jimmy mclean head of agricultural services the royal bank of scotland group new entrants summit 12...
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Jimmy McLeanHead of Agricultural Services
The Royal Bank of Scotland Group
New Entrants Summit
12 September 2012
Scottish Farming Balance Sheet
ASSETS £b
Land and buildings 32.3
Plant, machinery and vehicles 1.0
Breeding livestock 1.1
Other 2.0
36.4
LIABILITIES
Loans and mortgages 0.9
Overdrafts 0.8
Other credit 0.5
2.2
NET WORTH 34.2
Source: Scottish Government
New Entrants
•New to sector
•Successor – with other beneficiaries to pay out
•Sole Successor
Scottish TIFF
0
200
400
600
800
1000
1200
1400
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
TIFF £ million Real (2011) £m Linear (Real (2011) £m)
Scottish Farming Balance Sheet
ASSETS £b
Land and buildings 32.3
Plant, machinery and vehicles 1.0
Breeding livestock 1.1
Other 2.0
36.4
LIABILITIES
Loans and mortgages 0.9
Overdrafts 0.8
Other credit 0.5
2.2
NET WORTH 34.2
Source: Scottish Government
Financial Plan
Profit↕
Cash↕
Capital
Owner EquityOwner Equity
• Percentage of Business Owned
Net Worth divided by Total Assets
Tenant - 50%Owner Occupier - 70%
Profit and Loss Account
% Gross Output Total Output 100
Variable Costs 30 - 40
Gross Margin 60 - 70
Labour 15 - 18
Power & Machinery 15 - 18
Property & General 4 - 6
Gross Profit Min 30
Rent & Interest Max 15
Net Profit Min 15
Rent Interest & P.D. Max 30
Cash
Managing the Cashflow
Risk
• Recognise the risk• Manage the risk
– Training/qualifications– Experience– Business Plan– Sensitivity Analysis– Potential Exit Strategy
Final Thoughts
• Business Training for Succession
• Availability of Tenancies
• Lack of Share Farming Opportunities
• Bespoke Loan Guarantee Schemes