Category: Corporate Finance

Thoughts in advance of the 2023 Autumn Statement

Posted on by Derval Rooney

For many years Autumn Statements did not create much interest outside of economic and political circles. They were more like midterm report cards that would signpost how things were going in the economy, with updates on public spending and borrowing. Since 2018 the plan was for the Budget to take place in the Autumn and then there would be an economic update in the spring to be called the Spring Statement. The theory was to avoid two fiscal events in the same year and to enable Parliament to have more time to debate and review draft fiscal legislation. However, since 2018, the reality has been much less clear cut with a plethora of ad hoc fiscal statements and indeed last year a budget statement reversal after the chaos caused by the Truss/Kwarteng budget statement in September 2022.

On 22nd November 2023 Jeremy Hunt will present his Autumn Statement to Parliament. He will no doubt be relieved that he has survived the recent cabinet reshuffle, but that relief will be significantly tempered by the thought of an election which must take place within the next 15 months. The current opinion polls, the state of the UK and global economies and the fact that the current Government has put in place fiscal measures that have led to the highest tax burden in the UK since the end of the Second World War will mean that any thoughts of job security may be temporary.

So, will the Chancellor make any surprise announcements at the Autumn Statement in a bid to both stimulate the economy and start to reverse the trends in the polls? The general thinking is that he has virtually no room to manoeuvre at the minute. Whilst tax receipts have been extremely buoyant in the last six months due partly to the better-than-expected economic growth but mainly to the impact of the increased tax burden, the impact of inflation on public sector costs and the huge increase in government borrowing interest costs (rising to over £100bn this year) will mean there is virtually nothing in the kitty for any big tax give-aways.

With that in mind, it is always worth looking at what might be included in the statement (or maybe even in the Spring Budget):

Corporation tax rates went from 19% to 25% from 1st April this year (despite the Truss/Kwarteng attempt to reverse this last year). The higher rates will no doubt impact on foreign direct investment, and it may be too early to tell whether the higher rate will result in a higher tax yield. Whilst the natural home for a Conservative Chancellor would be to lower corporation tax rates, one must remember that companies don’t vote and we are too far into the current election cycle for a cut in corporation tax rates to have any significant impact in time for the next election.

Inheritance Tax is regarded as the most hated tax in the UK — effectively paying tax on wealth that has already been subject to income tax and capital gains tax. There were some hints earlier this year that this tax may be subject to a root and branch review and that it would be adjusted so as to take most people out of the inheritance tax net, leaving only the wealthiest subject to it. However, inheritance tax is actually not paid by the majority of people and its dislike is more often about its perceived impact rather than its real impact. Whilst the cost of making some significant changes would not be enormous, it would be seen as handing a tax break to the wealthy at a time of austerity and thus it may not have the electoral impact that would make it worthwhile.

Stamp Duty Land Tax has been around for 20 years now and the rate has steadily increased over that time. There may be merit in a reduction in the rate at the bottom end of the property ladder to not only help stimulate the struggling housing sector but also to encourage younger people to get onto the property ladder. Having said that, with the base interest rates now north of 5% after a decade of interest rates closer to 1%, the reduction in SDLT rates may not give the necessary short term boost to first time buyers.

It is highly unlikely we will see any reduction to income tax rates or national insurance rates, the cost of such reductions would be just too great and any such rate cuts at this time could spark unwelcome movements in the UK government bond market similar to those seen last autumn.

Mr Hunt is between a ‘high tax rock’ and a ‘looming election hard place’. It is hard to see him having any wriggle room just now. However, the November Statement is not quite the last chance saloon, that will be the Budget Statement next spring. I suspect the Chancellor and his government will be keeping their fingers crossed that tax receipts will stay buoyant, global economic factors will enable inflation to fall back further and that interest rates will ease back below 5%. They say a week is a long time in politics but the question is will four months be long enough for the economy to provide a window of opportunity for the Chancellor? Watch this space.

Connor McAnallen Appointment

Posted on by Rory Moynagh

HNH are delighted to welcome Connor McAnallen as a Manager into our Deal Advisory team.

An Accountancy graduate of Queens University Belfast, Connor completed his training contract within the Accounts and Business Advisory Department of RSM in Belfast before moving to the Corporate Finance team within Mid Ulster based CavanaghKelly. During this time, he has gathered experience in both M&A lead advisory work as well as the delivery of due diligence projects.

Rodney McCaughey, Transaction Services Director welcomed Connor to the team, saying, “We are delighted to welcome someone of Connor’s calibre to the deal advisory team, and we are confident that the skills and experience he brings will make a significant contribution in delivering our growth plans.”

Connor added, “I am excited to take up my new role within HNH and look forward to working with the firm’s wide variety of quality clients. I am also looking forward to working alongside a team of top tier finance professionals to build on my experience gained to date in my career.”

Appetite for Renewable Energy Investments Continues to Rise

Posted on by Rory Moynagh

“With increasing concerns around climate change and the cost of energy, it’s no surprise to see growing appetite for investments in the renewable energy sector.”

Following the successive recent completions of the debt funded MBO of Realise Energy Services Ltd[i], and the investment into The Electric Storage Company[ii], HNH’s Head of Sustainability, Paul Gleghorne gives his thoughts on transactional activity for companies operating within the renewable energy sector.

“We have had an incredibly busy M&A market generally for 12-18 months, with a multitude of transactions across a range of sectors. The rhetoric from institutional investors remains positive around the availability of capital and their desire to deploy through all cycles. M&A activity and investments will continue but with a combination of cost inflation, supply chain issues, geopolitical uncertainty, and the remnants of COVID-19, we expect deals to be more strategic and measured, where strong management teams and deal structuring are likely to be key factors. Opportunities within defensive industries, especially where regulation is driving investment, will remain attractive.”

Paul explains that appetite for opportunities in the renewable energy sector has remained particularly high.

“The steep rise in the cost of energy has highlighted the overreliance on conventional energy generation. Many large energy users are now seeking to lower their marginal cost of energy use by installing solar panels and batteries or even opting to build their own renewable energy generation as private wire projects. In addition, it is becoming increasingly important for companies to demonstrate their green credentials to customers with ESG reporting requirements. On the other side, whilst financial returns ultimately drive decision making, investors are becoming increasingly eager to provide funding or invest in opportunities which assist in achieving their ESG targets.”

