34


roundtable: supporting growth


floating on AIM or the main stock markets to gain funding.


Guaranteed help for export growth ...


Lakesmere had traditionally self-funded for growth, and didn’t use Invoice discounting, said Ed McKenzie. To expand overseas his company had introduced Performance Bonds and Advanced Payment Guarantee Bonds to secure business – “Not something we were familiar with.” Through HSBC, Lakesmere gained access to UK Export Finance funding, which is government underwritten and helps free up our cash.


“You can get funding through advance payments, but you have to put the bonding in place and be prepared to underwrite it.”


Mike Forder


Frettingham pointed out the usefulness of such Export Credits Guarantee Department schemes. “The ECGD will back a facility, share the risk. As the business grows it’s decided how that risk level is split, and depending on what shape the business is in the ECGD involvement can be reviewed.”


McKenzie agreed that ECGD support had worked very well. “We have to provide some level of cash deposit but nothing like we would have had to put in place without ECGD backing.”


Frettingham: “As a structured facility it allows businesses to leverage up just that little bit more.”


... and are governments really poles apart?


Ed McKenzie


CTC Aviation has crew training centres in the UK and New Zealand and Steele said that in export help the two were literally and practically poles apart. New Zealand export support paid a significant element of trade mission costs to other countries and contributed to a company’s marketing costs, for example. “Compared to the UK, that level of support is far harder to come by. While our CEO recently joined the prime minister’s delegation to India, this was as at our cost.”


Austin said he had actually heard good reports of UKTI help in the past year or so. “They appear to have improved immensely.”


James Austin ... continued from previous page


proactive, helping us in areas where we had less experience, but equally they have said ‘You know the aviation business better than we do, so carry on doing what you do well’.”


Austin pointed out the PE difference to the BGF solution. CTC Aviation had sold the major part of its business, whereas BGF takes a minority stake to support existing management and shareholders through a long-term partnership.


No-one at the roundtable had considered www.businessmag.co.uk


Crook agreed. “I was pretty impressed by some of the country reports they did for us recently. Yes, you have to pay for it, but the information was accurate and relevant and it was better and cheaper than just sending someone out there on a plane.”


Forder also found the UKTI very supportive. “Four years ago I did not export a penny. Last year I exported to 21 countries, which accounted for 15% of my turnover. UKTI commercial department in Paris gave us very positive and comprehensive help, so if anyone has not tried UKTI’s Passport Programme then give it a shot. You’ll find their people are of a very high calibre, have often run businesses themselves, and you can talk to them like you would a non-executive director.”


He admitted that the funding was not so forthcoming, but “. . . it is there in grant form if you


delve in looking for it. I’ve just got £4,500 for R&D on tooling for a new export product.”


Will funding concerns weaken supply chains?


Crook raised the problem of funding within supply chains: “Whilst our company doesn’t have funding problems; the concern we have is that our business partners can’t get money from their own banks. They’ve got through the last few years, but now they are submitting ‘numbers’ that are quite poor. Credit teams and bank funders are now taking a dim view of them and restricting money availability. If they want to grow, where do they go for funding – usually to the people supplying them, which morphs us into becoming an unsecured lender.


“In our world, there is definitely a gap, and we are having to fill that gap. We are becoming more like a bank than anything else, and having to get much closer to our partners. People never used to furnish you with their management accounts, but now it is common practice in order to get credit.”


He also mentioned new financing practices, such as end users funding purchases for the client through escrow arrangement via a third-party lawyer.


More pilots would help us fly


Steele highlighted that although his business partners with major airlines to train existing airline pilots, a large proportion of CTC Aviation’s activity is to train new pilots, who, as individuals, need to fund their own training – which could cost up to £100,000.


“While airlines would like the career to be open to anyone with the right skills regardless of their financial position, many candidates coming in are from wealthy backgrounds. The funding is not there for individuals to become a pilot. Currently there is just one UK bank that does a bespoke pilot training loan, repayable once the pilot gets employed.


“We’ve got 200-300 people on our database who have passed selection but can’t afford to start training. We begin a course every month and if it runs light that can be an issue for us. We very rarely take the gamble that someone without funding can start training.


“We hold open days four times a year and one of the most popular questions is always, ‘Do you know any airline sponsor or bank who will lend me the money to train?’ We do have an exemplary placement record, but unfortunately the funding options are still not there. That is one of our major barriers to growth.”


Steele explained that with austerity-hit and seasonally affected airlines not wanting to maintain permanently employed pilots, CTC Aviation has broadened its offering to include flexible crewing solutions which involve supplying airlines with both new and experienced pilots on flexible terms. CTC Aviation has over 300 pilots available to airlines.


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MAY 2013


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