Slides from Segment 2B ‘Businesses trading for > 2 years’ of Francis Clark's Finance in Cornwall 2015 seminar held on 12th May in Newquay.

1. F
Finance in
Cornwall 2015
“71% of SMEs approach
only one provider of
finance”
Richard Wadman –
Corporate Finance
Director
Business trading for > 2
years

2. www.francisclark.co.uk
Structure of morning
• Background, EU “calls” and the Banks (8:30am to 9:42am)
• LEP, Cornwall EU millions and “calls”
• Banks and SMEs
• Company presentation
• Grants, debt, equity and business support –
stratified by age of business (10:02 am to 11:22 am)
• Secured finance, alternative sources of finance,
business support (11.42 am to 1.00pm)
• State Aid
• Company presentation
• Q&A one to one / Networking (1pm to 2pm)

3. www.francisclark.co.uk
Funding and support
– for business > 2 years old
• 6 to 8 minute presentations on:
• “Investment ready”
• Grants
• Peer to Peer (loan) x 2
• SW Loan Fund (loan)
• Growth Funds - mezzanine
• Growth Funds - equity
• Venture Capital/ Private Equity

4. Getting
investment
ready
David Armstrong
Corporate Finance
Director

5. www.francisclark.co.uk
What we will cover
• What funding is right for you?
• Are you ready?
• How do you secure it?

6. www.francisclark.co.uk
Matching requirements
Understand
your
business and
its
requirements
Understand
funding
options and
funders’
requirements
General: Debt or Equity Risk? (and/
or potential for grant funding?)

7. www.francisclark.co.uk
Requirements: Grants
• “Project” eligibility – sector, size, location…
• Job creation
• Timescale – prescriptive, process and panels, not
retrospective
• Match funding
• ‘Need for grant’ versus viable proposition
• State Aid

8. www.francisclark.co.uk
Requirements: Debt
• Serviceability & Headroom
• Security / Personal Guarantees
• Conduits for government initiatives
• Covenants – achievable / appropriate?

9. www.francisclark.co.uk
Requirements: Equity
• Exit route and returns to the investor
• Investors’ expertise vs. loss of independence?
• Be prepared to discuss valuation

10. www.francisclark.co.uk
Investment ready?
• The story – past, present and future
• Due diligence:
 Compliance and legal
 Financial performance
• Credible management

11. www.francisclark.co.uk
Applying for the funding
• When, why and what funding is needed (Business
plan and projections)
• Communicating your requirement (Business case /
application form and projections)
• Building the relationship – on going dialogue

12. www.francisclark.co.uk
Structure of a business plan
• Contents
• Executive summary
• Background to the business
• Products and services
• Customers and markets
• Business operation
• Management
• Financial history
• Financial Projections
• Appendices

13. www.francisclark.co.uk
Investor Ready - Conclusions
• Appropriate funding / understand the funder
• Documentation
• Sufficient information for a risk assessment
• Be prepared for “due diligence”
• Build in sufficient time
• There is assistance out there…

14. www.francisclark.co.uk
“You are often trying to persuade a stranger
to give you somebody else’s savings…”

15. R G F
Grant Funds
John Hutchings
Programme Manager, RGF Grant Funds
Plymouth University

16. R G F
Grant Funds
Plymouth University
Has led or partnered in
5 of the 6 RGF “Rounds”

17. R G F
Cornwall & Isles of Scilly LEP
Heart of the South West LEP
1000+ new jobs
£15M+ of private sector co-investment
Helped over 90 businesses

18. R G F 5
U B I through North Devon+
Target 373 new jobs
£15M of co-investment
HotSW LEP ONLY

19. R G F 6
South West Growth Fund
£10M Fund, grants from £15k to £1M
Target – 634 new jobs
£22.3M of private sector co-investment
Mainly supporting capital expenditure
projects
CARE : some restrictions

20. R G F 6
South West Growth Fund
State Aid restrictions will apply
Intervention Rates most favourable in Cornwall
New job creation and private sector co-
investment key to success
Competitive process giving maximum value for
money for the public purse

21. R G F 6
South West Growth Fund
Contact
John Hutchings/John Lewis (Grants Team)
john.hutchings@plymouth.ac.uk
john.lewis@plymouth.ac.uk
www.gaininbusiness.com

