As talks fail to strike a Northern Ireland deal, customs chaos will only get worse, says ParcelHero

Delays and red tape on goods sent between the UK and Northern Ireland (NI) are set to increase significantly following the failure of a key UK-EU meeting, says the home delivery expert ParcelHero.

A UK-EU Joint Committee meeting on Wednesday failed to extend the grace period on the introduction of new red tape and tariffs on parcels and food, due to end on 1 April. The UK Government had asked for the delay to be extended until 2023.

ParcelHero’s Head of Consumer Research, David Jinks MILT, says, ‘If the new regulations are introduced in a month’s time, the impact on Northern Ireland parcel deliveries and supermarket food supplies will be severe.

‘A waiver on customs declarations for parcels sent from Great Britain to Northern Ireland runs out on 31 March. This is followed by certification requirements on supermarket goods being ramped up. Last week, ParcelHero called for the Government to do everything in its power to renegotiate these deadlines with the EU. On Wednesday, however, talks aimed at postponing these draconian measures ended without agreement. Unless there is a last-minute deal, this is extremely bad news for both NI citizens and anyone sending parcels to Northern Ireland.

‘Parcels sent from Great Britain to Northern Ireland with a value of over £135 will endure the ongoing chaos that has hit UK-EU shipments since the start of the year. Customs declarations will be needed for all such parcels, which is frankly ludicrous considering this is a UK domestic shipment. If there’s no proof that goods originated in the UK, there will be significant new tariffs to pay on these items.

‘When the Brexit deal was finally struck on Christmas Eve, it was hailed as a free trade agreement. The reality has proved very different. These new measures will introduce new bureaucracy and fees within the UK itself, as well as between Britain and the EU. No Brexit voter could have envisaged this outcome.

‘Already, Northern Ireland businesses importing goods valued at over £135 have had to wrestle with the red tape of joining the UK Trader Scheme, which proves their goods aren’t at risk of being shipped across the Irish border into the EU. Only then can their “imports” from Great Britain still qualify for zero duty.

‘As well as new tariffs, delays experienced since the start of the year will get worse. These are already becoming intolerable for some businesses. According to the Government’s own Office for National Statistics figures, a massive 44% of retailers and wholesalers reported the volume of goods they shipped to Northern Ireland decreased markedly in the two weeks from 25 January to 7 February, compared to the preceding fortnight. 31.5% of manufacturers reported their export volumes to Northern Ireland fell during the period. Of all businesses who had sent, or intended to send, goods from Great Britain to Northern Ireland in the last two weeks, 38% reported sending fewer goods.

‘A joint statement issued after the meeting did mention a “new operational plan with respect to supermarkets and their suppliers”. We very much hope this new plan can somehow mirror the current regulations, although the straightforward shelving of the pending changes is clearly the most effective solution.

‘It’s not as if these issues were unpredictable. As long ago as 2016, our pre-referendum report, Delivering Brexit: The true cost of leaving the EU, predicted SMEs would incur Brexit costs of around £163k in the first year and a typical rise of 30% on the price of items purchased in the EU that had components originating outside Europe.’

Optimum Finance scores ex-Microsoft Director as new CTO

Invoice finance firm Optimum Finance has appointed ex-Microsoft Global Director, Gordon McIntosh, as Chief Technical Officer furthering their specialism in the FinTech space.

Scottish/American national, Gordon has extensive experience with a decade working at Microsoft headquarters in Seattle, Washington. His most recent role at the tech giant was Global Director of Service Engineering for Microsoft’s Volume Licensing and OEM businesses in which he established IT solutions for global brands and world governments.

His expertise in delivery of IT projects at scale will be key to Optimum’s future goals of expanding invoice finance facilities to even more UK based SMEs. Market leading technology is a core pillar of Optimum Finance’s business and having a senior leadership team of highly qualified and experienced people is key.

On his new role, Gordon said “I can’t think of a more exciting time to be joining Optimum, the energy and passion of the team is fantastic. There is a huge opportunity to offer significant added value to SMEs through Optimum’s product suite. These highly performing products can be improved even further through technology, so I cannot wait to get stuck in.

“Obviously, there’s a huge difference in scale compared to Microsoft but the realities of successfully delivering on an IT programme don’t change. Getting a group of people pulling in the same direction towards a shared definition of success, that’s the same at any scale. There will be differences in terms of approach and priorities but there are also many commonalities too.”

