“We are setting compelling and achievable financial targets for the mid-term which will take Rolls-Royce significantly beyond any previous financial performance. This will benefit not just our shareholders but our people, customers and partners.
“We are building ‘one Rolls-Royce’. A company that can fully realise its potential, ensuring the excellence and innovation that helped shape the modern world, endures long into the future.”
Rolls-Royce targets “step change” in financial performance
Rolls-Royce is set to embark on a divestment program, efficiency initiatives, and partnerships as part of its new mid-term financial targets that will represent “a step change” in its financial performance, making the business “stronger and more resilient than it has been before.”
In the mid-term this means achieving operating profit of £2.5bn-£2.8bn, operating margin of 13-15% with free cash flow of £2.8bn-£3.1bn and return on capital of 16-18%.
These targets are based upon expectations for a 2027 timeframe. Rolls-Royce said: “We expect a progressive, but not necessarily linear, improvement year-on-year, and if we can accelerate the achievement of our ambitions we will.
“These targets, the performance improvements that underpin them and the actions we require to achieve them, are owned across the group and supported through rigorous performance management and clear lines of accountability. Our strong start to 2023 provides further confidence in our ability to deliver.”
Rolls-Royce’s new strategy is based on four pillars: portfolio choices & partnerships (the markets it is choosing to operate in, businesses it wants to invest in, and partnerships that will create truly winning positions), advantaged businesses & strategic initiatives (how it will create a competitive business, expand earnings potential and improve performance), efficiency & simplification (the importance of a company-wide focus to drive synergies that enable Rolls-Royce to be more competitive and simplify the way it operates), and lower carbon & digitally enabled businesses (Rolls-Royce’s commitment to the energy transition, building on the tangible progress it has made to date, and capturing the benefits of becoming more digitally enabled).
Amongst choices made to deliver the step change in financial performance, Rolls-Royce’s group-wide divestment program is targeting gross proceeds of between £1bn and £1.5bn over the next five years, which do not form part of the firm’s free cash flow targets.
Rolls-Royce said it will only sell assets at the right time and at the right price. For example, in Rolls-Royce Electrical the business is looking at options to exit in the short run or alternatively for the right value, reduce its position to minority with an intention to exit fully in the mid-term.
Rolls-Royce also believes “the world-class capability” it has built in Advanced Air Mobility will represent good value to a third party and will allow it to focus on its core electrical engineering activities in Power Systems, Defence and Civil Aerospace.
Moreover, Rolls-Royce efficiency initiatives will deliver sustainable savings of £400m-£500m in the mid-term.
Chief Executive Tufan Erginbilgic said: “Rolls-Royce is at a pivotal point in its history. After a strong start to our transformation programme, we are today laying out a clear vision for the journey we need to take and the areas where we must focus.
“We are creating a high performing, competitive, resilient and growing Rolls-Royce that will have the financial strength to control and shape its own destiny. We are confident in our ability to achieve these ambitions and have a clear and granular plan to deliver on our targets.
“We have made significant progress, with 2023 profit and cash forecast to be materially ahead of 2022.
Economy set to miss out on millions in warehouse crisis
New research reveals a lack of land is blocking the growth of the small to mid-box (sub-100k sq ft) warehouse sector, holding back job creation and costing the economy £480 million in Gross Value Added (GVA) per year.
With local planning focused on larger ‘Big Box’ (>100k sq ft) warehouse schemes and residential developments, change is needed.
The report, BIG things in SMALL boxes, is the second annual benchmarking report commissioned by industrial and logistics property company, Potter Space, conducted in collaboration with Savills. The report aims to uncover the challenges faced by the small to mid-box segment of the market and suggest potential solutions.
The biggest challenge facing this sector is that of ‘suppressed demand’. This means that demand for space outstrips the available supply of land for development. The report reveals that demand is suppressed in England by 38 per cent, and in some areas, this figure climbs to over 100 per cent.
The Midlands has been particularly affected, above other areas. Suppressed demand currently sits at 51 per cent in Nottingham and Derbyshire. This climbs to 57 per cent in Birmingham and reaches 101 per cent in Leicestershire, making the Midlands the hardest hit area outside of Stoke and Stafford (50 per cent) and Crawley in the South East which sits at 166 per cent.
One proposed solution to combat suppressed demand is ‘co-location’. Larger logistics property companies are facing a decline in demand, leaving unused space that could be filled by smaller providers to create economies of scale by sharing costs of infrastructure, such as access, drainage and power.
By co-locating on large sites, smaller providers could increase their footprint, create jobs and build more resilient local economies. Co-location is also growing in popularity within new developments, with a 16 per cent increase in new builds created with ancillary office space included since 2020, allowing businesses to conduct all operations from one site.
