Strength Through Diversity

Answering the door in casual clothes and withan affable smile to match, chief ministerTony Brown could not be further away fromthe distant, formal worlds of Westminster orBrussels. He receives us in his simple and

cosy house in Castletown, that was the Island’s ancientcapital, where he has lived all his life.

And if nothing else, any man who has risen to thevery top while sporting a resplendent handlebar mous-tache has to be admired. Fittingly, for a man who beganas an electrician, Brown has a disarmingly ‘we can fixit’ approach to politics. Looking back after 35 years inpublic service, he says that “most of what we’ve set outto do in the last five years, we’ve achieved.” He goeson, “We’ve sustained a good economy to help support

the Island, we’ve continued to help those most in need,and we’ve invested in the Island’s infrastructure to at-tract new business, to sustain jobs and quality of life.”

So what are the factors that have helped maintain thiseconomic growth? “The Island succeeds because it goesfor niche markets,” says Brown. “So we have a very di-verse economy, not just concentrating in one area. Andwe use our separate systems of government and legis-lation to help make it attractive.” He continues, “Impor-tantly, people who come here are drawn by the Islanditself and also because they find working with govern-ment very easy. We can make things happen reasonablyquickly – I think it’s that smallness and closeness thatmakes the Isle of Man different.”

A key aspect of that difference is the ‘Freedom toFlourish’ ethos which runs through all aspects of Islandlife. “We try to be as free as we can to encourage peopleto be successful,” explains Brown. “We say, ‘If busi-ness is successful, then the Isle of Man is successful.’It focuses people’s minds on trying to develop the Is-land in a way that will help it achieve continuedgrowth.”

Indeed, while much of the world is still languishingin recession, the Isle of Man’s economy is currently en-joying its 27th consecutive year of growth. However,Brown points out that this is not something to be takenfor granted. “In the 1980s we were struggling,” he re-calls. “Our GDP per person was about 50 per cent of theUK’s and we couldn’t even fund the services that wehad then, which were limited compared to today.” Get-ting out of this rut motivated the Manx Government atthe time, argues Brown. “It was that kind of ambitionto be successful that drove us along. There was no com-placency there. It was having that kind of focus – as wellas world events, of course – that helped us develop theeconomy. As the world grew, we grew with it.”

That hunger to succeed still clearly motivatesBrown’s government. “At the moment we’re still suc-cessful and still have growth, because the Island’s econ-omy is small and nimble and the areas we’re involvedwith have continued to grow” he says. “E-gaming, air-craft industries and manufacturing are doing very well.”So what does Brown plan to do in his retirement? “I’mjust going to sit here and watch telly,” he laughs, per-haps only half-joking as he talks about pursuing hishobbies and organising community events. And he issimilarly low key when asked how he would like to beremembered. “Just for being me, I think,” he shrugs.“I’m very proud of how Castletown has changed in mytime, which is something I’ve been involved in influ-encing.”, he says.

Whatever retirement holds, a move to the Algarvedoesn’t seem to be on the cards – he clearly thinks he’salready found his place in the sun. “The Isle of Man isa great place to live, especially for families,” he says.“You work hard, but you can relax outside work. We’revery fortunate to live in such a beautiful place.”

Located in the middle of the Irish Sea and with Celtic, Norse andAnglo-Saxon cultural influences, the Isle of Man is 32.5 mileslong and 13.5 miles wide. As a British Crown Dependency, it isnot part of the UK (nor the EU), but it is located in the British Islesand, has Queen Elizabeth II as its head of state and its own par-

liament called Tynwald, implementing its own legislation. Sterling isthe national currency and the Island produces its own bank notes.

The global financial crisis has served to constrain growth opportuni-ties. Nevertheless, the Isle of Man is in its 27th consecutive year ofgrowth. A number that tells a lot about the capacity of its people (localand foreign) to create solutions and work hard.

The expansion was sustained by the government’s successful strategyof diversifying the economy, investing on one side in the financial sec-tors and also supporting new initiatives in aircraft and shipping registers,clean tech, e-Business, e-Gaming, high tech engineering and manufac-turing, film, financial services, Isle of Man food products, ship manage-ment and space.

The main areas to generate the Island’s future growth are expected tobe those that have done so in recent decades, namely financial and re-lated professional services, which together generate about half the na-tional income. For many people the success of a sector has a combinationof advantages. “We have proportional legislation which is tailored tocaptives,” explains Gaynor Brough, chair of the IOM Captive Associa-tion. “We have the respectability in terms of the OECD ‘white list’ andthe IMF report, the infrastructure, the banks, the law firms, the biggestfour accountancy firms, strong and a highly skilled workforce, plus thework permit is easy to navigate. Logistically it is very close to Londonand the regulator here is very approachable”. Moreover, regulation iskey. “One of the benefits of the Isle of Man is been able to find the ap-propriate degree of regulation for the sort of businesses we have on theisland.”, assures David Vick, from the Insurance and Pensions Authority.

The Island’s traditional sectors of tourism and farming are still gen-

erating greater national income than a decade ago, despite losing groundas contributions to national GDP. The tourism industry that once had itsglory days now has a challenge on its hands in a sector full of competi-tion, and to renovate ideas and infrastructure. Agriculture, on the otherhand, seems to have found a way forward by using ‘Isle of Man’ to brandits products, adding value to the production.

The Island sustains an expanding manufacturing sector producinggoods ranging from aerospace components to foodstuffs, and includessuch hi-tech activities as laser optics. The Isle of Man-based Bladon Jets,a company that manufactures revolutionary micro gas turbines hasworked closely with Jaguar to develop the C-X75 concept car.

The discovery of niche activities – including film production, ship-ping and aircraft registration, and space and satellite licensing – has alsoincreased the economy. The Isle of Man Ship Registry remains one ofthe most highly regarded in the world, being a Category One British Reg-istry with international safety convention status for vessels of all sizesand classes. Meanwhile the Aircraft Register, launched in 2007, has sur-passed all expectations with more than 402 aircraft registered, making itthe eighth-busiest jet registry in the world. “The UK has got nine aircraftregistries in the world,” says Brian Johnson, director of Civil Aviation.“The only difference between us and everybody else is that we providea really good customer service. We would meet the clients’ expectationsrather than being a bureaucratic government department. The quickestwe ever registered was six days and some of our ‘competitors’ websitessay the expectation is for six to eight weeks”.

The IOM has even been considered the fifth most likely country togo back to the moon. “We've about 14 companies here in the Isle of Manregistered as space companies and doing a number of things. Satellitefilings, orbital filings, most of the largest satellite companies in the worldhave got offices here in the Isle of Man”, explains Adrian Moore, De-velopment Manager, Industry and Space for the Department of Eco-nomic Development.

E-Gaming and all other ICT activities have big opportunities andspecial conditions in which to operate. A unique aspect of Island regu-lations is that players’ funds are held in trust for them to ensure that inthe event of an operator’s insolvency, those funds are ring-fenced fromother debts and liabilities. “We have a very advanced infrastructure.Our hosting and network technology is strong,” says Steve Burrows,secretary of the Manx ICT Association. “As a jurisdiction for holdinginformation we are in a very unique position, not being part of the EUand nor the United States, sitting outside the two largely regulatoryregimes for data control that are very strict about the way data circulatesand we are a regime that has no particular interest in that data.”

All sectors have experimented with an unusual public-private part-nership that is appreciated by every single business person we spoke toon the Island. Of course, an accessible government is easier to be createfor a small Island than a big country, but this rare framework cannot bea product of size alone. There is also political will. “It´s a very stableplatform to work from,” explains Mike Hennessy, CEO of the Isle ofMan Chamber of Commerce. “The government works very closely withthe private sector and with new business which want to come to the Is-land. To make it fair it´s a well regulated arena and that provides a goodplatform for businesses that want to come to the Island”.

Away from the office, the Island offers a high quality of life and wehear from the relocated population how happy they were to raise theirfamilies in the Island, but the challenge is to keep hold of single people!The ability to bring in labour from outside is a key factor. On the otherhand, the Island’s economic moment is being reflected in the labourmarket, where unemployment at below two per cent has been the normnow for over a decade. “People tend to be very positive in their feedbackand the fact that they want a work-life balance,” says Debbie Harris, Di-rector of Paragon recruitment consultants. “They can have a serious ca-reer and can still move that career forward but also enjoy what they liketo do outside of work as well.”

Chief Minister Tony Brown

Sunday, 25thSeptember 2011ISLE OF MAN

Tony Brown Isle of Man Chief Minister

If business issuccessful, then theIsle of Man is asuccess”“

Chief minister Tony Brown is the very embodiment of the Isle of Man government’s approachable, small-scale and business-friendly philosophy. As he faces retirement after 35 years in public service, he speaks to us about his hopes for the future

ISLE OF MAN Ship Registry

Rapid service

Distributed with The Sunday Telegraph. Produced by Global Review who take full responsibility for and are solely liable for the content.