Commenting on the appointment Ant Persse, Optimum Finance CEO said “Invoice finance is a fantastic product, and our brilliant team do a great job at delivering it. Technical enhancements across the entire market are still in their infancy and we aim to change this. Our vision is to reinvent invoice finance with focus on speed, simplicity and convenience. This is where Gordon and his team will come in.

“Gordon brings a huge amount of knowledge and experience from his roles with Microsoft but it’s his energy and passion to make a difference that will help catapult us to the next level. I am thrilled to welcome him to the Optimum Team. Watch this space.”

Together Financial Services Limited – Q2 Results

Together Financial Services Limited (‘Together’ or ‘the Group’), one of the UK’s leading specialist mortgage and secured loan providers, announces its results for the quarter ended December 31, 2020.

Commenting on today’s results, Gerald Grimes, Group CEO Designate of Together, said: “Together delivered another robust performance in the quarter to 31 December, as we remained focused on supporting our customers, protecting our colleagues and shaping our business for the future.

“Average monthly lending rose to £74.4m as we continued to cautiously increase originations, with the loan book ending the quarter at £3.9bn with a very conservative LTV of 52.2%. We remained highly profitable and cash generative, with underlying profit before tax increasing to £38.2m and cash receipts increasing to £430.6m as redemptions continued to be strong during the quarter and, at 8 February, the Group had accessible liquidity of £366m.

“We also further extended our funding headroom with the successful issuance of a £500m bond in January, the first sterling corporate bond issuance in 2021 and since the formal completion of the Brexit process. The issuance was upsized by £50 million on the back of strong investor support and contributed to the Group having undrawn facility headroom of £1,127m at 8 February.

“While we expect economic conditions to remain uncertain for some time, with strong levels of capital and liquidity and our modernisation and transformation programmes underway, we believe the Group is well positioned to take advantage of future market opportunities and to play our part in supporting the UK’s economic recovery.”

Financial performance: quarter ended December 31, 2020

  • Group loan book of £3.9bn at December 31, 2020, down 6.6% compared with £4.2bn at December 31, 2019 (Q2‘20) and down 2.9% compared with £4.0bn at September 30, 2020 (Q1‘21), as redemption levels remained strong while the Group continued to cautiously increase new lending
  • Loan book weighted average indexed LTVs reduced to 52.2% compared with 54.9% at Q2’20 and 52.4% at Q1‘21
  • Average monthly loan originations of £74.4m, down 63.8% compared with £205.8m in Q2‘20 however up 70.6% from £43.6m in Q1‘21 as the Group continued its cautious growth in new lending
  • Loan originations continued to increase in January 2021 to £104m
  • Weighted average origination LTVs remain very conservative at 58.5% (Q2‘20: 58.0%; Q1‘21: 56.4%)
  • Interest receivable and similar income of £92.9m down 4.0% compared with £96.8m in Q2‘20 and down 2.5% compared with £95.3m in Q1‘21, broadly consistent with the decrease in the size of the loan book
  • Net interest margin remained highly attractive at 6.5% (Q2‘20: 6.3%; Q1‘21: 6.4%) particularly given the conservative LTVs and consequent high levels of collateral underpinning the quality of the loan book
  • Annualised cost of risk for the quarter was 0.6%, up only slightly from 0.5% in Q2‘20 which was prior to the impact of Covid-19 and lower than 1.3% in Q1’21, where additional charges were recognised due to impact of Covid-19 on the macroeconomic conditions and outlook
  • Underlying profit before tax was £38.2m, up 4.7% compared with £36.5m in Q2‘20 and up 12.7% compared with £33.9m in Q1‘21 due mainly to a reduction in impairment charge during the quarter
  • Cash generation remained robust, with cash receipts of £430.6m (Q2‘20: £432.6m; Q1‘21: £377.3m) as redemption levels remained strong
  • Dividend paid in Q2’21 (declared Q1 ’21) primarily to cash service the interest due on the Senior PIK Toggle Notes of Bracken Midco1 PLC

Shaping the business for the future

Number of key modernisation projects now underway to streamline the application journey, increasing efficiency, reducing costs and improving user experience for customers and intermediaries including:

  • Automating ID and validation, income verification, affordability assessments, asset valuations and enhancements to risk-based product pricing;
  • Providing digital document uploads, paperless direct debits and E-Disbursements;
  • Improving the layout and user experience of our intermediary platform, My Broker Venue; and
  • Rolling out the Together app to all of our direct customers, offering a new messaging and data-sharing platform to make it quicker and easier for them to do business with Together

Focus on automating processes and easy decisions while using our experienced underwriters more efficiently

Continued to strengthen our capital and liquidity positions to support future growth

  • Successfully issued £500m Senior Secured Notes at 5.25%, due 2027. Proceeds used to redeem the £350m Senior Secured Notes at 6⅛%, due to mature in 2024 and support further growth in lending
  • Undrawn facility headroom £1,127m at February 8, 2021 (December 31, 2020: £997m; September 30, 2020: £872m)
  • Immediate accessible liquidity £366m at February 8, 2021 (December 31, 2020: £300m; September 30, 2020: £285m)
  • S&P revised outlook from Negative to Stable on Together Financial Services Limited and Bracken Midco1 PLC

Covid-19 update

Supported our customers throughout the pandemic, providing mortgage-payment deferrals to c.7,800 customers. At February 15, 2021, 2.1% of customers by value remained within a payment deferral (November 5, 2020: 3%). Of the accounts who have exited payment deferrals 82% have resumed full payments, 14% are making part payments and 4% making no payments

UK online shoppers outspend the world and won’t kick the habit when the High Street reopens in April

England’s eagerly awaited non-essential stores’ reopening date of 12 April may come too late to stop a permanent change in the way Brits shop, says the home delivery expert ParcelHero. It says UK shoppers spent an average £3,379 online last year, more than consumers in any other country.

ParcelHero’s Head of Consumer Research, David Jinks MILT, says: ‘The reopening of many stores in April can’t come too soon for High Street retailers. In fact, it may be too late already. UK shoppers now lead the world in the great migration to online.

‘ParcelHero’s latest global trade analysis found Brits’ annual online £3,379 shopping bonanza eclipsed Denmark’s £3,056 average online spend and America’s £2,753 average.

‘When averaged out over the number of online shoppers in each country, the UK had a significantly higher spend than any other nation. Only Denmark showed a similar love affair with online shopping.

‘ParcelHero’s figures are supported by research from payment machine comparison site Merchant Machine, which found that, although China and the USA have a higher overall online spend, those nations have a far higher population than the UK. Merchant Machine found China spends $1,276.2B (£954.9B) and the USA $830.7B (£621.6B), compared to the UK’s $233B (£174.3B).

‘Both England and Scotland are set to reopen non-essential stores in April. That will be a huge test for the future of the UK’s High Streets. Will the spring weather lure people back to town centre shops or will newly acquired online shopping habits prove too hard to kick?

‘The answer is partly down to how well the country negotiates its way out of lockdown. Certainly, a fourth lockdown in England would spell the end for many physical stores.

Clearly, e-commerce has become vital not only for retailers, but the UK economy as a whole. The news online Brits now spend the most comes as six of the country’s largest online retailers, including Asos, Boohoo and Ocado, have launched the UK Digital Business Association (UKDBA). Its aim is not only to give online retailers a voice and help drive the economic recovery, but also, crucially, to help store-based retailers develop their business online.

‘In January 2017, ParcelHero released a high-profile report: 2030: Death of the High Street. It concluded that, unless retailers developed an omnichannel approach embracing both online and physical store sales, 40% of all UK retail would move online by 2030. Covid has clearly accelerated this change. The latest Office for National Statistics figures reveal that January online sales had already reached 34.2% of the entire UK retail spend. With the UK average online spend leading the world, it looks as if we will reach that 40% figure even earlier than 2030.”

Time to bounce back, 52% of SMEs in Europe relied on loans to survive pandemic

CapitalBox, the leading pan-European online lending platform for SMEs, today unveiled research that shows more than half of European SMEs relied on loans to survive 2020.

There was a variation across countries in how many applied for loans, with more SMEs in Finland applying for loans (60%), followed by Sweden (58%), the UK (56%), the Netherlands (49%), Spain (48%), France (47%), and Germany (46%).