According to the report, local authorities should take a positive approach to planning to unlock economic benefits. Local planners should consider land that is unsuited to bigger warehouses as opportunities for smaller facilities, including areas close to residential developments, beside motorway junctions or railway tracks.
The small to mid-box warehouse sector currently provides 2.1 million jobs in England, with more waiting to be created. It is responsible for 31% of apprenticeship starts, with 13,000 apprenticeship roles per year beginning in small to medium enterprises (SMEs). If the undersupply of land is addressed, this figure could increase to a potential 18,000.
Jason Rockett, Managing Director at Potter Space, said: “Whilst there have been some small steps forward in the industry, the main challenge of finding enough space to meet the demand of these businesses that make up the backbone of the economy hasn’t gone away.
“Our report findings clearly show the need for logistics property companies to work together and collaborate with local authorities for a sustainable future in which the demand of all businesses can be met. If we can get this right now, we’ll not only support businesses, but also provide meaningful and long-term jobs in our local communities.
“Co-location is one way that the sector can work together to make the best use of available land and resources. With suppressed demand sitting at 38 per cent and rising to above 100 per cent in areas such as Crawley and Leicestershire, it’s clear that steps need to be taken now to improve the situation, before it is a major challenge that puts a stop to business growth and job creation.”
Frozen food company fined after employee loses fingers
A frozen food company has been fined £700,000 after an employee lost two of his fingers following an incident at the firm’s premises in Lincolnshire.
Tom Matthews, from Grantham, now champions health and safety in his current job at a different company, warning others to avoid his misfortune.
He had been working a night shift at McCain Foods’ site in Easton on 2 September 2019 when he suffered serious injuries to his left hand.
While cleaning the company’s batter system machinery, the 33-year-old had attempted to remove string dangling from a chute when his left hand was drawn in and contacted the machine’s rotary valve.
The index and middle finger were later amputated as a result of the incident.
Tom Matthews, a father-of-two, said: “The last four years have been hard and an ongoing struggle both physically and mentally. I still have circulation problems in my left hand following the incident that should never have happened.
“While I’m currently working, my new role is with the health and safety team at a different company as I want to use my story as an example to others and make sure something like this doesn’t happen again.”
A Health and Safety Executive (HSE) investigation found that McCain Foods had failed to provide appropriate guarding to prevent access to the dangerous parts of machinery, namely the rotary valve. It had not conducted an adequate risk assessment of the batter machine and had not provided employees with adequate health and safety training or supervision.
McCain Foods (G.B.) Limited, of Havers Hill, Eastfield, Scarborough, North Yorkshire, pleaded guilty to breaching Section 2(1) of the Health & Safety at Work etc. Act 1974 and Section 11(1) of Provision and Use of Work Equipment Regulations 1998 (PUWER). The company was fined £700,000 and ordered to pay £6,508.51 in costs at Lincoln Magistrates’ Court on 22 November 2023.
HSE inspector Muir Finlay said: “This incident could so easily have been avoided had the company taken simple steps to guard dangerous parts of machinery and provide employees with suitable training and supervision.
“Companies and individuals should be aware that HSE will not hesitate to take appropriate enforcement action against those that fall below the required standards.”
This prosecution was led by HSE enforcement lawyer Jonathan Bambro and supported by Rubina Abdul-Karim.
Nottingham academics receive funding to help make AI safe to use
Academics from the University of Nottingham have received funding to research how to ensure Artificial Intelligence (AI) is safe to use, in a new project alongside the Universities of Oxford and Warwick.
The UKRI funded Responsible AI UK (RAI UK) has announced its first round of Impact Acceleration projects, investing £1.8m to ensure AI is safe, and that it will be responsible to the needs of society, addressing topics such as Generative AI in teaching and learning.
In one of these Impact Acceleration projects, researchers from Horizon Digital Economy Research and the Mixed Reality Lab at the University of Nottingham will join colleagues from the University of Oxford and the University of Warwick to deliver ‘Responsible Innovation Advantage in Knowledge Exchange ‘RAKE’’.
The project will work with a variety of stakeholders including businesses, standards bodies, funding organisations, research teams, doctoral training centres and SMEs to explore how Responsible Innovation (RI) can be better embedded and will deliver RI training sessions in these differing environments.
Dr Alan Chamberlain, in the School of Computer Science at the University of Nottingham, will lead on the development of an international interdisciplinary network to bring together academics, researchers and experts to better understand responsible AI in the context of the Arts and Humanities.
He said: “Starting to examine how people understand and apply responsible AI in their work is important. It will help us to approach the design of responsible systems together. Involving the public is fundamental, it’s vitally important to enable people to participate and have input into research.”