“It’s not all asset-based investments either, there are a host of companies providing services that facilitate the use of renewable energy. The recent deals of Realise Energy Services, who operate and maintain over 200 wind turbines across the UK, and power engineering and technology business The Electric Storage Company, attracted considerable interest with some interested parties citing green credentials as a contributing factor in their decision making.”

HNH Corporate Finance have a dedicated team with a specific focus on transactions in the sustainability sectors, ranging from sell/buy side M&A, raising project finance and appraising investment opportunities.

[i] The MBO of Realise Energy Services Ltd was funded by specialist credit provider Beach Point Capital

[ii] https://www.theelectricstoragecompany.com/2022/06/27/heron-bros-deliver-power-boost-for-the-electric-storage-company-with-significant-investment-and-strategic-partnership/

New Addition to Deal Advisory Team

Posted on by Rory Moynagh

HNH are delighted to welcome Lucas Batchelor as an Assistant Manager to our Deal Advisory team.

Lucas graduated from Queen’s University Belfast with first class honours, completing a BSc in Economics with Finance. During his time at the university, he was awarded the prestigious Porter Scholarship. Lucas completed his training as a chartered accountant in KPMG’s audit team in Belfast. He is currently completing an MSc in Data Analytics at the University of Glasgow and has recently submitted his final dissertation, “Comparing the performance of bankruptcy prediction methods”.

His appointment illustrates the continuing expansion and development of the Deal Advisory team.

“Paul Gleghorne commented: “We are delighted to further bolster our team within the Corporate Finance and Financial Modelling service lines. Whilst 2022/2023 will have more complexities for those considering embarking on M&A, we have an exciting pipeline of work and this is a sign of continued investment in our growing team.”

Lucas said, “I am thrilled to begin my new role within the Deal Advisory team at HNH. I am looking forward to working with a wide variety of quality clients and continuing my professional development within a team of high calibre individuals.”

Time to plan for an MVL?

Posted on by Rory Moynagh

Written by Jamie Callaghan

With the Chancellor’s Spring statement fast approaching, those business owners contemplating retiring or exiting their business will no doubt be considering the possible implications for them should the Government announce changes to the Capital Gains Tax (‘CGT’) regime. 

As the Government continues to deal with the aftermath of unprecedented borrowing to support the economy during the pandemic, some consider that CGT could be next on the Chancellors hit-list to raise funds. This could be achieved through the removal of business asset disposal relief (‘BADR’) or, as recommended by the Office of Tax Simplification, increasing the CGT tax rate. 

Business owners can mitigate their risk now by discussing a Members’ Voluntary Liquidation (‘MVL’) with an Insolvency Practitioner to explore whether it is an option suitable for them. 

An MVL is an option for solvent companies wishing to wind down their activities and allows for assets to be distributed in a tax-efficient manner, whilst also giving directors certainty given the finality of the liquidation process. Subject to certain conditions, distributions made in an MVL can qualify as capital distributions and business owners can avail of BADR with a tax rate of 10%. At current rates, this relief can save business owners up to £100,000 in CGT. 

An MVL is only an option for solvent companies meaning that the company must hold enough assets to be able to settle all liabilities and interest in full, normally within 12 months. Due to the ability under company law to hold members’ meetings at short notice, companies can often be placed into an MVL within a couple of days. 

While no-one really knows what the Chancellor’s plans are for CGT come 23rd March and beyond, business owners should always keep one eye on their exit strategy and plan accordingly. This will ensure their company’s activities are wound down in the most efficient possible manner.

A Squash and a ‘Fiscal’ Squeeze

Posted on by Rory Moynagh

Written by Rory Moynagh

If there has one benefit from the past 2 years, it is undoubtedly the opportunity to spend more of those precious moments with our kids. Whether that be the school run, homework or generally just being around more, the pandemic has afforded people the opportunity to reset and perhaps realign those priorities in life.

I’m sure like many, after an excitable day, our kids like to unwind before bedtime with a book.

During a recent reading of Julia Donaldson’s “A Squash and a Squeeze”, I’m sorry to admit, but my mind started to wander as I was reciting the words (almost by memory now at this stage!).

With the increase in hybrid working, I’m sure many might relate to the challenges of space being at a premium in our households at times, however I then began to consider the current fiscal squeeze facing many households.

Fiscal Squeeze

Whether it be rising heating bills, electricity costs, shopping bills, credit cards or fuel costs, the squeeze on household income is very much real.

Coupled with future increases in National Insurance Contributions from 6th April 2022 as well as last week’s announcement of future increases in local property rates, the financial pressure facing households continues to increase.

It was recently reported by the Office for National Statistics (“ONS”) that 76% of people were paying more for food, energy and petrol in the 10 days 3rd February 2022 to 13th February 2022. This was an increase from 69% for the period 19th January 2022 to 30 January 2022. Furthermore, consumer prices also rose by 5.5% in the 12 months to January 2022, the highest since March 1992 (7.1%).

The challenges presented by such inflation cannot be underestimated.

Whilst the Bank of England have attempted to curb the rising levels of inflation by increasing interest rates earlier this month, this will also have an additional knock-on effect on those with tracker or variable rate mortgages, further tightening the squeeze facing many household incomes.

Not Just Households, Businesses Too

Of course, this pressure is not limited to purely households, with many businesses also facing rising costs.

Inflation, Brexit and wider economic and political issues have resulted in increased labour, transport and material costs. The resulting impact on margins has been considerable for many businesses, and whilst many have publicly stated that every effort is being made to avoid passing such cost increases on to the consumer, the above ONS statistics unfortunately confirm the reality that such costs are already being passed on and will likely continue to be in the months ahead.

Plan, Plan, Plan

For both consumers and businesses, the only response to such rising costs is to plan accordingly.

Households should start, or if they already have one, update, their household budget. This will not only help prioritise essential expenditure and manage outgoings, but also highlight any potential areas of concern. Once highlighted, any such problems can then be addressed at an early stage before they become too problematic.

Similarly, businesses should review their business plan and update their financial projections accordingly.

