BayWa r.e. continues its strong growth in the UK through the provision of Operation and Maintenance Services (O&M Services) for five solar farms totalling 22.37MW on behalf of its new client, Ingenious.
The delivery of BayWa r.e.’s expert O&M Services will look to optimise the Ingenious managed assets helping to increase production through enhanced utilisation of resources.
As an award-winning provider of O&M Services with four office locations across the UK and Ireland and growing staff numbers, BayWa r.e. has grown its solar portfolio to over 943 MW and continues to expand.
Ingenious is a specialist investment manager, founded in 1998. The company supports the global energy transition to a low carbon environment through investment of debt and equity into projects and businesses that harness low carbon energy generation, resource efficiency, transport and communications technologies.
Life was good in 1967 Britain; the first colour television broadcast was made on BBC2, Sandie Shaw won the Eurovision Song Contest and Beatlemania was in full flow. August 1967 was particularly sunny and warm and annual price inflation (RPI) sat at just 1.4%1.
Within 12 months, RPI reached 5.7%, subsequently remaining above 5% for THIRTEEN years, including five years above 10%, and peaking at an eyewatering 26.9% in August 1975. From 1967 to 1983, inflation averaged 11.1% per annum, and the price of goods increased by 540%, having a devastating impact on the standard of living.
Those who were starting out in life in 1967, looking to buy a home and raise young families, are now in their 70s and 80s with very different aspirations and concerns. But if inflation makes a comeback, as is expected, what does this mean for them now that they are retired and for their later life and estate planning considerations?
Most people in later life have two overriding objectives; leave the best possible legacy for their family and ensure they have enough money to meet their own life needs. The two are not mutually exclusive as their accumulated wealth may need to be used for either purpose depending on how life pans out. Advisers therefore need to help them plan for all possible eventualities.
Inflation and capital taxes
Let’s consider the impact of inflation on legacy aspirations. In March 2021, the Chancellor froze all Inheritance Tax thresholds until 2025/6. In an inflationary environment where asset prices, particularly property values are increasing, more estates will be dragged into paying Inheritance Tax. Those who are not actively looking to sell their properties may be blissfully unaware that their assets have crept above the nil rate band and the prospect of IHT being levied on their estates may come as a surprise to them. For those with assets above £2m, again likely to be a growing number, Residential Nil Rate Band taper will accelerate as the value of their estate grows and so they may not enjoy the same level of relief they had been expecting. Gifting of IHT exempt assets, such as Business Relief (BR)-qualifying assets may be considered as a way of mitigating this.
Similarly, more clients could be dragged into the Capital Gains Tax net if they wish to crystalise gains made on other assets. Keeping track of rising asset values relative to tax exemptions and thresholds could make a real difference to the legacies clients are able to leave to their beneficiaries, or to the amount of money available for clients to pay for their own life needs. Proactive management will become an increasingly important aspect of the adviser role in an inflationary environment.
The ‘Real’ value of money
Many clients looking to maximise their legacies whilst maintaining access and control consider BR-qualifying investments, of which there are now a variety on offer from a number of investment managers. Many of these have a “capital preservation” focus and target modest returns, some as low as 1.5% p.a. and numerous around 3% p.a. Inflation has been low since the market for these products was developed, allowing investors to maintain the real value of their investments, but with little room to manoeuvre for any bumps in the road. Indeed, in recent times some services have struggled to meet these targets due to volatility in energy related assets.
Whilst the Office for Budget Responsibility (OBR) medium-term forecasts for RPI are around 3%2, Deutsche Bank has warned of a global inflation time bomb, with inflation re-emerging in 2023 at a level which “could resemble the 1970s’ experience”. It has to be said that this is not a widely held position but not many people expected to see double-digit inflation figures when they were enjoying the summer of 1967!
Even if the OBR are correct, some BR-qualifying portfolios would be struggling to preserve capital in real terms. It is vital therefore that advisers look towards services which can offer greater returns, and low costs, so that legacy aspirations can remain intact.
Rising costs of raw materials and energy lead to higher prices for consumers and a poorer standard of living if incomes cannot keep pace with expenditures. This is at its most acute for those in retirement, who often rely on savings to supplement their income, and where pensions maybe index-linked but ‘real inflation’ is growing at a faster rate than the index. In this situation, a planned legacy may now need to be repurposed to meet life’s needs.