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isle of man

Treasury Minister Anne Craine

Anne Craine speaks of changes underway in the Island’sself-governance, economic promotion, and its ties to the UK

Minister for Economic Development Allan Bell

225th, September 2011

when it comes to attracting interna-tional business, explaining that it isa “well-developed jurisdiction,with a stable political and eco-nomic base and a good legal sys-tem based on common law.” Healso argues that its location worksin its favour, as it´s well connectedto the UK and Europe.

Callin goes on to explain thatthe Island’s status outside of theUK is another key part of its ap-peal. “People see it as a separate ju-risdiction – we’re not part of theUK’s tax, national insurance orlegal system. If you’ve got a high-net-worth individual in Europewho wants to set up a trust or a cor-porate structure, he wants to comesomewhere that has a close con-nection with the UK but that isn’tactually part of the UK politicallyor legally.”

Talking of sales pitches, whatare the growing sectors in theManx economy that investorsshould be looking at? Lesley Webbhas no doubt that e-gaming is thecurrent hot favourite. “There hasbeen an explosion in the gamingindustry on the Island over the lastfew years,” she says.

“And although their businessisn’t necessarily conducted on theIsland, these firms have broughtgrowth and jobs.” The e-gamingboom has also impacted on howCallin Wild operates, explainsWebb: “The practice has had to ex-pand its knowledge base in order tohelp these firms set up.”

“I think the image of a well-regulated jurisdiction is very im-portant,” Callin argues.“Unfortunately, people still viewthe Island as being, in that nastyphrase from the 1970s, a taxhaven. Certainly the Island is alow-tax jurisdiction, and a largeproportion of what we do is finan-cial business based on that fact.That’s the message that it wouldbe nice to get out to the world –that we’re a well-regulated, low-tax jurisdiction, but we have triedvery successfully to clean up thetype of business that comes intothe Isle of Man.” the advocateconcludes.

Anne Craine, TreasuryMinister for the Isle ofMan, says that changesare afoot in the BritishCrown Dependency –

changes brought on by changingtimes. The international financialcrisis and its impact on the UK’scoffers, which have had an influ-ence in reducing the shared VATrevenues for the Island, as well asits growing ability to stand on itsown two feet, are changing the re-lationship between the two coun-tries. This, along with increasingcalls for a more transparent globalfinancial regime, heralds interest-ing times for the Island.

In the short term, however, theIsland´s population is gearing upfor belt tightening. Island residentshave enjoyed strong public serv-ices until now, and while MrsCraine hopes that frontline servicessuch as the Island’s excellent edu-cational system will not be af-fected, she says that Islanders mustbe prepared to think along newlines in terms of how services arepaid for.

“We have already set in motiona five-year programme to be able tocope with the £100 million that wasthe first reduction in VAT revenue,and now we have got a further £75million over a three-year period. Istill think there is a lot of govern-ment expenditure we can reduce,”she says.

“We do a lot of things on a smallisland that you wouldn’t necessarilyget elsewhere. We run buses, werun leisure centres and so on. Weneed to look at those things, makethem more commercial and take amore business-like appro a ch.”

Still, Mrs Craine does not be-lieve that the reduction in VAT

revenue will mean the Island’s exitfrom the Customs and ExciseAgreement, which would createbarriers to EU markets for Manxcompanies, nor a charge to the Is-land’s Zero-Ten corporate taxstructure. It does, however, reflecta change in the relationship be-tween the Isle of Man and the UK.

“We have a good working rela-tionship with the UK government.They represent us on different lev-els, but as we are becoming moreaccomplished and able to representourselves, they are quite happy toallow us to do that,” she says. Withregards to the current customsagreement, “We are at a positionnow where we both feel that wehave a solid base to work from, andthough it may have reduced our in-come by a considerable amount,it’s still worth us being in there.”

The bottom line, she says, is theneed to create further economicgrowth, an area in which the Isle ofMan has excelled over the pastdecade. Though financial servicescontinues to represent the bulk ofGDP, its contribution has shrunkfrom 45 per cent to 38 per cent overthe last few years as diversificationpolicies bore fruit in new industriessuch as aerospace.

In the financial sector, changesare also afoot. The Island is target-ing new markets in Asia, whilestrengthening its transparency reg-ulations. “People have to acceptthat these are changing times andwe have to abide by more stringentregulations if we are going to be in-ternational players,” says MrsCraine. “We are not a haven in anysort of shady sense; we are a well-regulated low-tax area. Maybepeople are not as aware of the Is-land as we would like them to be

but that’s down to us to do a betterjob in terms of promotion”

“We are not insular, we believewe have to go out and look forbusiness.”, she explains. “But weneed to be quite focused about themarkets we are going to go after,and those are things that the De-partment of Economic Develop-ment are coming through with atthe moment.”

Callin & Wild Jeremy Callin and Lesley Webb

This Manx firm deals with both international legal issues andlocal concerns in the Island’s highly-regulated jurisdiction

Lesley Webb and Jeremy Callin

Long-established Manx le galfirm Callin Wild may besmall but it punches wellabove its weight, dealing asit does with all aspects of

legal work for an impressive rangeof local and international clients.As advocate Jeremy Callin ex-plains, it has been a legal practiceon the Island for 120 years and itswork ranges from the daily con-cerns of local residents to the biggerimperatives of its international cor-porate clients, mainly based in theUK and Ireland.

Callin Wild is firmly rootedhere, and both Jeremy Callin andfellow advocate Lesley Webb bangthe drum for the Manx economywith infectious enthusiasm. Callinargues that the Island has distinctadvantages over its competitors

As head of a new super-ministry for economic development,Allan Bell is ideally placed to assess the Isle of Man’s future growth

In 2010 the Manx governmentcreated a new super-ministry,the Department of Eco no micDevelopment, bringing all ofits business-facing and re -

venue-earning arms under oneroof. As the man appointed to leadthe new department, former treas-ury minister Allan Bell is respon-sible for the promotion of theIsland. It’s a task that is central tothe government’s economic strat-egy, so it comes as no surprise tolearn that Bell is now one of thefront runners in the race to succeedchief minister Tony Brown.

“Clearly, life in the next fewyears is going to be a lot more chal-lenging for small jurisdictions suchas the Isle of Man,” he says. “Pre-viously we had all our drivers foreconomic growth spread acrossthree departments, so the intentionwas to bring them all under oneroof and focus the activities of thenew department and then developexisting business further and diver-sify the economy.”

This is all a far cry from theearly 1980s, when the Island suf-fered very high unemployment, netemigration and crumbling infra-structure and public services. “Inthe mid-80s we pulled together along-term strategy designed specif-ically to stimulate and diversifyeconomic development,” Bell ex-plains. “We have moved forward,identified new areas of activity andfocused a lot of resources on re-building infrastructure, which hashelped the economy itself togrow.”

Today, the Isle of Man is expe-riencing its 27th consecutive yearof growth. “Because we’ve startedfrom such a low point, and grownmostly through a period of global

economic expansion, we’ve beenable to maintain steady growth,”Bell argues. “Some of that growthhas been quite spectacular – it’sbeen 14 or 15 per cent net someyears. Over the last 12 years, we’veaveraged over seven per cent netgrowth year on year.” This has hada positive effect on the Island as awhole. “It has generated jobs, ourpopulation has grown and it’s cre-ated government revenues.”

Financial services has been atthe heart of this expansion, ex-plains Bell. “The sector startedgrowing towards the end of the80s,” he says. “The industry is stillgrowing and we’re identifying newareas of activity even within finan-cial services; pension provision,for example.”

Bell identifies two other keysectors within the Manx economy.“E-gaming is a very big part of theIsland’s economy now,” he says.“It has grown very fast and it’s stillgrowing. That helps e-business todevelop because it brings down thecost of doing business on the Is-land.” Bell also singles out thespace industry, which “has alsobeen growing surprisingly well.We now have four of the world’slargest satellite companies, so thissector is very much part of ourbusiness”. Indeed, as Bell veryproudly points out, the Island iscurrently the fifth most likelycountry to make the next trip to themoon. It would certainly be a tan-talising moment in the history ofspace travel as the watching worldholds its breath, an astronaut setsfoot on the moon and utters theline, “That’s one small step for theIsle of Man…”

With the prospect of electionson the horizon and the world eco-

nomic crisis, Bell admits that “thenext few years will be challengingfor the Island”. He adds the UKgovernment’s changing of thesharing agreement on the Island’sVAT structures as being a prob-lem. “Nevertheless, the economy isstill growing strongly, we havenearly £1.5 billion in reserves, noexternal debt and a triple-A creditrating, unlike the US.”