Owners should perform extensive sensitivity analysis under various scenarios and take time to strategise regarding both the pressures currently being faced and the future direction of the business as a result.

Again, early phase planning and review, will help businesses identify any funding gaps or financial pressures, which can then be discussed with stakeholders, banks, funders and / or creditors.

What is important to note however is that no matter how big the problem may seem, there is always professional assistance available to help work through the issues.

Advice

Seeking the assistance of professional advisors to review and critique a household budget, or a business’ operational, financial and strategic plan, could provide the very solution to the current pressures being faced.

There are solutions out there that can provide a chink of light in even the bleakest of situations. What is required is early engagement to identify and address the issue, and a focused and tailored approach to its resolution.

Whilst the past few years have presented their challenges, we all must recognise of how far we have come and what we have all been through. Of course, there will be further challenges ahead and we are all aware that the unprecedented level of Government support during the pandemic will have come at a cost.

However, if we all face this current period with the same approach and determination that we have recently shown, people and businesses can come through this and be in a position to take advantage of future opportunities that present themselves.

The Psychology of Debt: Post Pandemic Impact

Posted on by Derval Rooney

Written by Fiona Elwood

As we begin 2022, it is widely reported that rising living costs are having a financial, emotional and physical impact upon an ever-increasing percentage of the population. With National Insurance set to increase in March and the UK as a whole beginning to feel post pandemic inflationary pressures, one of the UK’s leading Debt Charities, StepChange, have confirmed that one in three people in the UK are struggling to keep up with bills (interestingly this is double the pre-pandemic number). Advice NI, another debt advice charity, has also recently issued a call to ‘encourage everyone to take a look at their finances now to help deal with what’s coming over the next year’. 

In my role as a debt advisory professional, we often meet with people struggling with their finances and in nearly every case the emotional (and physical) side effects of their financial difficulties are clear for us to see.

Whilst most households in Northern Ireland will have mortgages, car loans, personal loans, credit cards along with other essential monthly financial obligations such as childcare costs, It’s important to consider that debt impacts different people in different ways.  One person may suffer severe anxiety owing £1,000 on a credit card whilst another person may consider a credit card bill of ten times that, normal. Debt and financial pressures are not a new issue, but the effects of the pandemic have shone a light on the fact that any amount of debt can have a serious mental health impact. 

The commonly accepted emotional effects of debt include: Depression and Anxiety, Resentment, Denial, Stress, Anger, Frustration, Regret, Shame, Embarrassment and Fear. A recent study by Queen’s University Belfast on the Impact of debt and financial stress on health in Northern Irish households outlined that “neither the size of the debt, the type of debt nor the number of different lenders used affect health whereas the subjective experience of feeling financially stressed has a robust relationship with most aspects of health. In particular, financial stress negatively affects self-care problems, problems with performing usual activities, experiencing pain and feeling anxious or depressed”.

The key advice around resolving financial difficulties is to seek professional help.  When the financial problem is addressed and the appropriate solution is determined and implemented people will often describe more positive feelings such as relief, freedom and accomplishment. The age old saying of a problem shared is a problem halved has never been more true.

We often witness that when an individual begins a process such as bankruptcy or Individual Voluntary Arrangement to resolve the issue, there is a clear sense of relief experienced by the person and it is notably visible. Many of our clients describe the feeling of having a weight lifted from around their shoulders and many describe the day they accept the issue and seek help as being the first day of the rest of their lives. The role of a debt adviser is not the most glamorous of occupations but the ability to make a positive impact on someone’s mental health does make it all worthwhile.

Anyone affected by debt should seek professional advice and also avail of debt counselling to help deal with the mental health impact. StepChange, Advice NI or Christians Against Poverty are just a few of the amazing debt charities providing fantastic support in this area and their work (in an area that often remains unspoken about) should not go unnoticed.

https://www.stepchange.org/

https://capuk.org/

https://www.adviceni.net/

Deal Advisory Openings

Posted on by Rory Moynagh

Due to the buoyant M&A market and with a strong and growing pipeline for FY22, we are seeking to recruit into our Deal Advisory team.

  • – Assistant Manager/ Manager ideally with lead advisory or FDD experience
  • – Chartered Accountant with 2+ years PQE
  • – Based in our Belfast office

For more detailed information on the opportunities, or to submit a CV, please contact us via careers@hnhgroup.co.uk

HNH Strengthens Deal Advisory and TS Teams

Posted on by Rory Moynagh

A double helping of good news today as we announce two new additions to Deal Advisory and Transaction Services and congratulate two existing team members on their promotions.

Paul Gleghorne has been promoted to Associate Director in our Deal Advisory Team and will take the lead on engagements in the waste, energy and renewables sectors in addition to continuing his leadership role within financial modelling engagements. Peter Graham has been promoted to Senior Manager in our Deal Advisory team.

Duncan Thorburn joins our Deal Advisory team in Edinburgh as a Senior Manager from a similarly-positioned M&A boutique in Scotland, where he has been working across both corporate finance and TS for the last five years. He was previously at RBS, having joined their graduate scheme and fulfilled a number of customer facing and internal reporting roles.

Duncan arrives with strong experience and insight into the Scottish Tech sector and the wider SME funding environment, and we recently worked in conjunction with him when he undertook a buyer diligence role for Maven on Quorum Cyber, the MBO HNH advised on in June 2020.

Harry Linklater, Deal Advisory Director for Scotland, welcomed Duncan to the team, saying , “We believe that adding Duncan into the fold at HNH will be a key strategic addition to our team in Scotland, bolstering the ability we offer to provide experienced and relevant input to the technology and wider market here at HNH. Our focus has always centred on delivering best in class advice at a senior level, with an emphasis on local clients and Duncan’s addition enhances that’.

Duncan added, “I am excited to take up my new role with HNH and look forward to continuing to build on relationships I have developed with both clients and the investor market”

In 2018, we launched a Transaction Services division under the leadership of Rodney McCaughey. Since then, we have carried out FDD engagements for corporate acquirers, debt providers and private equity investors on transactions throughout the UK and Ireland. Highlights include the investment in the CRS by Renatus Capital Partners and the investment in Kingsbridge Healthcare Group by Foresight and 57 Stars.