Many of the SMEs surveyed stated that the money was used to cover overheads (35%) and wages (13%) to keep their businesses up and running.

Others used loans to invest and innovate to get them through the difficult year. One third (33%) invested in technology, turning to digital transformation to help them survive. Those in the Netherlands (41%) invested the most in this area of their business. One in five SMEs (21%) used their loans to hire talent to better equip them for the challenges.

The most popular source of funding was retail financing (55%), a form of loan set up to pay back in instalments to those with good credit ratings – this was particularly common in France (71%). Other sources of funding amongst SMEs included:

  • 31% applied for government support with the likes of the Coronavirus Business Interruption Loan Scheme in the UK and the ‘Corona Soforthilfen’ in Germany.
  • The survey found that SMEs in the UK (43%) and Finland (27%) were the most reliant on government funding
  • Almost a quarter of SME leaders (24%) asked family or friends for financial support
  • One in five (21%) turned to credit cards to keep their business running
  • Online loan providers have been the saving hand for 11% of European SMEs, and were in high demand in Finland, with more than a quarter (27%) turning to online providers to source the funding they needed.

Scott Donnelly, CEO of CapitalBox said: “The pandemic has left many businesses, especially SMEs, in financially dire straits. Almost two-thirds (60%) of SMEs across Europe have had their cashflow impacted negatively, and many struggled to cover basic outgoings such as overheads and staff wages. For most, the only way out of a very difficult situation has been to secure a loan to get through the pandemic.

“In 2020, the ambition, motivation and resilience of SMEs has been tested like never before. In times like these, it is vital that these financially under-served SMEs get the support they need. Regardless of the source, financial support needs to be fast, fair and safe, getting money to where and when businesses need it most.”

Work begins to breathe new life into historic mill with help from Reward Finance Group

A former flax mill in Cleator, near Whitehaven which played a significant role in the development of rights for women workers following a strike by the female workforce in 1915, is to be given a new lease of life with help from a £500k Business Finance loan from Reward Finance Group.

Cleator Mills, which used to employ 600 people, is to be developed into a business park, bringing new jobs to the area.

The developers, Mark Walker and Andy Ross of Genr8ed Limited, had managed the site for the previous owners for ten years and were given first option to buy the mill when it came up for sale.

To date the company has spent around £400k on demolition and clearance of part of the site, the replacement of all mains services, and the repair and renewal of river flood defences.

It is now embarking on Phase One following the £500k cash injection from Reward Finance Group. This will entail further demolition and the refurbishment of redundant single storey workshops at the east end of the site.

When complete the units will provide between 6,000 and 8,000 square feet of quality light engineering workshop space, suitable for SMEs in the local area.

Interest has already been high for the units from nearby Sellafield’s local supply chain companies, and the developers are confident they will be let on completion.

Following take up of the units, Phase two will begin which will comprise the refurbishment of one of the former mill buildings to provide a mix of workspace and flexible offices. The larger of the three buildings has the potential to create a café and conference facilities on the ground floor.

Speaking about the development, Andy Ross said, “We are so pleased that, having done all the preparation work, we can now push on with the refurbishment of such an historic mill.

“It is in a great location close to Sellafield’s Park & Ride facility and Gleeson Homes has submitted a planning application to build 100 houses adjacent to the site. This will result in it becoming a central hub and, when combined with the landscaping and river environments, the development will become a destination for new jobs and homes, leading to the wider re-generation of the area.

“We would like to thank Reward Finance Group for buying into our vision, seeing the enormous potential for the mill, and providing the funds to enable us to turn it into reality.”

Business development director at Reward, Clive Briggs, added, “Mark and Andy have formed the perfect partnership as they have complimentary skills. Mark’s a top-quality developer and Andy is a qualified chartered surveyor. Both have more than 20 years’ experience in their fields and have excellent reputations in the region.

“I have known the two of them for ten years and, during that time, witnessed their success across several developments. When they approached Reward about Cleator Mills, they were able to demonstrate the enormous potential for the site and we had no hesitation in providing them with the necessary funds to make it happen.”

Pandemic continues to disrupt rental plans for 76% of tenants

Research from the international rental marketplace, Spotahome, has found that the majority of UK tenants feel safe within the rental market, however, 76% have had their rental plans disrupted due to the current pandemic.

