The historic and successful visit to Gibraltar by Spanish Foreign Minister Miguel Angel Moratinos and his British counterpart David Miliband was the most high-powered political encounter the Gibraltar Government has hosted so far. The visit by Sr Moratinos, a first by a serving Spanish cabinet minister, shows just how far our Government has progressed the Trilateral (Cordoba) process, in sometimes testing times. They are to be congratulated, for their perseverance and moving the Forum on to new heights for the benefit of all the Campo area.
The summer also saw some less than logical traffic measures introduced across the border. The measures aimed at improving traffic flow into Gibraltar back fired and caused serious congestion and jams. After much protestations and exchanges, along with quiet deliberations of our Government, and the FCO, the status quo was restored. What this does highlight is the increase in the numbers of visitors coming to Gibraltar from the Costas under their own steam. “There are now more than ever a significant number of tourists visiting Gibraltar who prefer to come in their own cars and not in organised tours” commented a local businessman. The general consensus was that the flow of traffic coming into Gibraltar at peak periods needed to be reviewed perhaps through the framework of the trilateral process.
Economic Impact Study
Members should now have received copies of the Economic impact study. This report was commissioned by the Chamber to find out the impact of Gibraltar’s economy on the Campo de Gibraltar. This is the first time that such an extensive investigation has been undertaken.
Over the past 18 months the board has spent a deal great deal of time and effort bringing together the talents of the study team from Bournemouth University, which was led by Professor John Fletcher. The Professor is an expert in his field and has undertaken many similar studies in other regions for international organisations and governments over the last three decades. The board initiated the study as a result of comments made by the previous Spanish Director General for Foreign Affairs, Jose Pons, one of the architects on the Spanish side of the Tripartite Forum.
At a Chamber dinner in February 2007 Sr Pons talked with a positive message and was supportive of the improved cross-border relations achieved under the Cordoba Agreement. However he had expressed reservations and doubts as regards the beneficial impact of the finance centre to the economy of the area.
The Chamber took this as a challenge, and commissioned the study as an opportunity to shed light on the matter The report was published by the Board at a recently held a press conference which announced the findings and results of the independent economic study. Attended by local and Spanish press, the report received significant and positive coverage in the local and campo media. “Veinticinco mil libras dice la Cámara de Comercio de Gibraltar que le ha costado el estudio. Pero, en realidad, no tiene precio. Es muy probable que nada de esto resulte patriótico. Pero es sumamente práctico.” Said the Voz de Cadiz.
The Chamber would like to offer their sincere thanks to Professor John Fletcher and his team for all their hard work on the impact study between Gibraltar and the economic area of the Campo de Gibraltar.
Professor Fletcher has undertaken economic impact studies for governments and international agencies around the world. He has constructed economic impact models for counties in the Caribbean, the Indian Ocean, the Mediterranean, the Far East as well as mainland Europe and the UK.
In particular he has undertaken a variety of economic impact studies for the UK and Gibraltar Governments since 1978 and is well acquainted with all aspects of Gibraltar’s economy. Professor Fletcher undertook the analyses in this report with Professor Adam Blake and Dr Yeganeh Morakabati, both of whom are staff within the International Centre for Tourism & Hospitality Research. Adam is a renowned economist who specialises and has been responsible for leading the development of Computable General Equilibrium Models of economies and Yeganeh is a specialist research methodologist who has written on international trade flows and undertaken a variety of research projects concerned with trade and risk.
Study’s main findings:
- The amount of goods and services imported by Gibraltar businesses from Spain is valued at more than £174m per year.
- Gibraltar accounts for 1 in out of every 6 jobs across the whole of the Campo area using 2007 employment data
- Frontier workers (both Spanish and other nationals) earned £126m from their Gibraltar jobs and much of this was spent in the Campo region.
- Gibraltar’s economy accounts for around 12% of the Campo’s economy as a whole.
- The effect of Gibraltar’s economy increases the size of the Campo’s economy by an extra £420m per annum.
For further copies, please call the Chamber on + 350 200 78376
At the recent AGM of the Chamber Prof. Fletcher presented The Economic Impact Study to the Members and fielded question from the floor.Past president Peter Isola’s term as a director came to an end and he requested to stand down from the board after some 17 years as a director. The President on behalf of the board, extended their thanks to him for his long and dedicated time as an active director and popular president.