On the back of the success of the last two years and with a strong pipeline of work, we are pleased to welcome Tom Swatman to our TS team as an Assistant Manager. Tom qualified as an accountant with Harbinson Mulholland in Belfast and prior to that gained experience working with Bank of America Merrill Lynch in London.

Congratulations to Paul and Peter on well-deserved promotions and a very warm welcome to Duncan and Tom.

CRS Mobile Cold Storage

Posted on by Rory Moynagh

A team led by Rodney McCaughey has provided financial due diligence for Renatus Capital Partners on its investment in CRS Mobile Cold Storage.

Headquartered in Co. Meath, RoI, CRS provides portable refrigeration equipment including cold stores, blast freezers and cold rooms to customers throughout the UK and Ireland.

The investment from Renatus, which is the first from its new €35m fund, will be used to accelerate the business’ growth aspirations in the UK and Europe.

COVID-19: Implications for Financing & M&A

Posted on by Rory Moynagh

Deal Advisory director Neal Allen recently gave a presentation to ICAEW members in Scotland on the implications of COVID-19 on the outlook for fundraising and M&A activity. A copy of the presentation is available to download via the following link

COVID-19-Short-Term-Financial-ImplicationsDownload
  • Neal Allen
  • Director – Deal Advisory
  • neal@hnhgroup.co.uk
  • 07876 475783

Scottish Growth Fund

Posted on by Rory Moynagh

Our Transaction Services team is delighted to have advised Foresight Group on their investment into Substantive Research, a leading provider of data driven insights for the asset management sector.

https://www.foresightgroup.eu/news/foresight-invests-800-000-into-substantive-research-limited/

Our TS team has extensive experience in advising private equity investors throughout the UK and Ireland. Our Director-led, bespoke diligence process focuses on the key transactional risk areas, prioritising quality and insight over quantity and resulting in the production of an actionable document.

To learn more about our financial due diligence services, please contact Rodney McCaughey

HNH Secure Three Nominations in Insider Dealmakers Awards 2018

Posted on by Rory Moynagh

HNH Group has been shortlisted in three categories at Insider’s Northern Ireland Dealmakers Awards 2018.

Yesterday, Insider Media published their final list of firms, banks, deals and individuals nominated ahead of March’s awards ceremony, which will be held in Belfast Waterfront.

The awards recognise NI’s top corporate finance professionals, funders and lawyers. An independent panel will judge the four deals, young dealmaker and dealmaker categories, while the other awards will be decided based on votes cast by business professionals.

gavin-early director
Gavin Early – HNH Associate Director

Belfast based HNH Group has again been shortlisted for the Corporate Finance Advisory Firm of the Year category, having won the award in five out of the past six years. Associate Director Gavin Early is up for Young Dealmaker of the Year, while Director Richard Moorehead is nominated on the Dealmaker of the Year list.

HNH’s Corporate Finance team is trusted by a wide range of clients, including company shareholders, private equity funds and plcs, to provide strategic advice on business sales and acquisitions, management buy outs and raising equity or debt finance.

News of the shortlist comes during a period of continued growth for the HNH Group. Last month the company was confirmed as the leading corporate finance adviser in the Northern Ireland market, in Experian UK and RoI’s M&A Review 2017.

HNH confirmed as leading corporate finance adviser in Northern Ireland

Posted on by Rory Moynagh

HNH has been confirmed as the leading corporate finance adviser in the Northern Ireland market. They advised on 18 successful transactions during 2017, 15 of which met Experian’s criteria for inclusion in the published league tables. (Experian UK and RoI M&A Review 2017).

In 2016 we reported what was then a record performance of 14 completed deals and, subsequently, were named Corporate Finance Team of the Year at the Insider Dealmakers Awards. Indeed, 2016 in general was a bumper year for M&A in Northern Ireland with 235 deals in total – the highest on record.

Moving into 2017, many column inches were dedicated to the potential impact of Brexit and the Stormont impasse. The general sentiment was that 2017 was going to be a difficult year for Northern Irish businesses. Our experience and indeed the overall state of the M&A market in NI, suggests that this pessimism was misplaced. We have had a busier year than ever, advising on a wide range of transactions from company sales to private equity investments. With a strong pipeline of deals heading into 2018, we have invested further in our Corporate Finance team, taking the total headcount to seven lead advisory professionals.

We would like to take this opportunity to thank all of our clients for their continued support.

Source: www.experian.co.uk

Active M&A Market Helps HNH Group To Record Year

Posted on by Rory Moynagh

Multi-disciplinary advisory firm HNH Group has recorded the strongest year to date in its corporate finance department by completing 14 deals in 2016.

The independent Belfast-based company works with the directors and shareholders of entrepreneurial companies throughout Northern Ireland, Ireland and the UK providing expertise in corporate finance, business restructuring, forensic accounting, human capital and digital strategy.

In 2016 the corporate finance team advised on three acquisitions, two company sales, three management buy outs, two refinancing agreements and four growth capital backings.

The work included acting for Independent News & Media plc (Belfast Telegraph) on the acquisition of numerous titles from Greer Publications, including Ulster Business magazine.

HNH were particularly active in the healthcare sector, guiding the sale of Northern MRI to Affidea, a Dublin-based healthcare business. HNH also advised Keys Healthcare on a range of corporate activities during 2016 and Your Doctor Medical Services on the acquisition of clinics in the Republic of Ireland.

The company was instrumental in securing growth funding for a number of local companies, including Tascomi and Saliis. Funding was secured from the Growth Loan Fund to support renewable energy services provider Saliis in its rapid expansion plans. The funds will create up to 15 new jobs and enable Saliis to target overseas growth.

The momentum from 2016 has continued into 2017, with the advisory firm completing investment deals for Click Energy in Derry and PE Services in Cavan already this year.

Craig Holmes, managing director of HNH Group, said: “Last year was a very strong year for us, with our position in the market boosted by a steady upturn of the market for M&A and healthy levels of fundraising activity. It is encouraging to see different types of transactions taking place and activity spanning industries as diverse as engineering, healthcare, technology and hospitality, not to mention a range of active companies including PLCs, privately owned large companies and early stage businesses.