The Island’seconomy isstill growingstrongly”

“Minister Allan Bell

We have agood workingrelationshipwith the UK”

“Minister Anne Craine

ping companies busy and generatesindirect taxation. We have to makesure we keep unemployment levelslow and indeed foster and stimulatecontrolled population growth, and Ithink a taxation imbalance with theUK may actually be one of ourbiggest assets.”

Another key asset in today’s eco-nomic world is trust and reputation.Banks with a strong corporate so-cial responsibility, who are seen aspart of the local community, arefinding they have a distinct advan-tage over more global institutions.

“You can’t compromise on yourreputation,” says Grant, “We knoweverybody on the Isle of Man.When you’re that ingrained in theManx population, you’ve got totreat that with a lot of respect.

“I can walk my dogs down onthe beach and someone will say,‘what deposit rate have you got forone-year money’. The normal con-versation is about the weather, butnot if you work for Conister,” helaughs.

“We are in the psyche of the Isleof Man culture so we’ve got to playa part in that. If we get any requestsfor sponsorship we’ll always lookfavourably on them. But at the sametime we have a responsibility to our

shareholders, depositors andeveryone else. Your social re-sponsibility and your corporateresponsibility are not mutuallyexclusive, the two can live to-gether quite happily.”Last year Manx Financial Groupacquired ECF Asset FinancePLC which gave them greater ac-cess to the UK SME market, amarket starved of credit by largerbanks that have retrenched dur-ing the global crisis.

But the core business forManx Financial Group is still takingdeposits on the Isle of Man andlending money to Manx residentsand companies, which Grant sees asan opportunity to work with the gov-ernment in overcoming the currenthurdles.

“We’ve not stopped lending onthe Island, indeed we’ve got an ap-petite to lend more. By lending to in-dividuals and small businesses wecan help them through these difficultperiods, especially if they can investin core assets that develop their busi-nesses, create employment and ben-efit the economy. At the same time,we see ourselves as part of the solu-tion to the problem.”

And Grant is optimistic about theIsland´s economy as it registers on-going growth.

While it’s true the recent down-grade of the US’s long-term sover-eign debt to AA+ has exacerbatedthe gloomy economic outlook in theUK, the Isle of Man economy hascontinued to grow. A recent budgetreport highlighted a better than ex-pected financial position with infla-tion remaining stable, and a level ofunemployment well below that ofthe UK.

As the Isle of Man’s only inde-pendent bank, Grant believes Con-

ister has an important role to playthroughout these difficult timesand is well positioned to continueto provide asset-backed lending toindividuals and companies and of-fering fixed-rate deposit rates overterms that suit the client’s needs.

“Conister Bank Limited has asolid base with plenty of liquidityand access to a ready source offunding,” says Grant.

Based on Manx FinancialGroup’s recently released interimstatements, net loans and advancesto customers increased 53 per cent;their deposit base grew from £45million to £57 million comparedwith the first half of 2010. Anotherdivision, Conister Card ServicesLi mited, which offers prepaid cardser vices for the Group, has alsoseen impressive growth in prof-itability over the past year, improv-ing by 54 per cent over the first halfof 2010 figures.

“This is a testing economic envi-ronment but it brings opportunitiesto us as we seek to find sustainablesolutions to our customers prob-lems,” continues Grant. “Last yearwe entered the block discountingmarket and to date we have growna robust book with little to no ar-rears. Presently we are consideringother new products which will com-plement our existing portfolio oflending.”

As for the future, Grant clearlysees good things based on the mu-tually beneficial policies and prac-tises of the Isle of Man governmentand private enterprise.

“I’m an optimist by nature,” saysGrant. “If we continue to be aheadof the game, we’ll end up with asolid, balanced, diversified econ-omy in five years time.”

Conister Bank Douglas Grant

Formed 76 years ago, ManxFinancial Group PLC (for-merly Conister FinancialGroup PLC) was one of thefirst companies listed on

AIM and is best known locally asthe parent company of ConisterBank Limited. Firmly entrenched inthe Island’s community, its reputa-tion and local trust became two ofits key assets during the current eco-nomic woes. Douglas Grant, GroupFinance Director of Manx FinancialGroup and an Executive Director ofConister Bank, believes that despitethe sector being tainted by recenteconomic events, his bank has apositive role to play in helping thelocal economy.

“The government does not havea monopoly on creating the solu-tions to this economic environmentand as an established companywithin the Island’s business commu-nity we can contribute positively toboth the debate and the implementa-tion of the solution,” says Grant.

“The Isle of Man has a strongregulatory culture which has fos-tered growth whether it’s throughthe Financial Supervision Commis-sion, the Insurance and PensionsAuthority for pensions or the Gam-bling Supervision Commission forthe gaming companies. I thinkthere’s enough evidence in the pastto show that the regulators and re-sponsible companies can generatemarkets.”

Grant also believes that the lowlevel of corporation tax also pro-vides part of the solution in the Isleof Man, stimulating activity and di-versifying the economy. This is vis-ible on the Isle of Man throughgrowth sectors such as shipping,aviation, gaming and manufactur-

ing, all keeping employment levelshigh.

“Taking the gaming industry asan example, it’s a worldwide, tran-sient industry that could be basedanywhere, but it’s based here forsound reasons. The Isle of Man hasno unique natural resource so weneed to create an environmentwhich fosters small growing indus-tries, and in doing that we create aclustering effect. All the service in-dustries that spin off those primaryindustries – banking, building, hos-pitality, shipping, airlines – feed offsmall clusters. So while you mightthink one or two companies in anew industry doesn’t have thatmuch impact, you get this huge rip-ple effect and it doesn’t take manysmall companies to come in beforewe all benefit.”

“An increase in population isgreat for the Isle of Man. It makesthe restaurants, airlines and ship-

isle of man 325th, September 2011

The United States is crack-ling with distaste at find-ing the Isle of Man has astronger credit rating thanitself. Since the credit cri-

sis of 2008, the world has changed,of that there’s no doubt. Govern-ments, banks and financial institu-tions that weathered the initialstorm are now being battered in ahail of blame.

However, the Isle of Man standsout as an example of what goodgovernment can be all about ac-cording to Greg Horton, ExecutiveHead of Nedbank Wealth Interna-tional and Managing Director ofFairbairn Private Bank.

“The Manx Government has apolicy that they cannot budget for adeficit, which has proven to be avery wise strategy in the light ofglobal events,” says Horton. They’reconstantly looking to at least breakeven but strive to maintain a surplus.It’s a very solid and secure, safeplace and that statement is loudlyendorsed by the AAA rating. I thinkit’s a statement that a number ofother countries would be only toohappy to make and I think it showsgreat foresight by the governmenthere.”

Horton was instrumental instructuring the first euro-sterlingbond issue back in 2000 which ul-timately led to the Island obtainingits AAA credit rating.

The Island wanted to investsignificant amounts of money toimprove their water system in -frastructure. Horton’s firm ad-

vised them to issue debt and bor-row the money through the mar-kets by raising a bond issue. The£75m bond needed to be rated viathe credit rating agencies, and

hence the Isle of Man achieved itscurrent AAA status.

“One of the benefits of the Isle ofMan is that it has avoided the greedculture permeating some of theglobal banking sector. These opera-tions are very much more customer-focused and remain unscathed byany of the sub-prime events. This iswhy, as a leading International Fi-nance Centre, the Isle of Man is in amuch better position than many ofits fellow competitors.”

“I think that’s a very strongmessage which has gone out to therest of the world,” he says. “Theabsence of toxic debt here on theIsland is one of its strengths. It´s avery robust and solid jurisdiction.”

But despite the Island being aleading International Finance Cen-tre, the global crisis isn’t resolvedyet. Resting on your laurels is adangerous stance, even for such asolid, safe and secure environmentas the Isle of Man.

“If you look at Darwin’s theoryof evolution, you’ll see that it’snot necessarily the strongest ormost intelligent that survive, but

those that can adapt tochange,” warns Horton.“The three key words thatbusinesses or govern -ments need to look at arediversification, innova-tion and efficiency. Tho -se three areas are going tobe increasingly importantfor those that survive andprosper in this changingworld”.

When you’reingrained in theIsland, you’ve gotto treat that withrespect”

Douglas Grant believes local banks should be seen as part of the solution, not the problem, in today’s global economic turmoil

With the world economicsystem in crisis, the Island’sstatus as a highly-regarded

International Financial Centreensures that banks operating hereand their depositors are guaranteeda safe environment with state-of-the art financial services on offer.

“The Isle of Man is definitely agood place to do business,” saysMark Waterhouse, president of the32-member Isle of Man Bankers

Association (IOMBA). “It’s a secure,well-regulated environment and is a low-tax jurisdiction. But I think what’s bestabout the island is the cooperation onegets from the government and also fromthe tax department.”

In fact, one of the key attractionshere for businesses is the so-called“Zero-Ten” tax arrangement underwhich there are two corporate tax rateswith businesses paying no tax, whilebanks pay a rate of 10 per cent.