Accessibility & liquidity
Strong performance and minimising tax deductions on withdrawals can make money go further, but accessibility is a pre-requisite in this scenario. Whilst BR portfolios are favoured by many as they are, in principle, more accessible than most trust-based estate planning strategies, liquidity within the underlying companies and investments varies significantly. In challenging times, physical assets can prove difficult to sell in a timely manner and at a favourable price, even those shares listed on AIM may not be as readily realisable as they appear. Holding cash for liquidity purposes would become too much of a drag on returns in an inflationary period. This could explain why there is a trend developing towards secured lending-based investments where no trade or asset sale is required as there is natural liquidity within lending books.
Care provision
We all know that more and more people will need care of some description in later life. We know that it is expensive and can wipe out a lifetime of saving in next to no-time. Care provision is, by definition, a very personal service, delivered by caring individuals, who have bills to pay and who will face rising costs themselves. Ignoring for one moment any cost of goods, the inflationary surge in labour costs in the care sector alone will lead to significant increases in care fees. Obtaining professional guidance to navigate the care system, securing great care at the best possible cost will become increasingly important for families who want the best for their loved ones.
The value of advice
Only 5% of the UK population are over the age of 75 and will remember what it was like having to deal with inflation back in the 1970s’, most financial advisers were still at school and many not even born, the experience of the client coupled with the expertise of the adviser makes for a good partnership but meeting the challenge of inflation requires product providers to support them with solutions which can provide sufficient growth, income, accessibility, tax efficiency and access to professional services in specialist areas such as care.
1Office for National Statistics, June 2021
2Office for Budget Responsibility, May 2021
Ingenious Media is proud to present two films in the upcoming Cannes Film Festival, running from 6 to 15 July, moved from its usual May berth due to the pandemic.
The first, Flag Day, is directed by Sean Penn and stars his daughter Dylan in a breakout role, together with Penn himself, Josh Brolin and Katheryn Winnick. Flag Day will hold its World Premiere in the Official Competition. Following its selection announcement, MGM acquired North American distribution rights and will release the film via its marketing-distribution joint venture United Artists Releasing in August this year. Flag Day is based on Jennifer Vogel’s memoir Flim-Flam: The True Story of My Father’s Counterfeit Life. It tells the story of the author’s coming of age, played by Dylan Penn, over two decades while navigating a fraught relationship with her beloved, career criminal father.
The second Ingenious-backed production will screen in the new Cannes Première section. Oliver Stone’s new feature documentary about the assassination of US President John F. Kennedy, JFK Revisited: Through The Looking Glass, is narrated by Whoopi Goldberg and Donald Sutherland and includes a team of forensics, medical and ballistics experts, historians and witnesses. The documentary comes thirty years after Oliver Stone’s Oscar-winning drama JFK and will feature recently declassified evidence and testimony in relation to the President’s 1963 assassination. Altitude Film Distribution will release the film in the UK and Ireland.
In the space of just seven days, education technology company Mindful Education has won two awards for its blended learning professional courses delivered in partnership with UK colleges.
The first award win came at the Learning Excellence Awards 2021 in the Design, Content Creation and Video category, with the judges commenting that:
“The calibre of entries was high; the diversity of entries was exciting; the breadth of companies submitting entries was inspiring”.
A week later, Mindful Education then took home Best Study Resource for their AAT Level 3 Advanced Diploma course at the annual PQ Magazine Awards, which recognise the very best learners, practitioners and providers in accountancy training.
Commenting on the two award wins, Mark Mckenna, Mindful Education’s founder and Managing Director said:
Mindful Education partners with more than 55 colleges across the UK to deliver media-rich professional courses in accounting, management, law and human resources, delivering learning to thousands of students.
At Ingenious, we consider estate planning to be just one part of a comprehensive later life plan. Business Relief (BR) solutions should be approached as an investment service in their own right and not solely considered as a tax solution. Advisers should remember not to let the, “tax tail wag the investment dog.”
When it comes to undertaking BR due diligence, we have six golden rules advisers can use to position their clients for the best possible outcomes for both estate planning and later life.
Estate planning is about leaving the most to our chosen loved ones as a legacy. Individuals should therefore plan to maximise the wealth they will have to ultimately pass on to their beneficiaries, whilst considering any potential needs, such as home improvements or travel, as well as the possibility of needing to pay for care one day. As well as helping to meet any needs, strong growth is also a key weapon to counter the negative forces of inflation, so seeking a steady, long term, meaningful return is always crucial.