HNH’s growth in recent years is also down to the holistic approach we take with our clients, helping growing companies not only with their finance options, but also with essential services including identifying the right people for their workforce and helping them establish the right digital presence

HNH’s corporate finance team has consistently been at the top end of the Experian Northern Ireland deals data, and the firm retained the Insider NI Corporate Finance Firm of the Year in 2017, the fifth time it has won this award in the six years of HNH’s existence.

Commenting on the wider market Mr Holmes added: “In the local economy it is positive to see that banks are lending again and prepared to work alongside other funders. To date our business hasn’t felt any negative effects from macro-economic factors. In fact, a shift in exchange rates has made conditions favourable for Irish companies who wish to purchase UK based businesses and in turn UK companies are also identifying opportunities in Ireland to set up a Euro presence before the UK exit from the EU. We anticipate that these trends will continue throughout 2017.”

Wayne Horwood, managing director of HNH Group, said: “As a young organisation we are delighted that our dynamic client base is growing in Northern Ireland and beyond. We are seeing a wide range of transactions which gives our business an exciting pipeline for the coming months and years ahead. We anticipate that there will be further recruitment in 2017 to respond to the increasing demand levels.”

Autumn Statement 2016

Posted on by Alison Jones

Phillip Hammond’s inaugural Autumn Statement, to be delivered this Wednesday, will be the Chancellor’s first opportunity to set out his vision for the economy post-Brexit. Amid rumours of a snap general election early in 2017, the challenge facing the Chancellor is how to balance ongoing management of the public finances with a few targeted pre-election incentives.  With anti-establishment sentiment the global political theme of 2016, he will no doubt aim to position the Conservatives as a party that understands the pressures facing the average working man and woman.  To this end, four months into his post, Mr Hammond has already sought to distance himself from the austerity-centric approach adopted by his predecessor. It is therefore expected that he will relax rules on Government borrowing, allowing for Keynesian-style investment in infrastructure as an economic stimulus.

However, despite the Chancellor’s attempts to differentiate himself from George Osborne, recent figures published by the IFS suggest that the Government will overshoot its borrowing target for the current fiscal year by more than £5 bn (£60.5 bn vs. a forecast of £55.5 bn) and therefore he will likely have to continue to implement austerity measures into the next parliament.  Recognising the potential short-term economic impact of Brexit, the IFS has called for temporary cuts to VAT and a relaxation of stamp duty, but notes that targeted tax rises and spending cuts will likely be required if the Government is to balance the books.  Under the “five year tax lock” announced by then PM David Cameron in 2015, the Government is precluded from increasing income tax, national insurance and VAT until 2020; similarly, it is expected that Mrs May will today confirm the Government’s commitment to a low corporation tax regime.  With the Chancellor’s hands pretty tightly bound, it is unlikely that there will be any major tax-related surprises in his speech.

From a Northern Irish perspective, what do we hope to see?

  • An increase in the annual investment allowance would be welcome boost to many small business. From 2008, the AIA has varied between £25,000 per annum and £500,000 and currently stands at £200,000. Restoration of the previous £500,000 limit would help create an incentive for capital investment and ultimately job creation;
  • While there are currently an encouraging number of cranes over the Belfast skyline, our construction sector is still recovering from the recession and we need to have clarity around the availability of funding for major infrastructure projects such as the York Street Interchange;
  • A clear commitment to retaining entrepreneurs’ relief at its current level of 10% on the first £10m of lifetime gains. Each year rumours abound that ER is in the firing line and business owners wait nervously to see whether their exit plans are likely to become significantly less appealing. Most businesses in NI are of a size that this relief provides a significant enhancement to shareholder returns and acts as an incentive for people to invest in and grow their businesses.

Whatever the outcome of the Autumn Statement, we remain focused on helping local and non-local businesses implement their growth plans. Whether you are considering raising finance for a major project, are thinking about an acquisition, or want to start planning towards selling your business, we would be delighted to hear from you.

Tax Losses – Recent Changes and their Impact on Recovery

Posted on by Alison Jones

The Government has announced significant reforms relating to loss relief as part of the recent Budget, although the changes will not be implemented until April 2017. It is contended that these changes are necessary to bring the UK into line with international best practice.

Under the current system, losses carried forward can only be used by the company that incurred the loss, and not used in other companies in a group. In addition, some losses carried forward can only be set against profits from certain types of income, for example carried forward trading losses may only be used against trading profits. However, for losses incurred on or after 1 April 2017, companies will now be able to use carried forward losses against profits from other income streams or from other companies within a group.

Additionally, from 1 April 2017, the Government will restrict to 50% the amount of profit that companies can offset through losses carried forward. The restriction will only apply to profits in excess of £5m calculated on a group basis. The current rules enable companies to offset all their eligible taxable profits through losses carried forward and the Government is concerned that this can lead to a situation where a large company pays no tax in a year when it makes substantial profits. To address this, the government will restrict the amount of taxable profit that can be offset through losses carried forward.

The greater flexibility of use of losses is to be welcomed and indeed had it been implemented sooner may have helped reduce the severity of the recession in Northern Ireland. However the restriction on losses carried forward may impinge on rescue scenarios and also on the ability for distressed business to recover. The key point for consideration being that it is now vitally important that groups are efficiently structured.

HNH Group Retains ‘Corporate Finance Advisory Team of the Year’ Award

Posted on by Rory Moynagh

HNH Group was again named ‘Corporate Finance Advisory Team of the Year’ at the annual Insider Northern Ireland Dealmakers Awards in front of an audience of over 300 at the La Mon Hotel & Country Club in Belfast last night.

For a fourth year, HNH, which celebrates only its fifth anniversary this year, beat strong and
long-established competition to win the award which recognises the achievements of those individuals and firms whose skill, creativity and sheer determination have stood out over the past year.

Led by Directors Craig Holmes and Wayne Horwood, HNH’s Corporate Finance team provides long-term financial strategies for private companies, private equity funds and financial institutions. The company advises on all aspects of corporate finance including mergers and acquisitions (M&A) and company sales through to management buy-outs (MBOs) and fundraising.

HNH was singled out for their work on numerous deals in the region in the last year, including advising on the sale of Nelson Hydraulics to Flowtech Fluidpower plc, refinancing for Keys Group and the high profile acquisitions of Boojum and four titles from Greer Publications by Independent News & Media.