“The IOMBA are fully supportive ofthe Zero-Ten tax regime and have noreal issues with the 10 per centburden falling on the banks,” Water -house explains.

“We are aware there is someexternal pressure for change and weare equally aware that some in theIsland’s financial sector are very keento maintain the zero tax rate as itapplies to them,” he adds.

“We will work with the government to

ensure that if there are changes to bemade, they will not be detrimental to thecompetiveness of the sector.”

The IOMBA’s main goals are to boostthe number of banking licenses on theIsland, increase staffing numbers andcarefully guide the development of theindustry, which Waterhouse argues isvital in the current economic situation.

There are always challenges in theoffshore market, he says, but theybecome tougher with a recession as

belts are tightened and there is morecompetition. Waterhouse says the keyto meeting these challenges is beingable to show more initiative in theproducts Isle of Man banks can offer.

“We also have the expertise here,our Island economy is widely diversifiedand all these things set us apart fromother International Financial Centresmaking us unique among ourcompetitors,” Mark says.

As crisis shakes the world economy, the Isle of Man’s banks address new challenges

Well-regulated financial sector provides a secure environment for banks and depositors alike

Douglas Grant Group Finance Director

Conister backs local iniciatives

2010 Island Excellence Awards

Fairbairn Private Bank Greg Horton

Greg HortonManaging Director

Mark Waterhouse President IOMBA

The Island remains robust in the wake of the credit crisis but adapting to constantly changing market conditions is still essential

Astring of industry accolades charts the route Fairbairn Private Bank has taken in its progress tobecoming a fully-fledged international wealth manager. The most recent title of Best InternationalWealth Provider in the Professional Adviser International Fund and Product Awards 2011

acknowledges the bank’s comprehensive range of wealth management services. Fairbairn Private Bank’s discretionary investment management service is designed as a solution for

clients who wish to delegate the day-to-day management of their financial assets to an experiencedinvestment team. With an established track record of managing investments, much of the bank’s newbusiness comes through existing client referrals - a strong endorsement of its investment expertise andpersonal service.The bank’s relationship managers develop a role of trusted adviser to their clients making them ideally

placed to understand and respond to their changing needs. The application of the bank’s establishedinvestment philosophy allows the construction of wealth management services which are flexible andcompetitively positioned. The global, multi-asset class investment service is built around a number of fundamental investment

principles:

•Asset allocation is an important driver of returns •Investment is for the long term •Diversification can reduce risk •Value investing and minimising cost•Risks need to be properly understood

By minimising fees and closely controlling a portfolio’s volatility, the aim is to optimise the performanceof the discretionary investment management service and add real value when measured against eachclient’s specific risk tolerance. This has culminated in the bank’s discretionary investment managementservice being shortlisted for the 2011 Private Asset Managers ‘PAM’ Awards.The table below helps to demonstrate the successful performance of the discretionary investment

management services from inception up to the end of August 2011:

Portfolio Return since inception* (annualised) Inception dateLow-medium risk 3.8% 30/09/2005Medium-high risk 5.3% 30/09/2005High risk 7.2% 31/07/2006Global bond strateg 10.0% 30/11/2008

* All returns quoted are net of feesFollowing the global equity sell off this summer, market volatility has persisted with increasing fears of a

slow down in the rate of global economic growth. Navigating these uncertain times will necessitateongoing economic analysis, careful investment selection, active asset allocation and professional riskmanagement. Fairbairn Private Bank is well equipped to take on the current investment landscape.

An award-winning approach to wealth management

“

The ManxGovernmentcannot budgetfor a deficit”

“

Fedelta Michael Shimmin

Royal London 360º David Kneeshaw

In these turbulent and uncertainfinancial times, finding a safeand responsible place for yourmoney is imperative. Locatingthat secure jurisdiction may lead

you to an offshore International Fi-nancial Centre where your hard-earned wealth deserves more thanjust a brass plate on a door andlower tax rates.

As Chief Executive of RoyalLondon 360º, David Kneeshaw isacutely aware of the desire amonginvestors to safeguard their money.Whether it’s a nest-egg for the fu-ture or a grandchild’s inheritance,Kneeshaw believes the utmost pri-ority for all his clients is security.“We work in a way that allows ourclients to sleep easy at night,” hesays when outlining the company’sethos, “because in today’s environ-ment, you need to know yourmoney’s in a safe place”.

Royal London 360º has a shortbut intense history. Formed in Jan-uary 2009 from the merger of Scot-tish Life International and ScottishProvident International, RL360º isthe international division of theRoyal London Group, the UK’slargest life mutual. Drawing onmore than 30 years experience in thefinancial service industry, RL360ºcurrently manages £2 billion infunds and has seen 40 per centgrowth in the first six month of 2011compared to the same period 2010.

“The merger allowed us to ac-cess broader distribution and in-crease our economy of scale,”explains the chief executive. Theclient base is international with thecore in the Far East and Middle Eastplus around 25 per cent from theUK. Products encompass offshoresavings and investment options,covering a range of sectors and lo-cations but sharing the common de-nominator of “generating value”.

The company provides a widerange of options for its clients in-cluding investment opportunities,retirement plans, savings plans andinvestment management.

Royal London 360º productscome with a difference and standapart from their competitors for sev-eral reasons. First and foremost,Kneeshaw says that the company’sRL360º vision gives it an all-roundview, posing the fundamental ques-tion of “Are we making money forour clients?”. By extension, RL360ºrejects selling volume. “Everythingwe do has to make money in its ownright,” he says.

RL 360º is also different in itshigh-profile parentage. For Knee-shaw, belonging to the UK’s largestlife mutual adds “credibility, hon-our and morality”. As a mutual,London Group’s policy holders arealso its owners and Kneeshaw be-lieves this leads to more cautiousand longer-term strategies. “All ac-tions are about customer experienceand customer ownership,” he says,emphasising the fact that ownershipby Royal London Group means 360ºbehaves in the same way. “We tendto take our time and go step bystep,” the Chief Executive adds.

A further differential comes inthe company’s location, the Isle ofMan. RL360º’s head office is on theIsland with all 200 employees underthe same roof, a holistic approach tobusiness which Kneeshaw firmlybelieves is part of its success. Healso underlines the fact that all

RL360º staff are“dedicated teammembers who eat,drink and sleepour business”.

As a location,the Isle of Manforms part andparcel of theRL360º philoso-phy. Kneeshawexplains that thereare plenty of otheroffshore jurisdic-tions where acompany can“create a brass-plate enterprise”,but he firmly be-

lieves this is certainly not enoughfor discerning clients who are look-ing for a safe and secure, long-termhaven for their money. “Clientswant a robust institution in a robustenvironment, not just an Island withtax advantages and a beach,” hesays.

The Isle of Man is certainly ro-bust – triple A ratings from Stan-dard & Poor’s and Moody’s,inclusion on the OECD’s ‘whitelist’ and stringent rules make it “areal Island with real regulations,” inKneeshaw’s words. He stresses that“these things really, really matter”and believes that few rival offshorejurisdictions have this set of quali-ties. Moving elsewhere offshore isnot an option for RL360º because,the chief executive says, “we haveto deliver more than a brass plateand lower tax”.

While maximising the Island’sreputation as a centre for financialexcellence, RL360º puts back intothe Manx community. A big localcharity supporter, the companybacks several causes such asAlzheimers Research Trust andtakes part in community action toimprove the Island´s quality of life.RL360º is also an official partner ofthe Isle of Man TT races, one of theworld’s most spectacular motorbikeracing events.

The financial sector hasbeen at the heart of theIsle of Man’s steadyexpansion over the last40 years, accounting

for almost half of the Island’sgross domestic product. Andfor much of that time, wealthmanagement company Fedeltahas been building an impres-sive record with its long-estab-lished roster of clients.

Fedelta was launched in1992, although, as group chair-man Michael Shimmin pointsout, all of the directors andmanagers of the company haveworked together for between 25and 30 years. “That’s part ofwhat our ethos is about,” Shim-min explains. “We enter intovery long-term relationships withclients.” A focus on quality of serv-ice is fundamental to these relation-ships, he argues. “And since thecompany is owned by the peoplethat work in it, we’re very moti-vated to ensure that our standards ofservice are as high as possible.”

Shimmin’s emphasis on qualityof service also extends to the Manxeconomy as a whole. He argues thatthe Island has established itself inthe forefront of well-regulated juris-dictions. “We have very high stan-dards of regulation and probity, weoffer a very diverse range of serv-ices compared with our interna-tional competitors.”

Comparing the Island to its near-est rivals, The Channel Islands,Shimmin argues that the Isle of Manoffers a number of key advantages.“The Channel Islands’ legal systemis based on statute law rather thancommon law,” he explains. “Andcommon law is something that isunderstood by solicitors throughoutthe English-influenced world.” Andhe identifies another benefit the Is-land has over its competitor juris-dictions. “Because we have fewconstraints on recruitment, we’reable to bring in the expertise that weneed,” he says. “We can thereforecompete very successfully onprice.”