The Office bearers elected were:
Mr. Nicholas Russo, President,
Mr John Isola, Vice-President,
Mr George Olivera, Treasurer,
Mr Jeremy Nicholls, Hon. Secretary.
With only one member, Mr Joe Bonavia, putting forward his name to stand for election to the board, he was duly elected to the board for a 3 year term.
The board would like to congratulate fellow director Mr Marvin Cartwright on his recent appointment as Country manager for the Royal Bank of Scotland / NatWest. To have a Gibraltarian heading up one of the Rock’s most important financial institutions is a testament to the quality of the talents and skill sets available in Gibraltar today.
Finally the Chamber welcomes the resumption of a ferry link between Gibraltar and Algeciras after a lengthy forty year break. Both sides of the Bay of Gibraltar should benefit from this new venture announced by the Spanish shipping group Transcoma.
In a workshop off Devil’s Tower Road some years ago, Tom Scott, an engineer with Toyota Gibraltar Stockholdings [TGS], pondered a challenge. He had been tasked with taking a factory-model Toyota off-road vehicle and making it bullet and blast proof, suitable for work in some of the world’s most inhospitable and dangerous places.
Together with his team, he took the car apart and rebuilt it, adding over a tonne of thick glass and steel plating. This was no simple conversion. Doors had to be modified to allow for thicker windows, suspensions had to be strengthened to cope with the extra weight. But three years of work paid off. They have a promotional DVD at TGS now that shows one of these armoured vehicles being put to the test, sprayed with gunfire and subjected to a pounding that would do for most vehicles. The armoured car emerges battered but intact, solid enough – in a real situation – to save the lives of anyone inside.
George Bassadone, the chairman of TGS, proudly recounts the story to illustrate the range of skills and know-how that his business boasts in-house, much of it drawn from what he describes as the local Gibraltar gene pool. “We’ve got a lot of talented individuals here, and diverse talents,” he told B2B in a recent, rare interview. “Tom basically hand-built the first armoured prototype. There are plenty of people here on the team whose job I couldn’t even begin to do.”
The story of how Mr Bassadone transformed a small family car dealership into a multinational company is a story that hinges on this human factor. Over three decades and starting from scratch, Mr Bassadone put together a team of experienced professionals and created a business that is now the world leader in a demanding, unusual niche market. Under his stewardship, the company grew to take the lion’s share of the market for supply of project vehicles to relief operations and non-governmental aid organisations around the globe. From Asia to Africa, relief workers use Toyota vehicles supplied and equipped by TGS to bring help to communities devastated by war and natural disasters.
TGS provides a bespoke service to its many clients, tailoring vehicles to highly-specific needs. The company converts factory vehicles into ambulances, equips them with tyres for operations in sandy environments, or fits them with specialist communication kits. Some of the work is unusual and includes a Toyota land cruiser pick up which TGS fitted out with generators to be used by an oil company for steam cleaning out in the desert.
“It says a lot about the adaptability of our team that they can work round the challenge and come with a one-off design like that,” Mr Bassadone said.
And all from a modest set of offices and workshops on Devil’s Tower Road.
It all started with a phone call from Denmark in 1985. By that time Mr Bassadone had been working in the family business for eleven years, the last seven of them taking a prominent role in the company following the death of his father. The call was from a Danish Car Trader, who wanted to buy five right-hand drive Toyota vehicles for Africa. This was at a time when unauthorised distributors were setting up channels for distribution of vehicles, and Mr. Bassadone smelt a rat. He suspected that the vehicles were really destined for the UK market but, amused by what he thought was an elaborate cover story about aid work in Africa, agreed to supply them to the Danish company. As a precaution, he alerted the UK Toyota distributor.
“But of course, the vehicles never arrived [in the UK],” he said. “They truly went over to Africa, and that was the start of the trading relationship with the Danes.”