Craig Holmes says: “To receive this award for four out of the five years we have been in business is a great honour. It recognises the achievements and excellent work done by the team over the last year. It’s also testament to the drive and ambition of the clients with whom we work and we’re very pleased to be singled out for helping them to achieve their goals.”

The award comes at a time of continued growth for HNH Group which, in addition to corporate finance, provides business restructuring, forensics, digital consultancy and human capital services. In 2015, the company welcomed Gerry McGinn, previously Managing Director of First Trust Bank and Chief Executive of Irish Nationwide and Bank of Ireland, as Chairman.

What should we look for in Thursday’s MPC Announcements and Forecasts?

Posted on by Alison Jones

On Monday, Britain’s manufacturing PMI jumped to 55.5 for October, ahead of analysts’ expectations of 51.3, which is one of the largest rises since the survey began over 20 years ago.

In the wake of a Chinese currency devaluation, continued rise of the dollar and emerging market worries, Mark Carney, Governor of the Bank of England, and Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, have remained focused on the first rate increases, in their respective jurisdictions, since the financial crisis.

Investec Bank and HSBC Holdings Plc are expecting Kristin Forbes to join Ian McCafferty, currently the most hawkish member of the committee, in voting for an immediate rate rise. Martin Weale, who has previously voted for an immediate rate rise, is the other member of the MPC who may join the hawks. However, market makers are currently pricing in the first full rate rise in April 2016, according to Sterling Overnight Index Average (SONIA), which had previously marked the first full rate rise for December 2016 in the aftermath of the recent market correction.

Ross Walker (of Royal Bank of Scotland) noted that the MPC’s communication would be very tricky as they wouldn’t wish to be seen supporting the markets dovish, lower rates, expectations. The most recent focus has been on core inflation figures which have remained close to zero as unemployment has continued to decline and wage inflation, driven by a shortage of skilled workers, are providing policy makers with robust data to support their more positive economic outlook.

Sterling has decreased against the dollar during the oil price collapse and ought to have dampened some of the disinflationary pressure, however, as recently as September, the UK’s Consumer Price Index dropped into negative territory. In the short term a decrease in prices has a positive impact on disposable income. Coupled with increasing wages, this has provided some relief to consumers at the end of the month.

Following the Bank of England’s decision to flood the market with liquidity, via quantitative easing, the MPC now expect to reach their inflation target of 2pc within three years, and this week are due to release the November Inflation Report.

It is worthy of note that Kristin Forbes, has recently said in a speech at the Brighton Summit 2015 that much of the “doom and gloom” surrounding emerging markets had been “overstated” and that recent “news on the international economy” had not changed her expectation that rates would “rise sooner rather than later”. This week also sees the External MPC Unit, (of which Kristin Forbes is a member), submit a discussion paper aimed at improving inflation estimates as sterling reacts to market shocks.

Over the past couple of months the market has been warned by our policy makers that interest rates are going to rise. The Federal Reserve are likely to lead the way in the coming months and the MPC may take confidence from a positive market reaction. Traditionally, The Federal Reserve and The MPC increase or decrease interest rates by 0.25% but there has been long standing communication from both US and UK policy setters that interest rates, when they do begin to rise, they will rise slowly and gradually.

Since becoming Governor of the Bank of England, Mark Carney has attempted to provide clearer communication where it has been possible and as we move into a rate hiking cycle (where interest rate increases of 0.25% bring increased market volatility), we could see smaller incremental increases over a prolonged period of time to allow businesses and individuals greater time to react.

£5.8m acquisition deal led by HNH Group

Posted on by Wayne Horwood

HNH Group is delighted to announce completion of the sale of Lisburn based ‘Nelson Hydraulics’ to Lancashire Company ‘Flowtech Fluidpower plc’ for a combined value of £5.8m.

Having celebrated 50 years in business during 2015, Nelson Hydraulics Limited (NHL) is a market-leading supplier of hydraulic components and hydraulic hose assemblies, throughout Ireland, the UK and beyond. The company has been a genuine success story within Northern Irish business on a long term basis.

Following many years of profitable growth, the Nelson family engaged HNH to advise on potential exit options.  HNH identified Flowtech Fluidpower as an ambitious and growth-focused company for whom there would be significant strategic rationale underpinning the acquisition of NHL.

As part of the deal, Mark Nelson, who has led the business for the past seven years, will remain as managing director. Mark commented “this transaction is a significant milestone for Nelson Hydraulics, which comes after a long and successful period of family ownership. The sale to Flowtech and the opportunities it will generate will position the business for many more years of growth and prosperity. HNH were instrumental in helping us to realise our ambitions, through managing the sale of our family business in a sensitive and professional manner.”

Richard Moorehead and Wayne Horwood advised the shareholders on the sale. Richard commented, “Nelson is a local business with an international presence. We were delighted that the shareholders engaged us to assist them in realising their investment. With Mark Nelson remaining as MD and Flowtech bringing its expertise and financial firepower to bear, we’re confident that the business has everything it needs to continue to thrive.”

HNH Group is a specialist Corporate Finance advisory service with expertise in private equity, banking and due diligence. 

With a firm track record in providing corporate services to businesses of all sizes, our partner-led approach is based on listening, challenging and delivering creative solutions for our clients

HNH Win Corporate Finance Team of the Year 2015

Posted on by Rory Moynagh

HNH have regained the CF Team of the Year award at the Annual Insider Dealmaker Awards in Belfast. Having previously won in 2012 and 2013, this means HNH has triumphed in 3 of the 4 years that the company has existed.

In accepting the award, Craig Holmes (Director of HNH) stated “It has been another good year for the Corporate Finance team within HNH and for the Group generally. We are seeing increasing activity in the economy and are pleased to have been heavily involved in some of the landmark deals in Northern Ireland in the past year. This included significant transactions involving Lowe Refrigeration in Lisburn and Maydown Precision Engineering in Derry/Londonderry.”

“We would like to thank our clients for their continued support of our business and look forward to 2015 being another year in which HNH works with some of the best companies and management teams in Northern Ireland.”