He defines other key aspects of

the Island’s economy that make itan attractive location for interna-tional investors. “We have a verydiverse economy now, in terms ofplacing your shipping or aircraftthrough here, manufacturing andproperty investment,” he argues.“And it’s also a good place fromwhich to run international businessinto Europe because here you canhave a VAT-registered companythat actually pays corporate tax atthe rate of zero per cent – this is theonly place where you can do that.”

Moreover, the Island’s ability toattract international business is in-extricably linked to its reputationfor financial probity. “Our regula-tion is certainly better than that inthe UK at the moment, and it has tostay that way,” he says. “We couldnot afford the reputational risk ofhigh-quality jurisdictions sayingthat we were not up to the higheststandards.”

While other economies continueto suffer as a result of the recession,the Island has actually benefitedfrom the crisis in many ways, ac-cording to Shimmin. “People aresaving more and they’re more con-cerned about protecting their assets– and a lot of what we do is aboutwealth protection. People think thatoffshore centres are all about tax-saving – but they’re actually not

about that any more. If there istax-saving then that’s a bonus,but nowadays it is about wealthprotection, about making surethat the money you’ve earnedover your lifetime is passed onto your children and grandchil-dren in the best way that it canbe.”

However, the crisis has af-fected the nature of Fedelta’swork in some important ways.Clients’ appetite for risk hascertainly been affected by thefragile economic situation. “Alot of people have been dramat-ically shaken,” admits Shim-min. “I don’t think anyoneforesaw the situation wherepeople would be saying, ‘Idon’t know which bank to put

my money in because I’m fright-ened of the major banks goingbroke.”’ He goes on, “We ended uphaving to start spreading the risk bystructures having several accountswith different banks. We never hadthe need to do that before.”

When it comes to the Island’simage, Shimmin is cautiously opti-mistic. In the past, he admits, peopledidn’t even know where the Islandwas – but now the profile of the Is-land has unquestionably beenraised. Nevertheless, in the after-math of the financial crisis, Shim-min says, many economies foundthe International Finance Centres aneasy target.

“When you have statementsfrom the previous UK Chancellorlike, ‘The Island is a tax haven sit-ting in the Irish Sea,’ it shows thathe really doesn’t understand whatthe Island is doing at all,” Shimminsays. “But there is no doubt that theIsland is a major boost to the City ofLondon. It is much better that allthat business is passed through awell-regulated jurisdiction. A legit-imate business will be attracted bythe quality of our image – that’swhy it is important to retain it.”

We work in a way thatallows our clients tosleep easy at night,because in today’senvironment, you needto know your money’sin a safe place”

“When it comes to a safe place for your money, Royal London 360º brings a robust institution and a robust environment together

David Kneeshaw Chief Executive

Keith Amor, Merita Taylor, Ian Hutchinson and Cameron Donald launching the Superstock TT race

Rags to riches

isle of man 425th, September 2011

In Yorkshire they have a saying, “from clogs to clogs in three generations”. That is, if the first generation makesmoney, their children are taught to be financially astute, but the third generation will often lose it. Responsibility withmoney sadly tends not to be an hereditary skill. Thankfully there are a number of trust and company-based solutionsdesigned to help avoid this unfortunate circumstance. While these have traditionally been popular for their taxefficiencies, there are a number of other reasons to use them.

After all, it isn’t just about the money. Anyone who is looking at protecting wealth over generations is doing it withthe welfare of their descendants in mind, and unrestrained wealth can cause significant distress. An heir whoexperiences a gold-digging marriage, unscrupulous investment manager or sly business partner suffers more than justfinancially. Young people with large cash sums can easily get drawn into destructive behaviours that hurt more thanjust bank balances.

So using a trust company, foundation or family office with professional oversight can avoid these potentiallyunpleasant outcomes, by managing wealth succession. Many families are becoming familiar with the concept of havinga private trust corporation or family office arrangement whereby a company like Fedelta provides all of the necessaryskills and structures to fulfil all of their requirements. This may include yacht registration and management, aircraftregistration and management, investment holding companies, property holding companies, bespoke pension schemes(QROPS), and companies to hold the family trading businesses. The introduction of the Isle for Man foundation providesan alternative to the trust for those who are not familiar with, or comfortable with, the concept of a trust. These familiesare often from civil law jurisdictions and the Foundation allows the family to retain a higher degree of involvement andcontrol than is possible with a trust. Since a foundation is a separate legal entity like a company, whereas a trust ismerely a private arrangement, they are more suitable for dealing with investments that are higher risk by nature andmay prove unacceptable to trustees of a traditional trust. Foundations may have beneficiaries in the same way as atrust does but they can also be set up for charitable purposes and I forecast that we will see these increasingly beingused for philanthropic purposes. Persons wanting a charitable foundation will be well advised to look at creating this ina jurisdiction that is in the top tier of International Financial Centres and the Isle of Man is therefore particularly suitablefor this reason. Trusts and foundations can even be used to provide incentives for heirs by placing conditions upondistributions, for example by matching payments to what they earn for themselves. A professional trustee or directorwill oversee these structures to ensure they remain in the best interests of the family. The key element to this isexpertise; a good fiduciary services provider can bring expert knowledge to the family’s assets in a wide range of areas.

If you are in the market for such professional trustees or foundation council members,there are a number of things to look out for. Try to bear in mind that this will probablybe the longest relationship your family ever enters into - we are now in the thirdgeneration of many of our family clients. Remember that both individuals andcompanies can move, change or disappear, so look for signs of longevity.I would also suggest finding a company that is locally owned and of asize where you will get to know the directors. Such a company won’tsimply close or sell their local branch on the demand of a corporateheadquarters, and the decision makers you rely on will change farless often. When talking to prospective companies to manage yourfamily assets, I would also be wary of anyone that doesn’t offer youa ‘removal mechanism’ up front. Ask about what recourse thefamily will have in the event that they want to end the fiduciaryrelationship.

So in summary, remember that preserving wealth is aboutwellbeing, not just the money; find a company that appreciates thattoo and that shows signs of real longevity; be sure to know the seniormanagement; and never trust a would-be trustee who doesn’t give youa clear exit strategy. That should keep the folks out of clogs!

Michael Shimmin Group Chairman

www.fedelta.com

The global crisis over the past fewyears created a huge oversupply inthe market. This reduced prices byroughly 40 per cent and there arenow excellent bargains to be had.The company is still very selectivewith certain aircraft models andtypes, however the bargains are outthere. “There is now a healthy

trend in purchases and prices arenow firming. With people recog-nising that the market has bot-tomed, we are picking them up forclients now. We’ve been tellingthem for the last two years to waitand not to purchase. And now weare saying, it’s time to buy,” themanaging director explaines.

The Private Jet Company Tony Corlett

isle of man 525th, September 2011

The Island’s Private Jet Company helps buyers choose theright aircraft for them, while offering Island’s some benefits

In August of this year, the Isleof Man registered its 400th air-craft since its Registry was es-tablished in May 2007. Theonly dedicated corporate air-

craft register in Europe, the Isle ofMan offers many benefits, includ-ing zero taxes for aviation transac-tions, a prompt VAT andim portation process and a highlycredible registration, which haveattracted growing business fromaround the globe.

With in-depth knowledge of in-ternational registering and de-reg-istering, The Private Jet Company,the only company on the Island tooperate corporate and private jets,was heavily involved in the cre-ation of the Registry. The first twojets to boast an ‘M’ registrationnumber belonged to the company.

“The Private Jet Company wasfor med when the Registry began.We brought in the first two aircraft,which were registered as aircraftnum bers one and two,” says Man-aging Director Tony Corlett. “TheRegistry has been a great successstory for the Isle of Man. It’s a veryhigh-level, highly-respected air-craft re gistry.”

Since then, The Private JetCompany has experienced‘tremendous growth,’ says Corlett.Offering a complete range of tai-lored services, including aircraftpurchase and sales, de-registrationand registration, operational man-agement, crewing, technical docu-mentation and hangerage, theclient has one point of contact forall their operational requirements.The company has grown over 100per cent in the past two years. It iscurrently investing in a £3-millionpound Jet Centre on the Island thatwill include secure corporate jethangerage and a Private VIP termi-nal with offices and meetingrooms.

For those looking to purchase,Corlett says that now is the time.

Tony Corlett Managing Director

needs of our international clients,”he says.

Though the Island´s image issometimes negatively construedin the UK, Corlett points out thatthe decision was taken a decadeago to comply with OECD regu-lations, and that the relationshipwith key regulatory bodies, in-cluding money laundering watch-dogs in Washington, is strong.