22. Funding Circle
Jeremy Crinall
Business Development Manager South West
Simple, affordable business loans

23. “At present the largest four banks account for over
80% of UK SMEs’ main banking relationships.
Many SMEs only approach the largest banks when
seeking finance…in the case of the first time SME
borrowers the rejection rate is 50%.”
Gov.uk, 2014
6

24. What is the alternative?
Traditional lending
Peer-to-peer lending
4

25. A simple model: Lenders can spread risk by lending
small amounts to hundreds of businesses
Business loan
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
Loan parts
5

26. 3 Founding Members –
set up in 2009
Over £600m lent
Over 10,000 loans
completed
175+ Staff in the UK
60+ Staff in the USA
Aim is to become the
global market-place for
investing in and
borrowing for SMEs
(as of April 2015)
Funding Circle – Who are we?
Index Ventures
Union
Square
Ventures
Accel
Partners
26

27. 27
• We are not a Bank - Funding Circle do not lend our own money
• Funding Circle are an online market-place – where investors lend directly to SME
businesses
• £5.2m lent to SME in Cornwall (march 2015)
• Liquidity depends on both the ‘Fractional Retail’ and ‘Institutional Whole Loan’
market-place
• Institutional investors agreed to invest £127m & $420m in our ‘Whole Loan’ market-
place – UK & US
Market-place lending

28. 28
• The Government lent an initial tranche of £20m
through Funding Circle in 2013
• A further £40m has been committed in late
2014
• Forms part of the Business Finance Partnership
scheme (British Business Bank)
• 10% of every loan on the platform is financed
by Government
The Government’s commitment to Funding Circle

29. Unsecured Loan
£5k - £250k
Suitable for a wide range
of purposes
6 months to 5 year term
Rates from 6% (8.3% avg
A+ over 36 months)
Fees between 3-4% of
loan amount
No ERP’s
Secured Loan
£150k - £1m
 All asset security
agreement
 Charge on specific
properties or
assets
Types of borrowing
29
Asset finance
£20k - £1m
 Suitable for a wide
range of hard assets
 Hire purchase
 Flexible on LTV–
100% considered
 Individual deals up
to £250k, credit lines
of up to £1m

30. Any business, any purpose……
8
Loan Purpose
Working capital
Expansion/growth Capital
Asset purchase
Other
Residential property development
Asset finance
Refinancing a loan
Tax payment
Tax liability
Annual purchase
Commercial mortgage
Sector
Automotive
Finance
Leisure & Hospitality
Education & Training
I.T and Telecommunications
Agriculture
Consumer Services
Healthcare
Manufacturing and Engineering
Other
Professional and Business Support
Property and Construction
Retail
Transport and Logistics
Wholesale

31. 31
Minimum criteria includes
• Limited companies, LLP’s & non limited
• 2 years of filed/formal accounts + latest 3 month bank
statements
• Directors – no CCJs, CVA & CVL (last 6 years)
• Min turnover £50,000
• Beneficial ownership in UK
• Loan supported by PG – Main shareholders

32. 32

33. 33

34. 34

35. Thank you for listening
35
Jeremy Crinall
Business Development Manager
jeremy.crinall@fundingcircle.com
0203 667 2250

36. B Y D AV I D B R O W N

37. • UK P2P business lending is a billion pound industry
• Regulated by FCA
• UK has most advanced website platforms
• 16 business lenders in the UK
• Folk2Folk 6th largest in UK
PEER-TO-PEER BUSINESS LENDING

38. • Varied concepts across increasing number of
Companies and Platforms
• Some online P2P platforms offer unsecured
lending, some offer a mix
• Types of security include: property, any tangible
asset, director’s guarantee
• Folk2Folk only offer secured lending against
property
WHAT IS SECURED LENDING?