Professor Elvira Perez Vallejos and Dr Virginia Portillo at the University of Nottingham, along with Dr Carolyn Ten Holter at the University of Oxford, have a wealth of expertise and knowledge and will lead work with the Institute of Electrical and Electronics Engineers Standards Association, UKRI CDTs and AI spinouts to map current RI practice, identify gaps and develop guidance to embed and drive knowledge exchange. Alexandra Dock Housing site released to market
An opportunity to create a brand new housing development on brownfield land near the Grimsby Fishing Heritage Centre has been released.
The site, behind the newly renovated Garth Lane waterfront area, has been earmarked by the Council for urban housing and the Council is now looking for a development partner to come forward to drive the project forward.
The 6.25 acre town centre site bordered by Fisherman’s Wharf and the River Freshney will eventually see a community of around 130 homes with supporting commercial accommodation.
The frontage of the site, bordering Alexandra Dock, was completed in 2021, and includes the new footbridge over the River.
This area was identified for homes in Grimsby’s Town Centre Masterplan, which is supported by Homes England, and is cited as an ideal location given the water nearby and the improvements that have already taken place.
Investment worth approximately £7.8m to support the development at this site has already been secured through the Government’s Towns Fund.
Cllr Philip Jackson, leader of the council with responsibilities for the economy, net zero, skills and housing, said: “The main objective of this work is to create a place that connects the town and its community with its waterside, creating a fantastic urban living environment.
“There’s a long way to go yet, and developments of this scale don’t happen overnight. But we are working to improve the town centre as a whole and this is part of that vision. Step-by-step we want to change how our town centre is used and enjoyed as a whole.”
Potential bidders can view documentation on www.find-tender.service.gov.uk– external site. Selected developers will then take part in a competitive dialogue, followed by an invitation to submit formal tenders to develop out the site from 2024 onwards.
Investor swoops for Wellingborough engineering company
Nene Capital, an investor in UK small and medium-sized enterprises (SMEs), has acquired MTS (Motor Technical Services Ltd), a Wellingborough engineering company.
Stephen Bayliss, Managing Director of Nene Capital, said: “With its strong track record of delivering high-quality products and services to its customers, MTS is a clear fit with our investment strategy.
“It has a unique value proposition and a compelling vision, we look forward to supporting the talented management team to deliver their growth plans over the long term.
“This acquisition is a testament to our unwavering commitment to identifying investment opportunities in the SME space with long term growth potential, and creating value on a risk adjusted basis.”
MTS, which specialises in the sale, servicing, repair and reconditioning of electric motors, generators, fans and pumps, will now benefit from Nene Capital’s resources and strategic guidance.
This synergy is expected to further elevate MTS’s position in the engineering sector and enable the company to explore new avenues for growth and development.
Simon Stringer, finance director of Nene Capital, said: ”MTS has performed consistently for a number of years through putting customers first – delivering a solution-based quality product to a loyal client base.
“These fundamentals, combined with the massive opportunities in this market, now and in the future, make it another excellent SME acquisition for Nene Capital.”
“We are thrilled about the opportunities that this acquisition will bring to MTS and its stakeholders,” said Tony Libertucci, Managing Director of MTS. “Nene Capital’s commitment to supporting the growth of UK SMEs aligns perfectly with our vision for expanding our reach and capabilities.”
County leaders sign proposed Lincolnshire devolution deal
Parliamentary Under Secretary of State of Levelling Up Jacob Young met the three Greater Lincolnshire Council Leaders today (27 November 2023) as they united to sign the greater county’s proposed devolution deal.
Mr Young joined North East Lincolnshire Council Leader Cllr Philip Jackson, along with Cllr Martin Hill OBE from Lincolnshire County Council and Cllr Rob Waltham MBE from North Lincolnshire for the ceremonial event held at Scunthorpe’s 20-21 Visual Arts Centre.
Parliamentary Under Secretary of State for Levelling Up Jacob Young said: “It’s fantastic to be here in Lincolnshire today announcing our devolution deal for the Greater Lincolnshire area.
“It comes alongside extra funding, more powers and a new directly elected mayor for the Lincolnshire area. I know it’s going to have a dramatic impact across the whole of the Lincolnshire County.”
Cllr Martin Hill said: “This is a deal which will be fantastic for Greater Lincolnshire, from the Humber down to the Wash.
“It gives us a lot of extra spending power over the next 30 years, £24 million a year for the next 30 years, and some additional money straight away that we can spend on our priority areas.
“But importantly it will give us extra powers as well to make sure that we can direct that spending in areas that we know local people need it, around infrastructure, around transport, around housing, flood defence and various other areas where we know we’ve got need in the county.
“We know it’s going to be great for us in determining the future direction of Greater Lincolnshire.”