Costs are another guaranteed negative force on investment returns and so should be minimised. Lower costs can also reduce risk. A manager with lower fees doesn’t need to chase extra risk to cover these costs before delivering on their specified or target return, which is calculated once fees have been deducted. In addition, high costs can indicate the investment is not delivering best value to the investor, but that instead the manager is taking the significant benefit.
BR investments are investments into underlying portfolio companies, which can carry out a wide variety of BR trading activities. These companies and the markets in which they operate should be clearly understood by the adviser. BR companies tend to either own and operate assets or carry out a lending trade. Some do both. Broadly speaking, those with a higher proportion of their portfolio in physical assets will see their fortunes depend on the performance of those assets and will fluctuate on the fundamentals of the sector. Those more focused on lending should see more steady returns as they will have lent money at normally fixed rates and any market fluctuations should have less impact. The associated risks of both routes, including their sector, liquidity and valuation risks, vary widely between strategies. This should all be considered in the context of the investor. Is the trading strategy and associated risk appropriate for their profile?
When making any investment, it is crucial to purchase the asset at the correct price, taking into consideration the potential future sale value. For BR, there are two main considerations.
The first is being aware of the methodology undertaken by the manager when calculating the Net Asset Value (NAV) of the service. Owned assets tend to be more complex to value, are reliant or many variable assumptions and have more potential for subjectivity. Valuations that appear not in line with current market fundamentals or with similar services, should be assessed carefully. Lending services tend to be more transparent and less subjective to value.
The second consideration is whether the share price for incoming investors is trading at a premium to the audited NAV. If so, this should be reviewed, as it means the investor is taking on extra ‘valuation risk.’
Investors in later life do not normally wish to give up control and flexibility of their wealth to achieve estate planning or investment objectives. It can be an uncertain time and being able to adapt is key. But any access to this capital should be managed in a tax-efficient way, considering Capital Gains Tax (CGT). One way to do this is through investing with a Manager that only offers newly issued shares, rather than using matched bargains. Such shares, after a three-year holding period, should qualify for Investors’ Relief, capping CGT on any disposal at 10%, rather than the potentially higher 20%.
One in three people aged 85+ require some form of care1. As well as making the most of any investment, later life planning should seek to provide further utility, for instance, in the preparation for potential care needs. By considering the potential cost of care and practically pre-planning to meet any care needs, the investor will be equipped to make the right choices should this issue arise.
If advisers want their clients to get the most from any BR service they recommend, the use of these rules should help ensure the optimal outcomes.
1AgeUK Briefing: Health and Care of Older People in England, 2019
First published on Professional Adviser
Mindful Education has been named Edtech Company of the Year at the Global Business Tech Awards 2021 at a virtual awards ceremony held on 17 June.
Mindful Education had previously won this category at the UK Business Tech Awards in 2019, but this time faced tough competition from established international edtech company D2L – creators of the Brightspace online learning platform.
This is the third award win in the space of just a few weeks for Mindful Education, following wins at the Learning Excellence Awards and PQ Awards.
Mindful Education works in partnership with colleges, employers and training providers across the UK to deliver media-rich professional courses and apprenticeships in accounting, management, law and human resources.
Mindful Education were recently the Headline Sponsors of the Tes FE awards which took place virtually on 28th May. This event, which takes place on an annual basis, aims to celebrate the fantastic work and achievements of the further education sector.
London South East Colleges (LSEC), one of Mindful Education’s college partners, picked up three awards, including the prestigious ‘FE provider of the year’ award.
A number of our other college and training provider partners also went home winners, including:
You can watch Mark’s full speech here.
Ingenious today announces that its Infrastructure Ventures EIS Service has invested in Winnow, the technology company behind Winnow Vision, the artificial intelligence tool helping chefs cut food waste in half, as it completes its series B round of funding at $12m. Other co-investors in this fund raising round include Ingka Investments, Mustard Seed, Circularity Capital, D-Ax in addition to Ingenious. This follows a recent loan from The European Investment Bank (EIB) and in total means the firm has raised $20m in the last month, allowing it to focus on global markets.
Launched in a single staff restaurant in 2013, Winnow has been adopted by more than 1,000 sites globally and is now operating in 40 countries with offices in London, Dubai, Singapore, Shanghai, Cluj-Napoca and Iowa City. Winnow’s latest AI product Winnow Vision, the most advanced food waste technology on the market, has been developed to automate waste tracking, enabling chefs to run more profitable and sustainable kitchens. With global clients already adopting Winnow Vision, from IKEA stores through to the Armani Hotel in Dubai, the demand by companies to drive down food waste in 2019 is increasing.