The research commissioned by Spotahome analysed 1,322 UK tenants and their feelings towards the current rental market as lockdown restrictions remain in place and the threat of Covid continues to loom.

The good news is that 77% of tenants feel safe renting in the current climate and the latest government announcement will have provided some light at the end of the tunnel, although Covid continues to cause a worry for 23%.

The pandemic has caused disruption for 76% of tenants when it comes to their plans within the rental market.

38% of tenants plan to move but won’t until lockdown restrictions are eased, despite the market remaining open to facilitate this movement.

A further 21% have been unable to move due to the pandemic, for reasons such as shielding, quarantine or being unable to travel to their rental destination of choice.

Finally, 16% can no longer afford to rent their current property due to reasons such as being on furlough or job losses and so have no choice but to move.

In terms of the biggest issues at present, affordability remains a concern. 29% of tenants stated that getting by on their remaining income once the rent has been paid is their biggest concern at present.

20% stated that the state of their property was the biggest issue with their letting agent or landlord failing to rectify problems.

A lack of outdoor space (17%) or the size of their rental home (15%) was the biggest problem for 32%.

Fear of eviction due to rental arrears, inadequate wifi, viewing rental homes under lockdown restrictions (5%) and people not abiding by Covid protocols when viewing (4%) were a far smaller concern for tenants in the current market.

Spotahome Head of Data and Analytics, Jorge Alonso, commented: “It’s clear to see that the impact of the current pandemic continues to influence the decisions of tenants in the UK, with the ongoing restrictions in place causing many to reconsider their place within the rental market and when they plan to move.

The good news is that for the large part tenants feel safe and while finances are a concern, they aren’t the driving issues for the vast majority. Uncertainty, space and quality of living conditions are far more important and this is a trend that is likely to remain as we’re eased back to normality.

Survey of 1,322 UK tenants carried out by Find Out Now (February 18th 2021).

Lessons should be learned from Bounce Back Loan fraud, says SmartSearch

SmartSearch, the UK’s leading anti-money laundering (AML) solution provider, has called on lenders, brokers and conveyancers to learn the lessons from the Government’s failure to prevent the loss of £billions in Covid-related fraud over the past 12 months.

As the Government made vital funds available to support businesses through the deepest recession for 300 years, a lack of due diligence and robust ID verification left the door wide open to organized crime gangs to exploit the opportunity.

John Dobson, CEO at SmartSearch says these frauds were made possible due to a lack of joined up systems, despite all the information being available to raise flags when bogus applications were being made. And without moving to more secure methods of verification, regulated firms in the property sector face the same threat.

In one example more than £40bn has been loaned to struggling firms through the Bounce Back Loan scheme. But the Government’s own estimates suggest that nearly two thirds of loans may never be repaid, due to mistakes in the process and fraudulent claims.

Dobson says: “The Bounce Back Loan scheme is one of a number of funds made available since the start of the coronavirus pandemic which have been targeted by fraudsters, and they have probably found it surprisingly easy to work the system.

“This should serve as a stark reminder to all regulated businesses that when it comes to fraud we should be working at a heightened state of alert because as long as you’re using manual methods of ID verification, you’re going to be vulnerable.”

Dobson says one of the key lessons to be learnt from the past 12 months of living and working in a Covid-world is that increasing use of technology is the most effective way to protect your business from falling victim to fraud.

RegTech providers have also responded to the crisis and developed processes and systems to adapt to the new ways of working.

He adds: “The whole essence of an electronic verification solution is that all the information is there in one place, and easily accessible so that anybody in the business can use it, it’s not technically complicated in that sense.

“If the government departments responsible for handing out the Bounce Back loans had been using an electronic verification system to vet applicants, they could have found out almost instantly whether they were genuine.

“There are a number of ways to check whether a business is bonafide; verify the company exists at Companies House, identify trading accounts, look at payment histories, identify the auditor, identify the ultimate beneficial owners, persons of significant control. Verifying the bank account where loan funds are due to be paid to see if it matches with the address given on the application, and in some instances the owner’s address, is also key. All this information and more is available in a smartsearch so there is no excuse for ‘skimping’ on due diligence.