Director Richard Vanderplankadds, “It’s important to differenti-ate between the Isle of Man andother offshore jurisdictions as wehave a genuinely diverse econ-omy. Financial services is an im-portant part of what we do here,but not the only part. We have astrong maritime tradition, so ship-ping has been very important to

us. But we’re still agricultural.There’s light industry. Becausewe are a real economy, and are notjust a sandbar somewhere, we’renot a tax haven. We never havebeen.”

Cains has contributed to the de-velopment of new Island indus-tries by building niche practices inareas such as aerospace and satel-lite and is involved in other high-tech projects, like the high-speedamphibious craft Aquada.

Cains, which was named ‘Off-shore Law Firm of the Year’ atLegal Week’s 2007 British LegalAwards and The Lawyer Awards2008, is the Island’s exclusivemember of Lex Mundi, the lead-ing global association of interna-tional law firms.

Cains Advocates Andrew Corlett

“We are not a tax haven, we never have been,” says the Island’spremier corporate law firm, pointing to the diversified economy

As the Isle of Man’s pre-eminent provider ofcorporate legal serv-ices, Cains Advocateshas been instrumental

in the Island’s transformation intoan International Financial Centreby attracting business fromemerging economies.

Indeed, two years ago Cainswas awarded the Queen’s Awardfor Enterprise in InternationalTrade, the only offshore firm everto win the honour. Its strategy isto advise companies and invest-ment funds from BRIC economiesand other emerging markets seek-ing capital and listings in theworld’s major financial markets,plus associated merger and acqui-sition and corporate related work.

Cains’ expertise covers trans-port, listings, e-business, insur-ance, mutual funds and financialservices, pensions and employeebenefits, and space and satellite.The firm also provides bespoke fi-duciary and corporate servicesthrough Cains Fiduciaries, andwas the first Island firm to open anoffice in London. In 2008, itopened an office in Singapore.

Managing Director AndrewCorlett says that today half thefirm’s work is legal, with the restof services. “Essentially we oper-ate on the hub and spoke basis,where the hub is commercial lawand the spokes are the other areasof law such as litigation and prop-erty,” he comments.

Corlett, who is a member of theIsle of Man Treasury’s FinanceSteering Group, says that there isa great deal of public-private in-teraction between the Manx gov-ernment and local businesses.“Most things that go through ourparliament here are subject to agood commercial evaluation be-fore they hit the statute books, andthe aim on the Island is to be reg-ulatory compliant with all interna-tional standards but to becommercially sensitive to the

We see our role asadding value to theglobal offering ofmajor financialcenters”

“Richard Vanderplank Director and Andrew Corlett Managing Director

The Isle of Man Creamery searches out new opportunities abroad for its top-quality range of traditional, as well as innovative, cheeses

Isle Of Man Creamery Findlay Macleod

Asmall company with bigideas perfectly describesIsle of Man Creamery, acooperative of local, fam-ily-owned dairies whose

cheese products are well establishedin the UK and Ireland, and is nowaggressively moving into new mar-kets both near and far.

“Over the last three years we’vebeen exporting to Spain where saleshave been growing significantly,”says managing director Fin -dlay Mcleod. “Andwe’ve got our firstorders from theUS where

we’ve been working for about ayear with the country’s biggest dis-tributor of European cheeses.”

Isle of Man Creamery’s cheeses,which include a range of primeCheddars and the traditional Manxcheese known as Druidale, willsoon be on the shelves of Sam’sClub stores across the United Statesand at Publix, one of the biggest su-permarket chains in the south east-ern US.

“There is the potential in the USfor annual sales of between 300 and400 tonnes of our cheese,” Findlayexplains, arguing that exporting is alogical choice for a company seek-ing to boost its revenues and dealswith other challenges.

“The Isle of Man won’t ever bea cheap place for manufacturing

because there’s an expensivestretch of water between us

and our markets and sup-pliers, so we have to make

sure we’re the best atwhat we do,” says the

managing director. The Creamery

markets itscheeses as a nicheproduct, cele-brated for their

flavours and tex-tures, but not so exclu-

sive and expensive thatpeople buy them only for spe-

cial occasions. “We see ourcheeses as a quality purchase and asa regular treat,” Findlay explains.

The Isle of Man Creamery is aninherent part of the local economyand the community, processing all

the milk produced on the Island, oraround 25 million litres a year. Fromthis, the company packages sevenmillion litres for local consumptionas its short shelf life prevents ex-ports.

The Island’s pristine environ-ment, unsullied by heavy manufac-turing or urban pollution, alongwith the rich grasses carpeting theIsland and which provides most of

the outdoor grazing fodder for thedairies’ cows, ensure high quality.

And each dairy in the coopera-tive undergoes strict inspection byindependent accreditors of its milk-ing and collection process, as wellas the cows’ welfare, diets, enclo-sures and veterinary care.

“But our main volume of milkgoes into producing 2,000 tonnes ofcheese a year and that is small com-

pared with some of the big UK pro-ducers like Dairy Crest whose out-put is something like 60,000 tonnesa year,” he notes.

Around 300 tonnes of cheese aresold on the Island, while another 700tonnes are exported under the Isle ofMan Creamery label to other mar-kets, chiefly the UK and Ireland.

Along with the classic vintage,mature and mild Cheddars, the

company also produces flavouredcheeses. The crumbly texture of theIsland’s own Druidale makes it per-fect for blending with fruit.

The remaining 1,000 tonnes ofcheese are sold as “commoditytrade”, – supermarket own brands atTesco, Asda and other chains wherethey compete successfully with ri-vals from the UK, Ireland, Australiaand New Zealand.

Besides moving into new mar-kets, the creamery is dealing withthe significant changes the Island’ssmall dairy industry is undergoing.

Farmers are retiring at a fasterrate than new farmers can replacethem and the result is a decline inmilk intake. The company’s goal isto convince younger farmers to pro-duce milk and urge existing farmersto boost their output.

“That’s why we’re constantlylooking at new markets for ourhigh-value cheeses so we can divertwhat we’re now selling as commod-ity trade to our own label for thoseincreased sales,” he says.

Findlay Macleod Managing Director

isle of man 625th, September 2011

We have tomake surewe’re thebest at whatwe do”

“

pany were to be looking ultimatelyto a listing on the London StockExchange, then frankly being onthe Isle of Man is as good as beingin the City of London. It’s wellknown, well respected and well un-derstood.”

Just across the Irish Sea, Man-chester United’s fans are still ab-sorbing the news that the club’sAmerican owners are contemplat-ing floating on the Singapore stockexchange, and this brings us to an-other aspect of Celton Manx’s suc-cess. Mummery explains, “As partof building the brand outside ofAsia and also penetrating back intoour core markets of Asia, we iden-tified that English football is thecore product for what we do. Glob-ally it’s the largest followed sportand within that, English football, inparticular the Premier League, isthe world standard.” And as Mum-mery points out, a club like Man-chester United has 300 millionsupporters worldwide, of which190 million of those are in Asia.

A firm understanding of thesedemographics encouraged CeltonManx to embark on of one its earlymajor marketing moves – its spon-sorship of Premier League clubWest Ham United. “That doesn’tjust raise awareness of our brand inthe UK and Europe,” says Mum-mery. “English football is broad-cast globally to about 200 countriesevery weekend, with a strong foot-print in Asia. So once that agree-ment was in place, our brandSBOBET was being transmittedback to our core markets in Asia.That’s been a very successful wayof lifting the brand in new territo-ries and strengthening it in its coreterritories.”

Mummery goes on to illustratejust how central – and lucrative –football is to the company. ‘Beforethe major football games start at aweekend we are at a peak of be-

tween 200 and 300 transactions asecond,’ he says. “It’s enormous –we are a very high volume busi-ness. Football accounts for 80 percent of the firm’s profits.”

Despite the preponderance of theword ‘global’ in much of his con-versation, Mummery is keen tostress that Celton Manx is, as itsname suggests, a company firmlyrooted in the Isle of Man. Indeed ithas recently put its roots down evenfurther with the completion of abrand new global corporate HQ onthe outskirts of Douglas, which hasbeen designed to accommodate astaff of 70. Mummery also stressesthe company’s strong commitmentto supporting the Manx community,with much of its profits beingploughed back into social projectsand sports initiatives on the island.

So what does the future hold forthe e-gaming sector as a whole?Europe and Asia will continue toprovide opportunities, arguesMum mery, in addition to new mar-kets opening up in South America.The US, he opines, is one potentialmarket where no one knows whatis going to happen, but he believesthat it will eventually have to reg-ulate and tax e-gaming transac-tions, a process likely to start atstate level and then grow to encom-pass the whole country.

Predictions, however, are some-times hard to judge in an industrythat moves at such lightning speed.As Mummery says, “The rate ofchange in e-gaming is staggering.We operate, in effect, in dog years– so a 12-month rate of change in aconventional sector, we wouldachieve seven years of change inthat same period. The dynamics areenormous.” And as Bill Mummeryvisibly savours the sheer, unbridledmomentum of this burgeoning in-dustry, it’s clear that ‘e-gamingambassador’ isn’t a job title he isquite ready to relinquish.