39. • First charge mortgage
• Benefits of secured lending
– The loan is more attractive to a lender
– Minimises risk for the lender
– If the borrower does not have property to secure against
their loan we will not lend
HOW IT WORKS

40. • This type of lending isn’t new
• Previously known as a private mortgage: people with money lent
to people in the community who needed it and the local solicitor
would referee the arrangement.
• Business are finding it harder to get credit and people are not
seeing the levels of return on their savings as they had previously
• There’s been a re-emergence of the old fashioned way of
borrowing and lending but now under the banner of a modern
FCA regulated industry
• And with Folk2Folk, who are born out of a Cornish firm of
solicitors with 300 years experience of private mortgages, we see
it coming full circle.
HISTORY OF SECURED LENDING

41. • We’ve introducing finance for business initiatives ranging
from the purchase of Golf Clubs, kick-starting multi-million
pound property developments, and renovating leisure
complexes and barn conversions.
• Utilise your property assets if you are looking to grow your
business or require a cash injection.
• We offer face2Face in addition to online proposition.
• Speed of decision making
• Local knowledge
FOLK2FOLK SECURED LENDING

42. TYPES OF BUSINESS ACTIVITIES WE FUND
property build/purchase
55%
renewables
10%
commercial
12%
agriculture
7%
leisure
9%
other
7%
property build/purchase
renewables
commercial
agriculture
leisure
other

43. www.folk2folk.com
Twitter.com/Folk2FolkUK
Facebook.com/folk2folk
Linkedin.com/company/folk2folk

44. SWIG Finance
John Peters, Managing Director
Call: 01872 223883
info@swigfinance.co.uk
www.swigfinance.co.uk

45. Who are
SWIG Finance?

46. We fund businesses looking
to
+ =
Business Support Growth

49. Get in touch
www.swigfinance.co.uk
info@swigfinance.co.uk
01872 223883
SWIG Services Ltd
Lowena House, Glenthorne Court, Truro Business Park
Threemilestone, Truro, Cornwall, TR4 9NY

50. SANTANDER GROWTH CAPITAL
PETER ABEL, DIRECTOR
SANTANDER GROWTH CAPITAL,
Tel: 07809 493791
Email: peter.abel@santander.co.uk
Website: www.santanderbreakthrough.co.uk

51. SANTANDER BREAKTHROUGH PROGRAMME
The Breakthrough programme will invest £200 million in fast-growth SMEs, supporting local enterprise and community
initiatives, creating jobs, inspiring entrepreneurs of the future and turbo-boosting a private sector led economy
This initiative will help SMEs participating in
the Breakthrough programme to reach new
overseas markets if their growth plans and
ambitions are beyond the UK. It includes
subsidised trade missions, educational
roadshows and support accessing
information on exporting.
Santander is running a unique experience
programme for fast-growth SMEs that takes
them behind the doors of the world’s most
iconic and best fast-growth businesses, to
learn first hand how they did it – real
experience to help their own growth journey.
In keeping with our focus on responsible
business, Santander has launched a
number of initiatives to encourage more
responsible and inclusive business practice
and to invest in Social Enterprise
development.
Santander is running regional Breakthrough
Live conferences for fast-growth SMEs.
Working with Santander Universities the
Breakthrough Live conferences bring
together leading entrepreneurs to share
experiences.
Santander has launched an online portal for
SMEs participating in the Breakthrough
investment programme to access the best
student and graduate talent across our
partner University network – including
Universities in Scotland.
Santander has up to £200 million to invest
in fast-growth SMEs turning over between
£500k – £50m across the UK. The
investment programme will run over the
next 3 – 5 years and invest in up to 200
SMEs.
1. Breakthrough Growth Capital
4. Breakthrough Talent
2. Breakthrough Live
5. Breakthrough Responsibly
3. Breakthrough Masterclasses
6. Breakthrough International
www.santanderbreakthrough.co.uk
Breakthrough@santander.co.uk

52. INTRODUCTION - GROWTH CAPITAL FILLS
THE FUNDING GAP
as identified in the Rowland Report

53. OUR BROAD CRITERIA
Annual turnover
£0.5m – £50m
Growth in a
combination of sales
and/or profits
Track record of
sustainable operating
profitability and cash
generation
Proven management
team
Privately owned
businesses rather than
Private Equity backed
Not start-ups.
At least 3 years of
financial history