By 1989 Toyota, recognising that this was an important sector, asked Mr Bassadone to sell directly to the end customers and, in effect, cut out the middle man. Mr Bassadone set up Bassadone Project Vehicles, the forerunner to the present company, and got to work. Travelling widely, he fostered relationships with UN bodies and NGOs around the world, brought in experienced people to help guide the business. This was not like setting up an ordinary car dealership, for which there was an established process, a route map. This was a step into the unknown, from establishing the contacts to understanding their needs and setting up processes that met those requirements. Take language, for example. Knowing the importance of being able to communicate in one’s indigenous tongue, Mr Bassadone brought in French and German speakers, Danes and Dutchmen who knew the aid business and could talk freely with potential clients. “One of the incredible things about TGS is that there was no model to follow,” Mr Bassadone said. “Here was a business that had no guidelines.
By 1996, the business had received a full sanction from Toyota and became TGS, its present incarnation, a fully authorised company active in many areas of the car trade but specialising in the provision of customised project vehicles. “Gibraltar has really become a touch place,” Mr Bassadone said. “In the case of an emergency, the phones ring to the Rock. We’ve been doing the job for 20 years and we’ve become a blue chip partner for relief organisations, an implementing partner. The client has a trust in our performance. We have a trust in them. At the end of the day, we’ve tailored ourselves for their requirements.”
For years they have cropped up all over Gibraltar, rows of white Toyota four-wheel drive vehicles parked in neat rows in the most unlikely places. These are the factory models, the raw material which the TGS team transforms for work out in the field.
Until recently the cars were shipped in to Gibraltar on car carriers sailing directly from Japan. They were offloaded here and stocked piled, ready to be converted and shipped to the final destination depending on client needs. Space has always been a frustrating constraint for Mr Bassadone and his team, who have had little choice but to base parts of the business outside the Rock. The armoured conversions, for example, are now subcontracted and carried out in plants in Spain and Poland.
The car carriers now call at the port of Sagunt north of Valencia, where TGS is able to hold a substantial stock of vehicles. Cars are trucked down to Gibraltar to be converted and fitted with accessories, then trucked out again to Spanish or Portuguese ports for onward transport. On occasion, depending on the urgency, they have even been shipped by air using giant Russian Antonov freighters flying out of Málaga airport. It is a complex logistics operation that has Gibraltar as its hub, the centre point on which all else hinges. It works at speed sometimes. Recently, TGS shipped 21 ambulances in 21 days, a formidable achievement that further consolidated the company’s reputation for reliability under pressure. In the world of relief work, TGS has put the Rock firmly on the map. The vehicles shipped through this logistics chain end up in the four corners of the world. Africa is always a main contender, but they end up anywhere where there’s a problem. TGS, for example, was the first agency to get vehicles to Asia after the devastating tsunami.
For TGS, bad news on the TV screen means good news for business, but the company plays a crucial, positive role in that equation. “At the end of the day, I look at it from the point of view that our operation here supports the hardship that is created by natural disasters,” Mr. Bassadone said. “We’re not responsible for the natural disasters, but we help alleviate the pain.”
Eventually, TGS hopes to bring the Japanese car carriers back to the Rock, to find ways exploiting minimal available space for the good of both the business and Gibraltar as a whole. The company currently employs over 200 people on the Rock.
Close associates of Mr. Bassadone said he never stands still, something that he admitted with little hesitation. He said he was driven by a sense of personal duty to the legacy left to him by his father and grandfather. His was an upbringing infused with the entrepreneurial spirit of his predecessors, one that he embraced with vigour. “Both my father and my grandfather were in business,” he said. “I was born into a business environment. There’s a sense of duty to expand and take the business forward for the next generation.”
This is a success story, but there have been difficult times over the years too. A low point, he said, were painful shareholder wrangles that damaged relations with other members of the Bassadone family. “That was a very difficult time, a very testing time,” he said. “Business mixed with family is an explosive situation.”
George Bassadone’s style is to lead from the front, to put in as many, or more, hours than his staff, to inspire with ideas and to boost confidence and self belief. His company is covered in his fingerprints from top to bottom, but it is not only about him. “I believe my role is to give inspiration, to coax people along, but above all to allow them to develop, and in that development contribute to the company,” he said.
He wants to wind down in the coming years, take a step back into an advisory role and let others continue the frontline work. He has a daughter and two sons, one of whom, George, works at his side. “It’s a pretty tough environment but we’re in a strong financial position and of course, 2009 will happily come to an end on the 31st of December. We’re looking forward to an invigorated 2010.”