E-gaming is one of thefastest-growing industriesin the Isle of Man, with asignificant number of in-ternational firms locating

to the jurisdiction over the last fewyears. Indeed the ICT sector – ofwhich e-gaming is a major compo-nent – is now the third largest onthe Island, representing some 10per cent of national income. Notbad for an industry just over adecade old.

In a market crowded with spec-tacular successes, Isle of Man-based company Celton Manx,which owns the global sport bookbrand SBOBET, has had a risemore meteoric than most – becom-ing a major global player in a mat-ter of three years. No wonderexecutive director Bill Mummerybrims with such enthusiasm whentalking about the industry. Mum-mery was ‘in at the ground floor’of the e-gaming boom, havinghelped float one of the ‘first-to-market’ entrants on London’s AIMmarket in 1998. Then in 2004 he be-came the Isle of Man government’se-gaming ambassador, a role thatsaw him help develop the Island asone of the premier jurisdictions forthe industry. Mummery returned tothe private sector in 2008, joiningCelton Manx and playing a crucialrole in expanding SBOBET world-wide.

As Mummery points out, “Theorigins of the company were origi-nally in Asia, but as the businessgrew it became apparent that oneneeded to have a location that wasrecognised across the industry at aglobal level. The shareholders thenhad a ‘beauty parade’ of various ju-risdictions to find out the best placeto be based, licensed and regu-lated.” The Isle of Man “ticked allthe right boxes”, says Mummery.“Now the jurisdiction is becomingthe company’s global headquar-

ters, not just from a corporate per-spective, but also in terms of themassive technical infrastructure in-vested in the Island.”

So what is the key to the Isle ofMan’s success in attracting e-gam-ing businesses to its shores? Mum-mery argues, “Firstly, the legalsystem that’s in place, and fromthat the regulatory and legislativeframework that has been estab-lished to manage and control whatis and needs to be a highly-regu-lated sector.” He goes on to iden-tify another key factor in thegrowth of e-gaming. “A world-class telecommunications infra-structure is the lifeblood of abusiness like mine,” he says. “It’squite interesting that a small Islandin the middle of the Irish Seashould be one of the highest-qual-ity telecoms centres in the world.The providers of the data centreson the Island are truly world class.”

One more factor also plays itspart, argues Mummery. “It’s wellknown that if a Manx-based com-

Celton Manx Bill Mummery

World’s largest e-gaming software firm enjoys a unique position

In 2001, the Isle of Man was oneof the first jurisdictions in theworld to introduce legislationspecifically designed to benefite-gaming firms and protect

players. Since then a network of e-gaming businesses and software de-velopment companies haveemerged on the Island, tripling insize since 2006 and due to doublethat growth again this year.

Currently boasting 24 licensedcompanies and a further 22 in vari-ous stages of set up, the sector nowplays a very important part in the Is-land´s economy. Last year, it regis-tered growth of 24 per cent, broughtmore than £150 million into the localeconomy and employed 700 peopleon the Island.

It is no coincidence that 2001 wasalso the year that Microgaming, theworld’s largest online gaming soft-ware provider, established its globalhead office there. Headed by RogerRaatgever, the industry’s longestserving CEO, Microgaming cur-rently provides award-winninggaming solutions to over 160 lead-ing sites worl dwide; offering morethan 500 game titles and 1,000 gamevariants in 24 languages, across on-line, land-based and mobile plat-forms. The company, whosegrowth rates have consistently out-performed the industry, signed 35new operators just last year.

Microgaming’s history virtuallymirrors the birth and growth of thee-gaming industry. It has pioneereda number of industry firsts, includ-ing the largest online jackpot win inhistory at €6.37m and the introduc-tion of third-party brands into theonline gaming sphere, such asTomb Raider™ and The Lord ofThe Rings™. The company is alsoa founding member of various in-dustry trade bodies such aseCOGRA, an independent London-based player protection and stan-

dards organization that provides aninternational framework for bestoperational practice requirements,with particular emphasis on fair andresponsible gambling.

Raatgever says that the key ad-vantages that the Isle of Man offers,apart from the obvious tax benefits,include the widespread availabilityof professional services, the acces-sibility of government, the neces-sary technical infrastructure and ahigh quality of life for staff.

“For any online business, thechallenges to developing an IT clus-ter are the need for a strongtelecommunications infrastructure,server hosting, digital media serviceproviders and professional services.The Isle of Man meets all of theseneeds admirably and, in addition,there is open and constructive dia-logue between the private sectorand the government on matters per-taining to online gaming. Thismakes for a very attractive environ-ment,” he comments.

Microgaming has long been aproponent for a well-regulated, li-censed and appropriately taxed in-dustry. Raatgever says the currentwave of new regulation now takingplace in Europe will benefit the in-dustry in the long term as long as

authorities apply a workable, prag-matic approach that takes into con-sideration existing technologicaladvances and lessons already learntby industry leaders.

“In the short term, it will proba-bly manifest itself in a decrease inprofitability as the costs of regula-tion are absorbed by softwareproviders and operators. However,over time the business opportunitythis represents will be huge asmore and more players go online toseek entertainment in secure andwell-regulated markets,” he com-ments.

“In many respects, the recentlyregulated markets are in part dupli-cating what the industry has donewith regard to ensuring a safe andresponsible playing environment, inpart voluntarily, for over ten years.However, the biggest challenge isan overzealous and misguided ap-proach to responsible gaming thatcould be adopted to the detriment ofthe industry while achieving verylittle with regard to responsiblegaming.”

Microgaming is expecting mo-bile platforms, technology in whichthe company has been investing forsome years, to soon become a pow-erful new driver of growth. Mi-crogaming’s mobile software haswon numerous industry awards, in-cluding Mobile Supplier of the Yearat the 2010 eGaming Review B2BAwards.

“For a long time now, mobile hasbeen touted as the ‘one to watch’,but we genuinely believe we arenow approaching a tipping pointthat will see this exciting new plat-form begin to deliver on some ofthese promises,” Raatgever con-cludes. “Our belief and investmentin this area has given Microgaminga unique market position and a mas-sive head start.”

Microgaming Roger RaatgeverDomicilium Andy Swearman and Phil Adcock

Magnificent country-side, remarkablebeaches and a re-laxed lifestyle arenot usually the

hallmarks of an environmenthosting high-tech enterprises, butthe datacentre and computer serv-ices management companyDomicilium (IOM) Ltd. has foundthe Isle of Man the perfect placeto do business for other reasons.

“The Island’s strongest pointfrom a business point of view isthe outstanding public-privatepartnership which means the gov-ernment can make things happenvery quickly,” says Domiciliummanaging director Andy Swear-man.

The company provides state-of-the-art IT ser vices includinghosting facilities in jurisdictionsaround the world, next generationnetworks, domain name registra-tion, cloud hosting and systemsmanagement for internationalclients. It also has an office in theUnited States.

“It requires a very substantialinvestment to set up a data pro-cessing centre like ours and thepayback is not immediate. Wetravel around the world to look atlocations where we could site thisfacility and our conclusion wasthat the best was the Isle of Man,”recalls technical director Phil Ad-cock.

A wise decision as Domicil-ium’s customers have also dis-covered that the Island hasadvantages such as lower energycosts which in other places can bemuch higher for power-hungrydatacentres.

“And, we directly bill ourclients so we´re very transparentand there are no hidden charges ormark-ups,” he says.

One of the company’s mostpopular services is cloud hostingthat provides computation, soft-ware, data access and storage toclients not wishing to operate theirown datacentres, usually becauseof cost.

“Big retailers need to buy a lotof computers to handle, for exam-ple, the Christmas rush, but it getsvery expensive as those comput-ers sit idle for the rest of the year,”Swearman says.

“However with our cloud plat-form, there is no massive capitaloutlay as you pay just for the com-puting power you need at a partic-ular time.” Other clients use theirown computers for day-to-daytrading but turn to Domicilium forpeak times.

Since launching two years ago,Domicilium’s cloud platform hashad 20,000 users, from small start-ups to large enterprises, and whilecloud computing worldwide isgrowing 26 per cent a year, the

company has enjoyed 46 per centgrowth for its platform over thepast 12 months.

One of Domicilium’s advan-tages in cloud computing is thatthe company designed its ownsystem and it is located in the Isleof Man datacentre and is managedby its own engineers.

“Clients of many other cloudplatforms never know where theirdata is actually located, but withus, customers know their data isbeing held in a reliable environ-ment,” the technical director ex-plains. “Any problem is fullytraceable as there’s only one pointof contact.”

The executives see a bright fu-ture in datacentre services as com-panies continue to turn tooutsourcing for their computerneeds. “Right now we see hugeopportunities to further developthe business and build a strongbrand that is recognised aroundthe world,” Swearman says.