54. AREAS WHERE GROWTH CAPITAL SUITABLE
Capex investment to
support growth plans
Investment in New
Product Development
Investment in sales &
marketing overhead for
new products / areas
Acquisition funding
support
Funding of proven roll-
out concept
Expansion projects to
drive rapid growth

55. KEY BENEFITS TO SMEs
Debt offering.
No warrants – no
dilution of equity
Preserves cash
Interest only, with cash
interest L+5% and
rolled interest of 5%
payable at maturity
Enhanced debt
capacity, cash flow lend
- not limited to
tangible security
Flexibility - No
prepayment penalty
fees and no annual
monitoring fees
No automatic
requirement for PGs
Its not just about the
money - Additional
support through
“Breakthrough”

56. £1.2m Growth Capital
Video technology
August 2014
£1.5m Growth Capital
Childcare and education
60 new jobs
50 new jobs
September 2014
£1.35m Growth Capital
Vibration monitoring
62 new jobs
July 2014
£1.1m Growth Capital
Plumbing distribution
July 2014
£1m Growth Capital
Engineering consultancy
95 new jobs 20 new jobs
July 2014
£0.75m Growth Capital
Cloud brokerage services
35 new jobs
May 2014
£0.75m Growth Capital
Automotive
April 2014
24 new jobs
£0.5m Growth Capital
Healthy fast food chain
40 new jobs
October 2014
£1.6m of Facilities
Bakeries
45 new jobs
December 2014
£1.8m of Facilities
Services
43 new jobs
September 2014
£2.4m of Facilities
Supplier & Manufacturer
19 new jobs
December 2014
SOME RECENT SMEs WE HAVE SUPPORTED….

57. SUPPORTED BUSINESSES

58. CUSTOMER ADVOCACY
“It is mind-blowing that a bank would be that
entrepreneurial and supportive. They are a
breath of fresh air.”
Paul Bradford, Southern Communications, CEO
“Santander gets close to you in terms of
understanding the business and our Relationship
Director really understands the nuts and bolts of
what we’re doing and the issues we have.”
Mike Bishop, Finance Director and CoFounder, YourVets
“I think the Growth Capital investment is a really
well thought-out product. It allows us to draw
down funds as the company grows without having
to keep going back to the bank.”
Tim Hobbs, CFO, Vital Ingredient
“Before the deal we had 35 employees but only
one sales person. Now we have the resources to
grow the team and hire people to manage direct
sales, partners and channels.”
Mat Atkinson, CEO, ProofHQ
“It’s fascinating to see that entrepreneurship is
a genuine objective of Santander and not just words.”
Geoff van Sonsbeeck, co-founder,Isabella Oliver
“The Santander team got to know us individually
and we felt the approach of the team was
sensible and pragmatic.”
Graeme Scott, CEO, Bertram Nursery Group
“The expertise of the people who came in from
Santander was completely different from the
other banks... They could see the frustrations of a
small business. They also understood that a small
business needs time to do things.”
Andy Hill, CEO, I Like Music

59. THANKYOU
PETER ABEL, DIRECTOR
SANTANDER GROWTH CAPITAL,
Tel: 07809 493791
Email: peter.abel@santander.co.uk
Website: www.santanderbreakthrough.co.uk

60. Growth Capital Investors
Introduction to BGF
Ned Dorbin
12 May 2015

61. Growth Capital Investors
BGFisaninvestmentfirm
thatprovidesgrowthcapital
of£2m - £10m toUK
businesseswithturnoverof
> £5m.
Who we are.
Funding for growth and equity release
Investment of £2m – £10m for a minority
stake
Long-term and patient capital, no forced
exit
Access to huge network and support
Fast and focused investment process

62. Growth Capital Investors
67
How are we
doing?

63. Growth Capital Investors
Investment of £2m-
£10m
Cash-in: to support long term growth
Cash-out: for existing shareholders
Equity stake of up to
40%
Always a minority partner – you retain
control
Flexible structures –
equity / loan notes
Meets the needs of the company and
shareholder
What we offer.
Workingalongsidethe
banks,BGFprovides
growthcapitalina waythat
meetscompanies’needs.