But challenges aside, Mr Bassadone insisted that he was genuinely thinking of retirement. “A lot of people tease me by not believing that I’m capable of running out of steam,” he said. “But I’m convinced I will run out of steam. I’m planning my retirement in about four to five years time.” (As he said this, Ernest Felipes, Mr. Bassadone’s business development manager, laughed and looked unconvinced. “He said that five years ago,” Mr Felipes said, smiling.)
But across the table from him, the TGS chairman insisted it was true. And once again, he returned to a theme that ran throughout the conversation.
“One of the real values in successful businesses, one which is off balance sheet, is the human factor, the people who are working in that team,” he said.
“One of things that we’ve done over is we’ve pushed people to their own extremes. I enjoy doing that. I enjoy pushing myself, and others.”
Gibraltar has long boasted a solid reputation as an efficient jurisdiction in which to handle admiralty arrests, and with ship owners struggling to find work for laid-up vessels, it was only a matter of time before banks and creditors moved in.
By this summer, the predictions had come true.
Lawyers in Gibraltar say there is mounting evidence that lenders are taking tougher action against ship owners who default on loans and mortgages. They point to a string of recent admiralty arrests as proof.
On the waterfront in Gibraltar, there are clear signs that the economic crisis has hit some owners hard and there is a general expectation of more
At least 10 ships have been arrested here over the summer, with more coming in on a regular basis.
John Restano, a partner at Hassans who handles maritime work, told the maritime newspaper Lloyd’s List recently that the number of enquiries had risen sharply.
“Many banks are sitting on problem accounts and are now looking to take action,” he told the newspaper.
That sentiment was echoed by James Ramagge, a partner at another of Gibraltar’s law firms, Triay & Triay.
“We have seen a marked increase in enquiries and inevitably we expect there to be an increase in arrests in the coming months,” he told the newspaper.
Banks like to arrest ships in Gibraltar because admiralty cases are dealt with swiftly and efficiently here under British law.
That, coupled to an unrivalled geographic location overlooking the busy Strait of Gibraltar, means this is a jurisdiction of choice in troubled times. It also makes the Rock a potential barometer of a wider malaise in the industry.
During shipping’s recent boom years, admiralty work was slow.
The few arrests that did materialise were as a result of contract disputes or breaches of charter parties, with owners or insurers settling the amounts quickly and avoiding forced sales.
“These days, we’re arresting and selling ships because people are not paying,” said Christian Hernandez, a partner at Isolas.
“Many owners are struggling to make their payments because they haven’t got the work.”
“It’s much more drastic than a year ago.”
Resolving the legalities swiftly and with minimum fuss protects the equity in a vessel and enables a speedy return to business or, in the case of older ships, to the scrap beaches of Asia.
Gibraltar’s legal community is tightly knit and has a close working relationship with court staff, who are well-versed in the intricacies of admiralty law and try to give priority to shipping cases wherever possible.
In cases where vessels have to be sold, this can be done by way of public auction at the hands of a UK broker, or by private treaty in which two parties agree terms within certain restrictions.
In both cases, creditors – including crews, who take priority – are able to claim against the proceeds of sale.
And the business of arresting ships is not only profitable for lawyers.
Across the maritime community and beyond, from the port authority to ship agents, victuallers, hotels and airlines, this is an area of business that generates wide-ranging benefits.
Gibraltar and Spain will establish closer links in the maritime sphere as part of an agreement reached during the historic visit to the Rock by Spain’s foreign minister, Miguel Angel Moratinos.
In the coming months officials will work to formalise multi-level contact between the ports of Gibraltar and neighbouring Algeciras, which share a bay that is increasingly busy with shipping activity.
The move aims to improve cooperation and coordination between the two ports in the wake of major casualties including the New Flame and the Fedra.
It will also ensure a synchronised joint response to pollution incidents in a region that has become a key bunkering point for vessels sailing through the Strait of Gibraltar.
Authorities in Gibraltar and Spain have worked together at a practical level in the past, including the daring rescue of 31 seafarers during the Fedra casualty.
But political difficulties had so far hampered efforts to establish formal frameworks on issues such as maritime safety and environmental protection.