HNH provide a range of professional services including Corporate Finance, Business Restructuring , Digital Consultancy and Human Capital services.

Team HNH Run in the Dark 2014

Posted on by Rory Moynagh

The event kicked off at 8.00pm on Wednesday 12th November, with over 1500 runners lined up at the entrance of Stormont Estate. The event was organised by the Mark Pollock Trust, a fantastic cause who believe that the cure for spinal cord injuries simply requires enough of the right people having the will to make it happen.

This is the second year HNH have taken part in Run in the Dark Belfast, and we’re looking forward to submitting another team in 2015.

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MML Invest in Lowe Refrigeration

Posted on by Rory Moynagh

MML Capital has strengthened its position in Ireland by investing in Lisburn-based global refrigeration rental company Lowe Refrigeration. As part of its investment, MML will take a 55% stake in the company, in partnership with the existing Lowe management team led by CEO Rodney Lowry.

Craig Holmes from HNH originated the deal and acted for the Company. Holmes stated “It is great to see another Northern Ireland company attract a quality Private Equity investor such as MML to help realise its growth ambitions. Lowe has a global blue-chip customer-base, which can be further enhanced following this investment. HNH are working with companies in different sectors to attract Private Equity for growth or realisation, and that bodes well for the Northern Ireland economy.”

10995441304_f86eb585ec_bLowe Refrigeration is the world’s leading short term refrigeration rental company providing temporary cold solutions, in addition to hot equipment, to large food exhibitions, retailers, major sporting events and festivals internationally. The company services events such as the Singapore GP, Wimbledon, Glastonbury and the US Open Golf from nine locations throughout Europe, the USA, Middle East and Far East. The company has doubled in size since Rodney Lowry led the acquisition of the business from the founding Lowe family in 2008. Lowe Refrigeration expects to post revenue of circa €20 million for 2014.

Rodney Lowry stated: “We are delighted to receive this investment from MML. They rapidly grasped the future potential of the business and, importantly, the management team felt very comfortable working with them from the start of the process. MML has a strong track record of partnering with thriving businesses and supporting their growth ambitions. Therefore, I am very confident that we can now accelerate our development into new regions and new rental markets globally”.

The MML investment has been made through MML Growth Capital Partners Ireland, a €125 million fund dedicated to backing small and medium sized private businesses located on the island of Ireland.

Rory Quirke, who led the deal on behalf of MML commented; “We are delighted to be making our inaugural investment in Lowe. This represents an ideal transaction for us, backing a strong and ambitious team led by Rodney Lowry with the capital to continue to grow and build their business”.

MML Ireland’s Rory Quirke and Neil McGowan will both join the Lowe Refrigeration board, alongside Rodney Lowry and CFO Paul Lavery. The company is also pleased to appoint Mervyn McCall as Chairman of the board. Mervyn is a former director of the Mivan Group and the business will benefit from the experience and expertise Mervyn brings to the board.

Bank financing for the deal was provided by Bank of Ireland led by John Mathers in Belfast. Tughans acted as legal advisers to MML while Carson McDowell acted for Lowe Refrigeration.

http://www.insidermedia.com/insider/ireland/123978-mml-capital-invests-lowe-refrigeration?utm_source=ireland_newsletter&utm_medium=deals_article&utm_campaign=ireland_news_tracker

Mourne Observer sold for an undisclosed sum to the Spectator Group

Posted on by Rory Moynagh

The Mourne Observer, the largest selling weekly newspaper in County Down, has been sold for an undisclosed sum to the Spectator Group, owners of the Bangor Spectator and Newtownards Chronicle.

Founded in the late 1940s, the Mourne Observer remained a family-owned business for more than 60 years, with David Hawthorne taking up the reins as editor during the 1980s. Having decided that he would like to retire, David made the decision to put the business up for sale.

HNH provided advice to the shareholders throughout the process; partner Wayne Horwood commented “as with the Mourne Observer, the Spectator Group is also a family-run business, with a similar ethos to that fostered by the Hawthorne family. The transaction, as well as facilitating the retirement of David and Carole Hawthorne, will allow for a smooth transition to the new owners and provide job security for the staff”

Access to Funding

Posted on by Rory Moynagh

A new initiative, recently launched by Invest Northern Ireland, will make it easier for local small and medium-sized businesses to get the help they require to access funding.

Under the Finance Voucher scheme, businesses that meet the eligibility criteria (follow the link for full details), can apply for funding of up to 49% of the cost of preparing a funding proposal or business plan, up to a maximum of £4,000.

Details of how to apply for a voucher can be found here.

The team at HNH would be keen to hear from any business that is interested in using the Finance Voucher scheme to access debt or equity finance. With a deadline of 30 April for the initial round of applications, time is of the essence.

Insider Northern Ireland Dealmakers’ Awards

Posted on by Rory Moynagh

An excellent year for Horwood Neill Holmes was recognised at the recent Insider Northern Ireland Dealmakers’ Awards ceremony, with the firm picking up two awards.

For the second year in a row, the firm was presented with the coveted Corporate Finance Advisory Team of the Year award and also scooped the Deal of the Year award for its role as lead advisor on the investment in Seven Technologies by YFM Equity Partners.

Craig Holmes, partner at HNH, commented “to win the Team of the Year award two years running is a tremendous honour and provides a testament both to the quality of our clients, without whom such accolades could not be achieved and to the hard work and dedication of the whole team at HNH. Winning the Deal of the Year award is the icing on the cake and the success of the deal in question clearly demonstrates that there is funding available for ambitious local businesses”.

Boom Year for M&A

Posted on by Rory Moynagh

The number of deals in Northern Ireland increased by more than a third while there was a moderate dip in the number of transactions in the Republic of Ireland last year, according to research from Experian.

The information services company has also revealed the most active advisers in both Northern Ireland and the Republic in 2012. In 2012 there were 52 deals in Northern Ireland according to Experian’s league tables of M&As. This is an increase of 36.7 per cent from 2011 and the highest number of deals since 2008.

The value of deals in NI more than doubled in 2012 to £1.1bn from £384m last year. Experian says Northern Ireland experienced a “boom year” as the area of the UK with the highest increase in both volume and value of deals. A fifth of the deals completed in NI took place within the information technology sector.