Phase one at Beauchamp Business Park 80% sold
Over 80% of units in phase one of Beauchamp Business Park, a new commercial development in Kibworth, Leicestershire, have now been sold or are under offer, just two months after being made available for enquiries.
Beauchamp Business Park is being brought forward by Clowes Developments and its team including IMA Architects, TanRo, Millward Consulting Engineers, Gateley’s Legal and Postins Project Services. Philips Sutton and TDBRE have been instructed as agents on the scheme.
The level of take up at Beauchamp Business Park demonstrates the strength of demand from local companies wanting to grow their business within Leicestershire and companies from outside of the region choosing to make Leicestershire their new home.
By working in partnership with Investment Manager, Oliver Whittaker at Invest in Leicester, Clowes Developments has formed a strategic partnership that is committed to enhancing the local economy by attracting new companies, creating employment opportunities and promoting future growth. This collaboration will benefit the local economy and boost job creation in the local area.
In October, Units A and B were purchased by a Leicester based family of investors, and now terms have been agreed on the majority of remaining units.
Mike Denby, Director of Inward Investment at Invest in Leicester, says: “Leicester and Leicestershire presents an exceptional location for businesses seeking expansion, as evidenced by the popularity and quality of businesses at Beauchamp Business Park.
“By collaborating with companies like Clowes Developments and its partners, we can provide the infrastructure that supports ambitious businesses, fuelling growth within our region.”
Paul Turner, Construction Director at Clowes Developments, says: “The level of demand we have seen for the site has been phenomenal which shows the strength of the real estate market in Leicestershire currently. We are proud to be delivering another scheme that will benefit the East Midlands economy and boost job creation in the local area.”
Ben Hall, Director at IMA Architects, adds: “We have been involved in the creation of Beauchamp Business Park from the start and have been able to create units that will be perfect for a range of industrial uses. It is fantastic to see the popularity of the site and I am sure it will be an asset to the local economy for years to come.”
Construction is underway at the site with Phase One completion expected in April 2024. Phase Two is currently being marketed on a leasehold and freehold basis. When complete, the site will feature a series of freehold and leasehold industrial units ranging from 1,270 sq ft to 10,085 sq ft.
PwC appoints Helen Ward as Midlands deals leader
PwC has appointed Helen Ward as Midlands deals leader, succeeding Matthew Hammond who has led the deals practice over the past few years.
Helen joins the Midlands senior leadership team having built her career with PwC since 1996, most recently as a transactions partner in the deals practice. Helen specialises in providing financial due diligence services to a range of corporate and private equity clients, with a national focus on industrial products and services sectors, as well as a broad range of clients based in the Midlands.
Her priorities in the role will be to continue to build the deals practice in the region to support local businesses, as well as working with some of the firm’s biggest national clients, and helping to develop the next generation of talent.
Speaking about the appointment, Helen said: “I’m delighted to be taking on the role of Midlands deals leader. Having built my career in the Midlands since first joining the firm, it’s fantastic to be supporting the vision and strategy for the future of the region.
“As a diversity champion, I’m particularly focussed on developing our exceptional talent base and ensuring we have the right pathways in place to help all of our colleagues reach their career goals.”
David Morris, PwC UK Midlands regional market leader, said: “Helen brings a wealth of knowledge and experience working with some of the firm’s largest clients, and her commitment to developing talent will benefit so many of our colleagues.
“With almost 50% of PwC’s people based outside London, this appointment reflects the continued commitment and investment in our regional practices.”
Community health business acquires local pharmacies
Health business Jhoots Pharmacy has acquired 36 community pharmacies with support from HSBC UK, with sites spanning from the Peak District to Hampshire. The deal is expected to protect 212 jobs and create up to 130 new roles.
Jhoots Pharmacy will use a £17.4m funding package to acquire the sites across the UK which were previously owned and managed by Lloyds Pharmacy, securing jobs within small neighbourhoods and villages.
Jhoots Pharmacy, which owns and operates 63 sites across the UK, will use the funding to undertake refits and enhance pharmacy offerings, ensuring local communities have access to urgent care services – such as referrals from doctors, sexual health consultations and travel clinics – to alleviate GP waiting times.
Sarbjit Jhooty, business development director at Jhoots Pharmacy, said: “We were looking for the right banking partner to support our business and our vision to grow into a larger pharmacy chain. With HSBC UK’s backing, we’re committed to providing a service that puts the community first, with a strong face-to-face approach that will offer enhanced support to local areas.”
Partho Bose, relationship director at HSBC UK, added: “It’s extremely important to increase the access to care in the UK. With our extensive understanding and experience within the health sector, we’re providing Jhoots Pharmacy with financial foundations to realise the business’s ambitious growth plans as well as protecting and creating jobs.”