“Within two minutes you can confirm a business and its directors/shareholders are genuine and it exists. It’s simply not possible to replicate that level of search and due diligence by relying on people emailing scans of passports and driving licences, which are so easily forged and have no relevance in proving a business exists.

“With the property market remaining such a high priority target for criminals, it’s vital not to repeat the mistakes made by the Government in allowing billions to be lost.”

Less than one in 10 SME leaders feel supported during the current lockdown

As the UK’s third national lockdown continues, just 8% of business leaders feel supported, research from Nucleus Commercial Finance today reveals.1 Half (50%) feel worried or depressed about the current lockdown and nearly four in 10 (38%) feel anxious about the current lockdown. Other negative feelings towards lockdown include:

  • Stressed – 38%
  • Lost / lacking direction – 22%
  • Unsupported – 18%
  • Alone – 16%
  • Overwhelmed – 15%

More than half of SME leaders (54%) say their feelings towards the current lockdown are having a negative impact on all aspects of the business. A third (31%) say lockdown is having an impact on their ability to plan ahead, while a quarter (26%) say their negative state of mind is affecting the day-to-day running of the business. The difficulties business leaders are facing with lockdown are also having an impact on their relationship with employees, with 10% saying their own negative emotions are affecting employee morale.

During the current environment, access to support is vital. Nearly a third (31%) of SME leaders said they have a network of peers they are engaging with to help them and their business during the current lockdown restrictions, and a further 16% say they are planning to engage with a network of peers. However, nearly a quarter (24%) say they don’t have access to a network of peers and a further 22% say they don’t feel the need to get support.

While the majority of business leaders are struggling in the current lockdown, some believe there is light at the end of the tunnel. More than a quarter (27%) are optimistic for the vaccine, 21% are accepting, 10% are positive and a further 7% feel motivated.

Chirag Shah, CEO, Nucleus Commercial Finance said: “We often first think about the financial impact lockdown is having on the SME nation, but we must also consider the emotional impact on business owners across the country. Businesses now more than ever need access to support, whether that be financial, mental health or practical, to help them through the tough times ahead.

“While the picture is looking brighter with the mass rollout of the vaccine, it is never too late for business owners to engage with support groups. Not only do they provide business owners with access to a wealth of resources, but connect them with peers in their local area, allowing them to discuss the similar issues they are facing in today’s challenging environment.”

£4 million facility opens doors for Yorkshire manufacturer

Bibby Financial Services (BFS) has provided a £4 million Invoice Discounting Facility to investment group Modular Group Investments to support the acquisition of Euramax Solutions Ltd, one of the UK’s leading window and door manufacturers.

Servicing both commercial and residential businesses in the UK and Ireland, Euramax specialises in PVCu windows and covers developments of all sizes across a number of sectors. These include modular constructor, DIY and home improvement, and the holiday home and leisure markets.

The business runs all of its operations from a state-of-the-art manufacturing facility in Barnsley, South Yorkshire, where it employs 160 members of staff.

BFS worked with Modular Group to help support its acquisition of Euramax. The investment group saw Euramax as a strategic acquisition as they continue to expand their portfolio within the Modular Building Space.

Modular Group was introduced to BFS by Neil Sharp of TML Finance and Advisory, who helped to broker and structure a deal that enabled a smooth acquisition of Euramax. The funding facility freed up the necessary working capital for the deal and has ensured Modular Group are well placed to oversee the continued growth of Euramax.

Michael Garratt, Founder and CEO, Modular Group Investments, said: “At Modular Group we look to invest in high-quality, progressive businesses with a clear roadmap for growth. Euramax ticks all of these boxes and is exactly the type of business we want to work with as we expand our footprint in the Modular Manufacturing space.

“BFS has been an excellent partner in supporting the acquisition. Chris and the team took the time to understand the intricacies of the deal and were subsequently able to help raise the necessary funds in to facilitate the acquisition.”

Chris Farnworth, Regional Head Of Corporate, Bibby Financial Services, added: “BFS is always looking to work with ambitious, innovative partners who, like us, seek to help UK SMEs grow and thrive.

“By working closely with Michael and TML Finance, we were able to help Modular Group unlock the necessary cashflow to fund the acquisition in the most efficient manner possible. The future of Euramax is in very safe hands and we’re very happy to be working with Modular Group to help them realise their ambitions in the sector.”