64. Growth Capital Investors
No closed fund
pressures
Patient capital. No drag rights, no forced
exit
Fair legal approach Less onerous investor legal protections
Fast and focused
investment process
Minimises disruption and fees
More than money
Access to impressive network and
support
What we offer.
Workingalongsidethe
banks,BGFprovides
growthcapitalina waythat
meetscompanies’needs.

65. Growth Capital Investors
70

66. Growth Capital Investors
South West and
South Wales
James Austin
07872 819093
Ned Dorbin
07800 682195
Alex Garfitt
07770 582021
Paul Oldham
Regional Director
07887 657697
Edwin Davies
07880 384983
Greg Norman
07557 747302
Sarah Ledwidge
07557 232034
Daniel Tapson
07964 904443

67. 72
YFM Equity Partners
Giles Whitman
12th
May
2015

68. 73
73
YFM Equity Partners is a specialist equity investor
based in the UK regions, investing in fast growing
businesses at a point of transformational growth
We invest £1m to £10m in UK companies
We back ambitious management teams with a clear
plan to create value

69. 74
74
 Step-change in revenue and profit, driven by:
o Entering new markets / launching new products
o Acquisitions
o Changing market dynamics
o Increased sales and marketing
 Often the result of change of ownership / de-risking
 Transaction types:
o Growth capital; MBO; MBI; cash-out
What is transformational growth?

70. 75
75
 Strong management
 Typically £0.5m-£2m of underlying EBIT
 Small losses OK for earlier stage growth capital deals
o But should be budgeting profits within 12 months
o Minimum revenue £2m
 Invest in a broad range of sectors, but particularly like:
o Brand roll-outs
o Proprietary technology
o Niche market leaders
What else do we look for?

71. 76
76
 We are experienced investors
o Founded in 1982 – we have over 30 years of experience, investing in
fast-growing transformational businesses
o A regional office network - London, Leeds, Manchester, Birmingham and
Sheffield
o A team of 15 investment professionals
 We understand the nature of corporate transactions
o We will ensure appropriate funding structures and plans are in place
 We deliver what we promise
Our Transformational Expertise

72. 77
77
 We empower management to deliver their plan
o Brings out the best in management teams
o We understand the difference between support and interference
 We work closely with our investee businesses
o We have a broad network of advisers and Non Executive Directors to assist
o We understand that not everything goes to plan
Our Supportive Partnership Approach

73. 78
Mangar International
Inflatable lifting and bathing
equipment.
Powys
£4,600,000
MBO
January 2014
Intelligent Office UK
Process outsourcing
solutions to legal practices.
Alloa
£4,890,000
MBO
May 2014
Macro Art
Specialist wide-format digital
printer.
Cambridgeshire
£2,100,000
MBO
June 2014
Intamac Systems
Remote monitoring of key
services in the home.
Northampton
£1,000,000
Growth Capital
June 2014
The Heritage Window
Company
Specialist manufacturer of
aluminium windows.
London
£3,171,000
MBO
September 2014
2014 Highlights
Investments:
Cambrian Park &
Leisure Homes
Manufacturers timber holiday
lodges.
Porthmadog
£3,000,000
MBO
October 2014
Springboard Research
Measurement of retail
performance data.
Milton Keynes
£2,964,000
MBO
October 2014
ACC Aviation
Aircraft lease broking.
Reigate
£5,170,000
MBO
November 2014
Business Collaborator
Collaboration software to the
construction sector
Reading
£3,350,000
MBO
November 2014
Wakefield Acoustics
Specialist industrial acoustic
engineering business
Cleckheaton
£1,800,000
MBO
December 2014
Waterfall Services
One of the UK’s leading independent mid-sized contract caterers
Location: Nationwide (Headquartered in Warrington)
YFM Investment: 2007
Return: 5.3x
Realisation:

74. 79
“The investment from YFM
will help accelerate the
business’ ambitious plans in
the $3bn power solutions
market.” John O’Donohue,
CEO, Poweroasis
Case study
Sector Telecomms
Location Swindon
Transaction Development Capital
Deal size £4.5m
Investment 2011
The business
• Power management system that controls and manages the supply of power to remote
telecoms base stations
• Enables network operators to deliver capital costs savings, energy saving and revenue
protection by reducing network outages
• A number of key strategic partners provide access to international markets
The strategy
• Targeting a large and rapidly growing market
• Network power management will be critical in the future
• Market leading company with a more comprehensive and flexible product than any other
competitor
• Well advanced sales and orders pipeline
• Strong management team
The developments
• Supported the expansion of the sales and marketing in Asia, Africa, Europe and North
America
• Developed partnerships in strategic business areas
• Proving the scalability of the business model