Kitchens using Winnow tend to see a 40-70% reduction in food waste within 6-12 months, driving food cost savings between 2-8% in total, which improves profit margins whilst operating in an ethical manner.
Winnow Vision works by taking photos of wasted food as it’s thrown away and uses the images to train itself to recognise what has been discarded. Winnow’s systems have already reached and surpassed human levels of accuracy in identifying wasted foods. This means for clients, over time, these systems will enable their kitchens to automatically register food waste without any human interaction. Food will be thrown in the bin and the data will be captured automatically.
The transaction was led by Ingenious’ infrastructure division and represents the third investment from the Infrastructure Ventures EIS Service, following the backing of Over-C, an analytics company focused on operational performance in the workforce management market and Reactive Technologies, a world leading technology platform facilitating the transition to a low carbon future.
Ingenious Media is proud to announce that seven films produced by investee companies managed by Ingenious will showcase at the forthcoming Venice and Toronto Film Festivals.The Burnt Orange Heresy, produced by Achille Productions, has been selected as the closing film of the Venice Film Festival and will also screen at the Toronto Film Festival. Starring Claes Bang, Elizabeth Debicki, Donald Sutherland and Mick Jagger this noir thriller tells the story of an art critic who is hired to steal a painting from one of the most enigmatic artists. The operation spins out of control as he becomes consumed by his own greed and insecurity.
Seberg, produced by Nelly Films, narrates the true story of an FBI Agent, played by Jack O’Connell, who is assigned to investigate the iconic actress Jean Seberg (Kristen Stewart) when she becomes embroiled in the tumultuous civil rights movement in the late sixties in Los Angeles. The film will hold its World Premiere on the first Friday of the Venice Film Festival and subsequently at Toronto.
Military Wives, produced by Koliko Films, stars Kristin Scott Thomas and Sharon Horgan who start a military wives choir whilst their husbands are on a tour in Afghanistan. Music and laughter transform their lives as the women help each other overcome their fear for loved ones in combat. The film will hold its World Premiere at Toronto;
Tim Roth and Clive Owen star in The Song of Names, produced by Riba Films, which will also premiere at Toronto. This emotional detective story is spread over two continents and half a century. Beneath the film’s stunning musical revelations burn the horror of a war and the lost souls extinguished from history.
Dirt Music, produced by Pelgo Films, will premiere at Toronto. The films tells the story of a woman stranded in a relationship with a man she doesn’t love, in a small fishing village on the coast of Australia. An encounter with a local pariah results in an affair that dredges up secrets and changes all of their lives. Starring Kelly MacDonald and Garrett Hedlund, and from the producers of Brooklyn and Lion the story is based on the award-winning novel by Tim Winton.
Ingenious today announces that it has led an investment round into Over-C Limited, a London-based analytics company focused on operational performance in the workforce management market. Ingenious helped raise an additional £5.5 million in equity funding, bringing the total raised to £10 million.
Over-C’s software uses artificial intelligence, data and analytics to provide industry professionals with key insights for time-critical decision making. Over-C drives behaviours that allow companies to rethink their business and operating models, better quantify risk, uncover new opportunities, reduce losses, and boost profits. The firm currently operates across the UK, Ireland and The Netherlands providing solutions for many industry sectors ranging from transport operators for rail and airports, to shopping centres, stadiums and manufacturers.
The latest round of funding was led by Ingenious’s infrastructure division and represents the second investment from the Infrastructure Ventures EIS Service, following the backing of Reactive Technologies, a world leading technology platform facilitating the transition to a low carbon future.
The investment in Over-C remains in line with the firm’s ongoing drive to seek out high-growth investment opportunities in companies active in the energy, communications, transportation and resource efficiency industries.
The success of the firm to date has been recognised nationally. Its UK partner O2, a leading digital communications company, won ‘The IOT Award’ at the annual Connected Britain Awards 2019 for O2 Smart Compliance, which is powered by Over-C. The IOT Award for 2019 was given to O2, thanks to their joint work work with ScotRail in helping to ensure the security of workers in potentially hazardous situations. ScotRail, Scotland’s national rail service provider, needed a digital solution to help them align with the Department for Transport’s requirements and standards for security and safety, such as real time information, time sensitive prompts and tamper proof records.