Although the exact details have yet to be finalised over the coming months, the will to resolve those difficulties has now been clearly signalled from the highest diplomatic levels.
The agreement was reached following the ministerial-level meeting of the Trilateral Forum for Dialogue between the UK, Gibraltar and Spain.
Present at the discussions were Mr Moratinos, the first serving Spanish foreign minister ever to visit the Rock, his British counterpart David Miliband and Peter Caruana, Gibraltar’s Chief Minister.
“We have sought to ensure a high level of environmental protection in Gibraltar and the whole region…by proposing cooperation in areas such as pollution from maritime activity and traffic, bunkering operations, industrial emissions and water discharges, waste disposal and land reclamations, among others,” the three governments said in a joint statement.
“This cooperation is intended to take the form of liaisons, establishment of contact points and urgent means of communication, rehearsed cooperation in coordinated incident response and other means.”
With the start of the Winter 2010 timetable (25 October or 01 November depending on the airline), each of the carriers operating scheduled flights to Gibraltar has announced significant changes to their services. Traditionally, the number of flights in Winter is lower to reflect the reduced demand during the off season. This year will be no different. As always, schedules are subject to change but these are the highlights
British Airways (BA/BAW)
Earlier this year, the national carrier announced another of its frequent restructurings of its short and medium haul network from Gatwick Airport. As a result, whilst maintaining a single daily flight from Gibraltar to London, the service will switch from Gatwick to Heathrow Terminal 3. In addition, the flight has been retimed and will now leave ‘The Rock’ at 8.10pm each evening, arriving at Heathrow at 9.55pm. If you are connecting to another destination, it is pretty certain that an overnight stay would be required in London as the last departures from Heathrow leave before 11pm.
The low-cost carrier has confirmed that it will reduce its schedule to London Gatwick from 12 weekly flights to just seven for the Winter period. The now single daily flight has also been retimed to leave Gibraltar at 2.25pm (Monday to Friday), arriving at Gatwick at 4.20pm. Although there are slight time differences at the weekend, the basic pattern is clear.
Monarch Airlines (ZB/MON)
Following the precedent of previous years, Monarch is reducing its schedule to London Luton from six weekly flights to five (from 01 November) and then four with effect from 11 November. The airline has also rationalised its timings and all flights will now arrive in Gibraltar 11.10am returning at 11.55am. This marks a change from the previous mix of morning and evening services. In a separate announcement, the airline has confirmed that the operation of its three weekly flights to Manchester will remain unchanged.
Ándalus Líneas Aéreas (EA/ANU)
Although operating a growing fleet of regional jet airliners and a disparate network of flights within the Iberian peninsula and to North Africa, Ándalus has made significant changes to its Gibraltar schedule. Despite initially announcing an increase in the service, from 27 September the airline cancelled its flights to Barcelona citing weak demand. Additionally, from the beginning of September the route to Madrid has also suffered considerable reductions, with the morning return from Madrid and early evening flight to the Spanish capital being cut. This trend looks set to continue with the Winter schedule. More positively, from 25 October the morning departure to Madrid is an hour earlier at 7.25am, arriving at 8.45am in good time for the day’s meetings.
Brian T Richards is a freelance air travel consultant. email@example.com
Businesses in Gibraltar, and around the world, are under increasing pressure to meet regulatory and compliance standards concerning business ethics and procedures. One area that can create problems for many types of business, large or small, is the ever-growing need for space.
Here in Gibraltar space is a valuable commodity. As businesses grow and develop, depending of the nature of the individual business, two things are likely to happen: an expansion of the work force and the ever-increasing amount of paper that these individuals produce.
Moving premises or extending existing ones can be stressful and costly as well as inconvenient. Of course, moving to new premises can also be a sign of prosperity and business development, but wherever we go, no matter how much space we acquire it will inevitably one day be filled.
Sound management protocols should allow a business to manage the ever-growing amounts of paper and data produced, and fulfil the required compliant and regulatory duties as one and the same. However, meeting these requirements can add stress and consume time that could be spent concentrating on the business in hand.