Being on the Isle ofMan is as good asbeing in the City ofLondon. It�s well know,well respected andwell understood”

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isle of man 725th, September 2011

The e-gaming sector has proved to be a big winner for the Island’s economy. No wonder Celton Manx’s Bill Mummery is so happy

Willian D. Mummery Executive Director

Roger Raatgever Chief Executive

Kevin Nolan, captain of thesponsored team

Datacentre’s key businesses grow as more clients outsource

Andy Swearman Manager Director, Phil Adcock Technical Director

Founded in 1988 by Irish en-trepreneur Dan Tynan witha modest project of sevennew starter homes, Dan-dara has grown to become

one of the Isle of Man’s biggestbuilders of residential and commer-cial properties. As managing direc-tor Seamus Nugent proudly pointsout, the company has now built over4,000 properties on the Island, hous-ing somewhere between 12 and 15per cent of the population.

Over the last 23 years Dandarahas also expanded its base well be-yond the Manx shore, with a host ofbuilding projects in the Channel Is-lands and across much of the UKmainland. As Nugent explains, thecompany is involved in “a full rangeof property, from nursing homes tooffices and housing, both in urbanand rural areas, and in terms ofprice, everything from £150,000starter homes up to £5m bespokeproperties.”

He points to the fact that Dan-dara “creates unique residences inprime locations throughout the Is-land”. One such location only ashort distance from Douglas is Bal-lanard Woods, an exclusive devel-opment of superior executivehomes.

“Increasing numbers of high networth individuals are coming to theIsland and we are mindful of theneed to be able to offer propertieswith the exclusivity they desire andhomes that complement theirlifestyle. The government uses theslogan ‘Freedom to Flourish’ in ef-forts to attract these wealthy entre-preneurs along with new businessand investment.”

“It’s worth remembering that thetop rate of personal tax is 20p in the£ and no individual can pay morethan £115,000 a year in income taxand there are no capital taxes on theisland and more companies here areexempt from corporation tax.”

Seamus Nugent is clear about thephilosophy that underpins Dan-dara’s success. “We’ve always putthe customers first,” he says.“That’s how the company was sosuccessful at the start. We gave peo-ple extremely high quality proper-ties that represented excellent valuefor money. And even today in theIsle of Man our properties com-mand a premium because they’revery well constructed. The corething is that the customer gets a re-ally good deal.”

According to Nugent, the com-pany’s reputation on the Island is“second to none” and its emphasison customer satisfaction has meantthat many Manx residents have hada relationship with the firm stretch-ing across its 23-year history.

He adds, “At the end of the dayour success can be measured in howpopular we are and the number ofpeople prepared to make that kindof step, because buying a house is ahuge purchase. Given that a signif-icant percentage of the populationof the Island have made that com-mitment with us, I think that is a bigseal of approval.”

Nugent is cautiously optimisticabout the impact of the recession onthe property sector, arguing that theIsland hasn’t been hit as hard aselsewhere. “Prices are still ex-tremely strong,” he says. “It has tobe remembered the Island did not

go into recession and still hashealthy growth of 2.5 per cent. Wecertainly haven’t dropped our pricesat all since the crisis began. By com-parison with our colleagues in theUK and Ireland, we’re in a goodplace.”

Nugent is keen to stress, how-ever, that although house priceshave remained high, Manx resi-dents have plenty of benefits thatmake up for this higher cost – withmore disposable income and lowertaxation and travel costs. “The Isle

of Man is an incredible place to live,a great place to bring up a family,”he enthuses. “Costs are less here forall sorts of things. Things like carand household insurance are a frac-tion of the cost in the UK. And if itonly takes you 15 minutes to get towork, you’ve got more time tospend with your family. This meanspeople are involved in a lot morethings outside of their jobs here, es-pecially sport. And in economicterms, we’ve got a reserve fund –how many countries have that? Wedon’t have a deficit. Money hasbeen spent on very worthwhilethings. The infrastructure on the Is-land is second to none.”

Many in the construction sectorhave complained that the Island’splanning regulations are too tough,making it harder to meet the hous-ing needs of a growing population.Nugent agrees that “every yearthere is more legislation, more bu-reaucracy. It doesn’t get simpler – itjust gets tougher.” However, hepoints out that that the regulatorysystem in the Island is very similarto the UK – with just one notabledifference. “We have third partyright of appeal, and that obviouslycauses more delays,” he explains.

Another factor that has sloweddevelopment, Nugent argues, is thatthe whole Island is regarded as aconservation zone. “One of thethings that hasn't happened here, isthat there should have been morezoning of land for housing – it hasbeen very slow,” he says. “There isnot a lot of land available, In fact,there hasn't been any new landzoned since 1980.”

Despite these factors, Nugent ar-gues that the Island offers excellentopportunities for investors lookingto invest in property. “The housingmarket on the Island has never ex-perienced negative equity and thereis a strong rental demand,” he says.“Since the property market took offagain in the late 90s, growth herehas been stronger than in the UK.Anyone who has invested in prop-

erty in the Isle of Man has done ex-tremely well.”

Nevertheless, the Island shareswith the UK many of the problemsthat have affected the housing mar-ket since the recession. “It’s harderfor first-time buyers to get funding,compared to a few years ago” ex-plains Nugent. “The maximummortgages here are 90 per cent andpeople have to have a pretty cleancredit history. It’s obviouslytougher for young people becausethe lifestyle is credit cards, car loansand so on. That is causing a little bitof a slowdown in the market be-cause you don’t have the same num-ber of people coming in at thebottom.”

If this all sounds too painfully fa-miliar, there are definitely some as-pects to the Island’s housing marketthat are a world away from the UK’sfixation with transport. “Half anhour is the absolute maximum foranyone’s commute to work,” Nu-gent says.

Echoing the Manx government’semphasis on conservation, Nugentis proud to champion Dandara’scommitment to environmental is-sues. “We offer people options likesolar panels, insulation standardsare extremely high and we have ourown recycling compound on the Is-land.” Given that Dandara builds

timber-frame properties, a sustain-able approach to forestry is also akey component in the company’sgreen agenda. “We plant thousandsof trees every year – far more thanwe use” he says.

Despite progressive workingpractices like these, however, Nu-gent admits that the Isle of Man suf-fers from something of an imageproblem. “There is a lot of igno-rance about the Island and I thinkthe Isle of Man has a job to do tomarket itself a lot more positively,”he argues. “People hear things aboutthe TT races or Manx cats, andthat’s all they really know about theIsland, and yet it’s a significantbusiness centre right on theirdoorstep. We need to get the mes-sage out there that the Isle of Man isa very efficient, highly regulatedplace to do business.”

So what does the future hold forDandara? “What we want to do is tomaintain the business,” Nugentsays. “It’s not just a question ofgrowth. We have a lot of youngpeople who we’re bringing throughthe firm. We want to hang on to all

those people and give them a long-term prospect in the company.”

Dandara’s structure is the key tothis attitude, as Nugent explains.“We’re different from most prop-erty companies because we do allour own design work, we have allour own architects, engineers andcost-surveyors. We own all our ownplant, equipment and trucks, ourown drivers, excavators, every-thing. Very few firms operate likethat any more – they sub-contracteverything out. Unlike them, we’renot just property developers – we’rebuilders and designers, and we haveour own legal department. It’s all in-house.”

Nugent is confident that thisstructure has been a key factor inDandara’s success over the lastquarter-century. “You have ab-solute control that way,” he ex-plains. “You can guarantee thequality, the time and the cost –you’re not in the hands of third par-ties. And the other thing is that youretain all the intelligence and expe-rience. Everything that you learn,both the challenges and the things

that go well, are retained within thecompany.”

Nugent is also keen that the newManx government builds on the Is-land’s wider success by focusing onthe wider international market.“The big challenge for the new gov-ernment is to promote the Islandbetter, to continue to look hard athow it can generate new business.Other jurisdictions are not doing sowell, we're doing better than most –but we need to hang on to our posi-tion and move forward from there.”

He continues, “Because the Isle-and has done very well for the last30 years, people are inclined to geta bit complacent. But we can’t af-ford to be complacent. That’s why Ithink diversification is so important.Our natural resources are our peopleand our ways of doing business. Weneed to be seen to be an absolutelylegitimate place to do business butat the same time an extremely com-petitive one. The quality of the serv-ice we give has to be the best. Andthat’s what Dandara always strivesto be – the best.”

Dandara Seamus Nugent

“The Island’s housing market has never had negative equity and there is a strong rental market”, says Managing Director Nugent

Inside views of the luxurious penthouse, located at Douglas Marina

‘The Ascot’ from Dandara’s luxury Ballanard Woods development

Seamus Nugent Managing Director

We’ve always put thecustomers first. That’show the company wasso sucessful at thestart. We gave peopleextremely high qualityproperties at value formoney”

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isle of man 825th, September 2011