carbon energy for domestic and industrial uses.”
Dirk Rabelink from ULC-Energy said: “Challenging energy market conditions, particularly in Western Europe, have clarified the importance of having reliable and affordable energy systems. The Dutch Government believes that nuclear can and should play a meaningful role in the Netherlands. The Rolls-Royce SMR is ideally suited for the Dutch market. At 470 MW, and with a capacity factor >95%, each unit makes a meaningful difference and can be deployed efficiently to either supply power to the grid, or supply power and heat to dedicated industrial users.”
Secretary of State for International Trade, Anne-Marie Trevelyan, said: “It is fantastic to see UK firms like Rolls-Royce SMR leading the way on sustainable energy and exporting green technology around the world.
“We are truly proud to support leading UK companies which lead to international partnerships like this one, not only creating high-value jobs here in the UK and abroad, but also helping to wean the planet off harmful fossil fuels and move to reliable, safe, carbon-free energy. This is another essential step to meet our ambitious net-zero commitments.”
JW Doubleday shareholders agree to sell the business
The shareholders of Lincolnshire/Norfolk-based John Deere dealership group, JW Doubleday, have entered an agreement with Ben Burgess for the sale of the business.
In line with John Deere’s dealer of tomorrow strategy, Ben Burgess will formally acquire the Doubleday Group with all employees and existing Doubleday depots across Lincolnshire & Norfolk operating as part of the Ben Burgess group.
Founded in the early 1970s by John Doubleday the business has remained family owned, successfully growing for over 50 years and becoming a core part of the agricultural community. In 1982, the business became a main dealer for John Deere – as Deere was first growing its UK presence. JW Doubleday operates from locations in Swineshead; Holbeach, Kings Lynn and Old Leake. The company employs 54 staff.
Ian Doubleday-Collishaw, grandson of the founder, said: “This decision has not been taken lightly but we the Doubleday family, were determined to protect the future of our loyal team and the longevity of a reputable John Deere dealer across our trading area. We believe this is the correct decision for everyone involved.
“Ben Burgess share Doubleday’s values for providing premium brands backed by expertise and excellent standards of customer service. The combination of our joint processes, dedicated teams and the infrastructure already in place at Ben Burgess will deliver the best value to both our team and customers. We are confident the level of service you our customers are accustomed to will continue undisrupted.
“My family and I would like to take this opportunity to thank our dedicated team and our loyal customers, many of whom we consider our friends who have supported us throughout our 40 years as a John Deere dealer.”
Ben B Turner Dealer Principal at Ben Burgess said: “The Doubleday family have built a highly successful, strong and customer focused business over the past 50 years and were adamant that they wanted to pass their legacy over to a family business that shared the same values. We are enormously proud that they have chosen Ben Burgess to continue their outstanding work.
“The combined business will strengthen our position in the industry and enable the future investments required in facilities and technologies to proactively support our customers, offer greater opportunities and security to all our employees whilst continuing to grow in a responsible and sustainable manner. This growth will give the company a strong platform to enable our business to continue building on the great legacy of these two-family businesses.
“We aim to conclude the deal by the end of September to facilitate a quick and smooth transition for the benefit of all our staff and customers.”
Financial Services most desired destination for career changers, but retention challenge remains for sector
Almost a quarter (23%) of individuals looking to change career would consider working in financial services, making it the joint most popular sector alongside professional services for individuals considering a career change according to new data from KPMG UK.
The desire to change career appears to be trending across the UK’s workforce, with over a third (35%) of workers throughout the economy considering new careers because of the rising cost of living, up from 31% during the Covid-19 pandemic in 2020.
The three most popular reasons why individuals would consider a career in financial services include high salary and bonus expectations (58%), a good work life balance (43%) and that the topic sounds interesting (36%).
However, despite being an aspirational sector to work in, a significant proportion (42%) of Financial Services workers will be looking to change career themselves within a year, down slightly from 44% in 2020 during the Covid-19 pandemic.
Among Financial Services workers looking for a new career, 30% want improved salary and benefits, 23% want more job security and 20% want more flexibility regarding working from home arrangements.
Karim Haji, head of Financial Services at KPMG UK, said: “Given the rising cost of living and the broader economic uncertainty, it makes sense that many individuals will be considering their current roles, career choices and where they live and work.
“This will provide a great opportunity for Financial Services firms to target talent, but also make sure that they are better demonstrating the benefits of working in the sector and their improved proposition for employees. Doing so will help firms attract and retain the best talent.
“Encouragingly, the number of financial services workers looking to change career has dropped slightly since the Covid-19 pandemic. Many financial services firms have already offered pay rises to their employees, but as important to many are the other benefits which firms have invested in to boost personal fulfilment, such as more training, mobility and development opportunities.
“In the competition for talent, Financial Services firms should consider extending the scope of their search to include non-traditional pools of talent which can help boost diversity and inclusion. This could mean investing more in return-to-work, military transition, apprenticeships or school leaver programmes.
“Since the Covid-19 pandemic, many Financial Services firms have also made positive changes to their working practices, including dropping some of their more conservative employee policies in line with other sectors. This will go some way in tackling outdated perceptions of the industry and help to attract a more diverse workforce.”
The main reason why individuals wouldn’t want to work in financial services is because they don’t know enough about the sector or what job opportunities there are (32%). Long hours (23%) and the belief that the topic sounds boring (29%) were other prominent reasons why individuals would not want to work in financial services.
Karim added: “There is a huge diversity of roles within the financial services sector, and I’d encourage prospective applicants to do their research and not be put off by old fashioned stereotypes.”
Plans approved for transformation of Swadlincote town centre
South Derbyshire District Council’s Planning Committee has approved plans which will see the transformation of an area of Swadlincote town centre.
At their meeting on Tuesday 23 August, members approved the scheme, planned by the council, which will see:
The remodelling of the former indoor market site in Midland Road to create a multi-function events space available to host community and public events. This will include facilities for staging events such as open-air performances and festivals.
When activities are not taking place, the site would provide further free public car parking.
Work will also be carried out to demolish the derelict structures and clear the land between Midland Road and Belmont Street, on the sites known as Sabine’s Yard and Bank House.
Councillor Kevin Richards, South Derbyshire District Council’s leader, said: “I am proud that the plans for the transformation of Swadlincote town centre are one step closer after being approved.
“The plans for the redevelopment of Swadlincote Market Hall will see the transformation of a building which is unattractive and not fit for purpose into a new site which will offer new opportunities for entertainment.
“The wider scheme will also offer more car parking spaces, a ‘pocket park’ and the regeneration of vacant, derelict sites.”
The proposal was approved by the committee following consultation with stakeholders and the public.