From the aspect of compliance a couple of phrases that are used, so much these days, are disaster recovery and continuity planning. When these phrases are used people instantly think of calamities such as earthquake or floods. However a disaster often takes the form of something quite different and may only affect individual businesses rather than whole districts. A business could cease operations for any number of reasons, natural disaster being just one of them. It could be that a man made error, denial of access to your premises, loss of data because of hardware failure or fire.
The priority is to restore services and restart operations as soon as possible. Statistics from the London Resilience website show that half the companies that suffer from either data loss or major disruption and have no effective continuity planning, go out of business within twelve months of the event.
Outsourcing document management/archives as well
as digital data is something that can make life easier and at the same time increase the effectiveness of disaster recovery and continuity plans.
Lab Gibraltar Ltd. provides a number of solutions that are both cost-effective and compliant. By removing digital data storage away from your place of business you automatically create a duplicate that is constantly updated. Lab’s dedicated Data Vault backup solution means that a client’s entire system can be restored without the danger of corrupted or lost data often associated with backup tapes. Data Vault allows for full backup restoration or even the restoration of individual files, should a file be misplaced or accidentally deleted. The backup data is encrypted before leaving the client’s premises for additional security.
Lab can also provide clients with a managed Document Vault. Storing your physical documents/archive in our secure premises that are monitored by intruder alarm, fire detection and entrance and exit monitored CCTVs. The Vault Is temperature and humidity controlled to ensure documents do not deteriorate over time and they are also catalogued for ease of access and retrieval should originals be required by the client.
Some clients require documents to be scanned and transferred to other types of media or hosted by Lab for online viewing. Closed circuit networks are used for the scanning process removing the threat posed by outside attack.
- Strong euro impacting on stock costs and squeezes margins.
- Banking costs affecting many local businesses. Lending conditions remain tight.
- High business costs and competition from Spain have the biggest impact on local businesses.
- Members returning completed questionnaires employed more than 2,500 people or around 1/6 of the private sector workforce in Gibraltar.
- 30 per cent response rate (83 completed questionnaires returned).
One quarter of respondents said that they had increased the number of employees in the previous 12 months. These were in the non-banking parts of the finance sector mainly insurance and “Other Financial” categories. This was counterbalanced by a similar number of respondents who said that they had reduced the number of employees in the same period, predominantly in the construction, gaming and banking sectors, although a number of retailers had also reduced staff levels. The remaining 50 per cent of respondents said that there had been no change to staffing levels during the period.
One poignant question asked of respondents was whether in the light of the global recession, employers were expecting to make redundancies in the year ahead. Just 10 per cent of respondents said that they expected to make job cuts, but a further third (36 per cent) said that they were unsure if job cuts would be necessary. A certain degree of reassurance was given by more than half of respondents (54 per cent) who responded that they had no plans to make job cuts in the year ahead.
Around half of those responding said that they had seen an increase in sales compared with the previous year. Just under a third of respondents (31 per cent) said that they had seen a fall in sales whilst a fifth (20 per cent) said that their sales had been flat compared with the previous year.
Of those who had seen increases, wholesaling, legal, insurance, other finance, and the port and shipping sectors all reported healthy double digit increases in sales. The sectors hardest hit were banking, construction and transport which all reported sharp falls compared with the previous year or at best flat sales levels.
The one puzzle in this result is that the increases in sales reported by retailers and particularly wholesalers conflict with the decrease in business reported by transport companies. This could be explained perhaps by the significant increase in volume of transport companies entering Gibraltar to supply goods but not using local transport and customs clearing agents. Should a levy be introduced on such non-local trucking firms and if so who might benefit? The Chamber does not wish to see an increase in business costs just to support a number of small local firms. We would, however, want to encourage people to use local firms where the service level, quality and price are better to that offered by outside firms.
More worrying perhaps is the expectation of what lies ahead for the business community. Nearly a quarter of respondents (23 per cent) expect the next year to be better than the previous year. However, 40 per cent of those responding expect the outlook to deteriorate in the year ahead. A similar amount (37 per cent) expect trading conditions in the year ahead to be the same as last year.
Important issues affecting business
Increased costs and competition are the two issues having the biggest effect on local companies.