75. 80
80
 We are experts at transformation
 We are very experienced
 We are supportive partners
 We have funds available and are keen to invest
Summary

76. 81
81
 It is in the nature of venture capital investments that considerable uncertainties exist in relation to the ability of individual Investees to
establish themselves as viable businesses.
 As there will normally be no ready market in the securities of the Investees such investments will be essentially illiquid and may be
difficult both to value and to realise.
 Any proposed investments are likely to involve an above average level of risk.
 Investment through a fund in developing businesses should be regarded as long term and as carrying a significantly higher degree of
risk than more conventional forms of investment.
 Any interests in a fund itself will also not be readily marketable.
 Past performance of YFM Equity Partners or any of its subsidiaries and employees does not provide any guarantee of future
performance.
This presentation has not been approved as a financial promotion by an authorised person within the meaning of the Financial Services and
Markets Act 2000 “the Act”. It is exempt from the general restriction in s.21 of the Act on the grounds that it is directed only towards
‘Investment Professionals’ within the definition of Article 14 of the Financial Services and Markets Act 2000 (Promotion of Collective
Investment Schemes) Order 2001 and Article 19 (5) of the Financial Promotions Order. It is only meant for investment professionals with
professional experience of the subject matter. It is issued for information purposes only and should not be construed as advice, nor does it
constitute an offer and should not be relied on by any other person. It may not be copied or distributed or otherwise made available to any
person without the express written consent of YFM Equity Partners.
YFM Equity Partners invests through its subsidiary YFM Private Equity Limited which is registered in England and Wales, Co No: 2174994.
Registered Office: 5th Floor, Valiant Building, 14 South Parade, Leeds LS1 5QS. YFM Private Equity Limited is authorised and regulated by
the Financial Conduct Authority, FRN: 122120 and is ultimately owned by YFM Equity Partners LLP.
Important Notice

77. www.francisclark.co.uk
(c) copyright Francis Clark LLP, 2015
You shall not copy, make available, retransmit, reproduce, sell, disseminate, separate, licence, distribute, store electronically, publish, broadcast or otherwise circulate either within
your business or for public or commercial purposes any of (or any part of) these materials and / or any services provided by Francis Clark LLP in any format whatsoever unless you
have obtained prior written consent from Francis Clark LLP to do so and entered into a licence.
To the maximum extent permitted by applicable law Francis Clark LLP excludes all representations, warranties and conditions (including, without limitation, the conditions implied
by law) in respect of these materials and /or any services provided by Francis Clark LLP.
These materials and /or any services provided by Francis Clark LLP are designed solely for the benefit of delegates of Francis Clark LLP. The content of these materials and / or
any services provided by Francis Clark LLP does not constitute advice and whilst Francis Clark LLP endeavours to ensure that the materials and / or any services provided by
Francis Clark LLP are correct, we do not warrant the completeness or accuracy of the materials and /or any services provided by Francis Clark LLP; nor do we commit to ensuring
that these materials and / or any services provided by Francis Clark LLP are up-to-date or error or omission-free.
Where indicated, these materials are subject to Crown copyright protection. Re-use of any such Crown copyright-protected material is subject to current law and related regulations
on the re-use of Crown copyright extracts in England and Wales.
These materials and / or any services provided by Francis Clark LLP are subject to our terms and conditions of business as amended from time to time, a copy of which is available
on request.
Our liability is limited and to the maximum extent permitted under applicable law Francis Clark LLP will not be liable for any direct, indirect or consequential loss or damage arising
in connection with these materials and / or any services provided by Francis Clark LLP, whether arising in tort, contract, or otherwise, including, without limitation, any loss of profit,
contracts, business, goodwill, data, income or revenue. Please note however, that our liability for fraud, for death or personal injury caused by our negligence, or for any other
liability is not excluded or limited.
Disclaimer & copyright