In contrast in the Republic of Ireland the number of deals completed fell by 4.2 per cent from 307 transactions in 2011 to 294. However the volume of deals increased from €28.3bn in 2011 to €28.6bn. The most active sector in the Republic was materials and equipment wholesale with just over a fifth of all transactions.

In Northern Ireland, the most active legal adviser was A&L Goodbody while Kirkland & Ellis topped the table in terms of value. Horwood & Holmes was named as the most active financial adviser with Barclays, Goldman Sachs and Guggenheim Securities jointly taking the top spot in terms of value.

A&L Goodbody also reach the top spot for most active legal adviser in the Republic of Ireland – both in terms of volume of deals and the value.

Davy Corporate Finance was the most active financial adviser based on the number of deals worked on and Goldman Sachs was the most active by value.

HNH Sponsors Northern Knights Cricket for Inter-Pros

Posted on by Rory Moynagh

Following the selection of the Northern Knights Cricket squad, the Knights unveiled another fine addition to their squad, new key sponsor, HNH.

HNH will be the main sponsor for the Northern Knights during the series and Wayne Horwood said: “It’s great to see the RSA Inter-Provincial series across the three formats of the game. They are a key stepping stone for players into the full Ireland squad. HNH are delighted to sponsor the Northern Knights and I look forward to a good summer of competitive cricket and hopefully a few new international players selected on the back of their performances in the RSA Inter-Provincial series.”

Northern Knights selector, Kyle McCallan said about the squad: “I’m delighted with the make up of the Northern Knights squad with all players showing good early season form. An away tie versus Leinster Lightning will be a tough start to the series, but I’m confident that this squad has the ability to get a win at the Hills CC on Bank Holiday Monday.”

Looking forward to the first match, Head Coach Eugene Moleon said: “The squad has been announced for the first game and everyone is looking forward to the challenge. Guys have shown good form early on. We have a good blend of senior players and youth. I am glad to say from players, to coaching staff to admin officer, we will be giving it our all for the Northern Knights. Please support us in this series.“

The RSA Inter-Provincial series will see the Northern Knights, Leinster Lightning and the North West Warriors play three day cricket for the RSA Inter-Provincial Championship, in one day competition in the RSA Inter-Provincial Cup and in a T20 competition, the RSA Inter-Provincial Trophy. For the full Northern Knights fixtures please check the NCU website: www.northerncricketunion.org

Reflecting on the first squad selected, NCU Chairman, Brian Walsh, said: I would like to wish Andrew, Eugene, Gavin and the team all the best for the match at the Hills and indeed for the season. I would also thank Wayne and Alan Waite for their valued sponsorship.”

The Northern Cricket Union looks forward to seeing cricketing fans from across the Union come together to support the Northern Knights. Congratulations to those selected and Good Luck to the team!

Northern Ireland Dealmakers Awards

Posted on by Alison Jones

An excellent year for HNH was recognised at the recent Insider Northern Ireland Dealmakers’ Awards ceremony, with the firm picking up two awards.

For the second year  in a row, the firm was presented with the coveted Corporate Finance Advisory Team of the Year award and also scooped the Deal of the Year award for its role as lead advisor on the investment in Seven Technologies by YFM Equity Partners.

Craig Holmes, partner at HNH, commented “to win the Team of the Year award two years running is a tremendous honour and provides a testament both to the quality of our clients, without whom such accolades could not be achieved and to the hard work and dedication of the whole team at HNH. Winning the Deal of the Year award is the icing on the cake and the success of the deal in question clearly demonstrates that there is funding available for ambitious local businesses”.

HNH Named Top CF Advisor for 2012

Posted on by Alison Jones

The Volume and Value League Tables, recently published by Experian Corpfin, reveal that, for the second year running, HNH (formerly HHCF) was the most active corporate finance advisor in Northern Ireland, with five successful completions. Deal highlights included the raising of growth capital for ambitious and innovative local businesses such as Bubblebum, Path XL and Seven Technologies.

Seven Technologies Attracts GB Investment

Posted on by Rory Moynagh

Seven Technologies has received investment from YFM Equity Partners, a GB-based Private Equity Fund of £6.6m. Seven is a Northern Irish engineering business that specialises in developing and manufacturing bespoke electronics and communications applications for operation in inhospitable environments for a wide range of international clients. As part of the deal, YFM Equity Partners has introduced a Chairman to the business, Richard Moon, an experienced non-executive director in a number of sectors including communications and electronics.

Seven Technologies was advised by HNH’s Corporate Finance team.

“Seven Technologies has demonstrated a strong track record of market penetration and profitable growth over the last few years to many international clients,” said HNH partner Wayne Horwood.

“The growth has been built on the strength of the management team and understanding of their market and customer requirements. “YFMEP’s investment in Seven provides the platform for future growth in international markets and it is excellent to see quality NI companies attract interest from GB based private equity houses.”

Founded in 2005, Seven Technologies is headquartered in Lisburn, Co. Antrim and employs 42 staff. Gavin Williamson joined the business as CEO in May 2011, bringing significant hi-tech business development experience from multinational electronics manufacturing and integration organisations. The company has a range of advanced products, such as electro-optic equipment and rugged computers, that it packages together to create bespoke solutions for particular requirements, typically involving use in harsh conditions prone to extremely high or low temperatures.

Seven Technologies prides itself in forming mutually beneficial partnerships with key organisations on a number of collaborative projects and shared research objectives. One such partnership is with two centres at Queens University – the Centre for Secure Information Technologies and the Institute of Electronics, Communications and Information Technology.

YFM Equity Partners invested £6.6m in an all equity deal through three of its funds: Chandos Fund and its two British Smaller Companies VCT.

Commenting, Paul Cannings (pictured) said: “The Seven Technologies team has a strong track record of growing their business, a loyal customer base and a clear path to future success. We believe that our funding and advice can help continue Seven Technologies’ development into a leading provider of highly sophisticated flexible technology solutions that are in high demand.”

Gavin Williamson, CEO, Seven Technologies adds: “YFM Equity Partners is a great funding partner for our business, as they understand our sector and have a strong track record of growing small British businesses. This funding will support our continued rapid growth and further investment in our highly regarded operational support teams.”