Increased business costs were cited by one third of respondents as the most important issue affecting their business. Several commented that the sharp appreciation of the euro against sterling was squeezing margins. Overall half of all respondents said that the fall in the value of sterling had had a negative effect on their businesses with just 20 per cent saying the fall in sterling had had a positive effect.
Competition from other local traders in Gibraltar and also from Spain was the second biggest issue affecting local companies.
When asked what about the impact of the lower corporation tax rate anticipated in 2010, nearly four fifths (78 per cent) responded that it would have a positive impact on their business. Nearly one fifth (19 per cent) said it would have no impact.
That said several respondents gave their positive reply on the condition that additional costs or taxes would not be introduced by the government. Many members asked the question: “How will government balance its books?”
Impact of the recession is having a notable effect on local traders with more than half of respondents (54 per cent) saying the downturn was having a negative impact on their business. Surprisingly, more than a third of respondents (37 per cent) said that the worldwide recession was having no impact on their business. These unaffected businesses were represented across most of the main sectors: wholesale, retail, finance sector, the port and shipping sectors. But it is still relatively early in the downturn and if the 1990s recession is any guidance, Gibraltar began to feel the effects of the downturn two years after it had hit the UK and Spain.
(Note: The survey was conducted in the second quarters of the year so changes in bank lending policies may have been made since then.)
Respondents were asked if the availability and cost of banking facilities had changed noticeably compared to the previous twelve months. Just under one sixth of respondents (14 per cent) said that borrowing rates had increased. Two fifths (41 per cent) said rate has decreased with a slightly higher percentage of respondents (45 per cent) saying rates had not changed. This gives some cause for concern as base rates have fallen to historic lows in the last 12 months but if these respondents are saying that they have not benefitted from reduced borrowing costs then this will be a burden for many local businesses.
This last response concurs with a related web poll run on the Chamber’s website in the first six months of this year. The poll asked respondents whether they had found it more difficult to secure credit facilities in recent months. Just under two thirds of respondents (59 per cent) said that they had found it more difficult, whilst a quarter of those responding (26 per cent) said that they had not found securing credit facilities more difficult.In a subsequent survey question, 42 per cent of respondents said that they had found their bank less willing to lend compared to the previous year, but in contrast more than half of respondents (56 per cent) said that there had been no change in their bank’s willingness to lend compared with twelve months earlier.
Cash management is perhaps the single most important factor in running a successful business. In fact there are many large and well known companies who have never been profitable but still operate seamlessly. How do they do it? Simply by clever management of their cash flows.
For many, cash has always been a priority. But today, with access to debt and equity markets increasingly tough, cash is receiving additional attention. Irrespective of the financial health or trading outlook of the company, the benefits of prudent cash management and cost reduction are obvious. Many CFOs and corporate treasurers know how to manage their cash. Most will consider squeezing working capital, optimising tax policies or liaising with lenders to increase the flexibility of their financing arrangements. But few will have in-depth experience of putting pressure on all of these levers at once, when unstable markets make traditional methodologies harder to apply.
So what can you do to improve your cash flow position? Here are a few tips:
Manage Currency Risks: Foreign exchange can have a direct and sizeable impact on a company’s financial risks. The increasingly global nature of businesses and current volatility in the foreign exchange markets requires careful consideration of local operations and cross-border trading. By implementing short term foreign exchange policies you can provide immediate protection against risks such as cash flow short falls. Good treasury management can release value whilst minimising risk and maximising upsides.
Restructure Finance Arrangements: Regularly review the company’s current financing arrangements with its suppliers and lenders, and negotiate whether these can be restructured or replaced to increase flexibility of your cash-flows. Examples include negotiating longer credit days, restructuring your purchasing commitments, moving to consignment inventory etc.
Reduce or Re-Evaluate Capital Projects: Capital expenditure can be a significant draw on cash and simply turning off the tap can cause long term damage to a company’s asset base. Review the company’s current and forecast Capex projects, determine the necessity of spend in an accounting period, assess cost/benefit and implement investment programmes to reduce or defer cash spend.
Simplify Organisational Structure: With Group structures expanding over time, either organically or by acquisition, they can become unwieldy and divert management time and funds away from the core purpose of running the business. Add to that mix dividend traps and unknown contingent liabilities and the risks can begin to stack up. Identify inefficiencies in your current structure and rationalise your corporate structure, thus reducing governance costs and redundant compliance costs to free up more cash.
Reduce Tax Cash Costs: Even when companies have specialist tax department they are normally focused on managing the effective tax rate rather than optimising cash-flow. Look at ways to accelerate tax refunds and raise cash or save cash costs through careful tax planning, maximise the use of losses to reduce cash tax payments and optimise indirect tax cash flows.
Maximise Use of Existing Cash Accounts: With management focusing on profit growth there can be a significant amount of cash value tied up in divisional or international entities. By closely monitoring the treasury function, you may be able to unlock cash, centralise liquidity management, and increase the speed at which cash can be accessed. At a time when debt financing markets are increasingly challenging, unlocking cash already held in the business can help reduce funding requirements.
Improve Financial Reporting and Controls: Accurate and timely information is essential if management are to respond to the challenges posed by the current economic climate. A focus solely on profit related metrics in management reports can result in lost opportunities to optimise cash-flow. By looking at Group finance, its internal and external reporting processes and its interactions with other parts of the organisation, you can focus on fast payback initiatives and implementation of processes to improve the speed, cost, accuracy of the financial close process and to embed a focus on cash-flow within the business. This can then allow management to make better and quicker decisions about the business.
Reduce Costs: In the current economic climate where it has become increasingly difficult to drive top line growth, protecting profits and cash through cost reduction programmes has become imperative. Align your cost base with future revenue expectations, and resize large scale overhead and direct costs.
Exit Operations: Whatever the market, a well planned and implemented exit can reshape a business and unlock value without consuming excessive management time. Timing and planning of an exit is critical. This can provide management with an opportunity to restructure balance sheets, improve trading performance and refocus their business whilst maximising value, and freeing up cash.
Reduce Pension Costs: The last few years have seen a significant shift in the pensions’ landscape pushing pensions further and further up the corporate agenda, not only from a strategic focus but from the potential financial risks that they can expose. One way to mitigate deficits in the pension fund is to transfer some of the company’s property assets to its pension scheme as a non-cash contribution, resulting in a possible uplift in the balance sheet value of the assets in the pension fund, and helping to meet the funding concerns of the trustees whilst at the same time helping to preserve cash flows in the company.
Relocation specialist, Del Sol Packaged (DSP) offers a complete portfolio of relocation solutions for businesses of all sizes wishing to relocate to the Costa del Sol, Gibraltar and surrounding areas.
With over 20 years experience of relocating, the dedicated team at DSP will work closely with each client to create a tailor made relocation package to suit the clients needs.
Executive Relocation - Relocation is listed in the Top 20 stressful events of life.
The hassle of relocating a company can minimize productivity and profits and leave staff feeling de-motivated.
An executive relocation package from DSP means that we will direct the whole relocation process from initiation through arrival and repatriation, leaving your business and employees to continue your business activities as normal.
A representative from DSP will liaise with your organisation to find solutions to your relocation problems. The basic services included in the package are; an introduction to Spanish culture and language, orientation tours of the local area, assistance with transporting goods and furniture, sourcing business premises and accommodation for employees, handling all legalities and administrative issues with local authorities (such as setting up NIE numbers, bank accounts, tax payments) and setting up international business networks in Spain.
For those of you who have not already attended a function at the newly refurbished Mons Calpe Suite Car at the Top Station of the Cable Car, you should take the opportunity to check it out. This already stunning venue has had a massive and spectacular facelift.
The result allows the visitor to fully appreciate the extraordinary views that the venue offers.
Complete with seating for 60 guests, PowerPoint and conference facilities, this is the location to make a corporate statement, even before you make the speech! Already, the venue has played host to the historic Trilateral Forum of Dialogue on Gibraltar, entertained guests who were invited to an evening with ex-England Rugby Captain, Martin Corry MBE (pictured below) and lunch with Sir Alex Ferguson, CBE, Manager of Manchester United FC.
The Mons Calpe Suite is licensed as a venue where couples can actually get married and then celebrate with family and friends.
It has teamed up with one of Gibraltar’s top restaurants, the Boatyard, who provide all the catering in-house. Together, they have created a wide variety of menus including a la carte, corporate and Christmas menus as well as a selection of delicious canapés.