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Finance Yorkshire Welcome

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  1. Finance YorkshireWelcome www.finance-yorkshire.com

  2. Finance YorkshireJames Newman - Chairman www.finance-yorkshire.com

  3. Finance YorkshireWhy are we here this morning? • Accountability to stakeholders, partners, intermediaries and clients • Building relationships • Looking to the future • Dialogue and questions www.finance-yorkshire.com

  4. Finance YorkshireAgenda • James Newman – Chairman, Finance Yorkshire • Alex McWhirter – CEO, Finance Yorkshire • Ed French - Seedcorn Finance • Tony Goulbourn - Business Loans • Barrie Hensby - Equity Linked Finance • Client Case Studies – Northend Creative Print Solutions & Boston Healthcare • Questions & Answers www.finance-yorkshire.com

  5. Finance YorkshireAlex McWhirter - CEO www.finance-yorkshire.com

  6. Finance YorkshireOur Mission and Vision • Mission • To build a permanent regional fund by contributing to the  success of businesses constrained by finance • Vision • Successful and growing financial investment institution • Recognised and respected as a key participant in the business and professional community • Stimulating demand for finance in our key market segments • Realising good returns for investors and value for money www.finance-yorkshire.com

  7. Finance YorkshireSector Spread of investments • 59% of investments made in 3 sectors; • Manufacturing/Engineering (27%) • Business Services (19%) • Digital/ICT (13%) • Others (41%) www.finance-yorkshire.com

  8. Finance YorkshireThe approach Working alongside the commercial market; • Maintaining and developing relationships with financial intermediaries to promote awareness and dealflow • Market making effect, making deals happen by spreading the risk with other investors and lenders • Co-investing with other lenders and funds www.finance-yorkshire.com

  9. Finance YorkshireFund breakdown £90m Investment Capital £30m European Regional Development Fund £15m Yorkshire Forward – Capital £45m European Investment Bank (JEREMIE) £10m Yorkshire Forward – Revenue www.finance-yorkshire.com

  10. Finance YorkshireThree portfolios • Seedcorn Finance (up to £780k) £15m • Business Loans (£15k – 150k) £27m • Equity Linked Finance (£100k - £2m) £48m www.finance-yorkshire.com

  11. Finance YorkshireCustomers • A new start or growing business • A business with growth potential • A business unable to source its full funding requirement from the commercial market • SME’s paying business rates in Yorkshire and the Humber or relocating to the region www.finance-yorkshire.com

  12. Finance YorkshireEd French

  13. Seedcorn Finance • £15m Seedcorn Fund • Up to £780,000 • £50- £400k typical first investment • 12 investments completed • Highly active • Wide spread of sector • High risk high growth potential Litecool

  14. Team Heather Roxborough PhD Bioscientist Unilever Ed French Engineer Uni Spin outs Graham Davies Bioscientist & programmer UMIP Ashwin Kumaraswamy Engineer Entrepreneur Uni spin-outs

  15. Example companies

  16. Market for Start-up Capital * BVCA Report on Investment Activity 2010

  17. Progress • 12 companies in portfolio to date • Highly active – >1 new portfolio company each month • Actively seeking out co-investors (angels, funds, corporates) to extend “runway” where appropriate • As planned, focus is moving towards nearer-to-market: • Early portfolio: 100% of first deals were pre-revenue • Q1 2012 50%:50% split

  18. Process • Give us a call: usually best done early • When ready we’ll then engage more deeply • Highly variable investment process - Records are - fastest 2 weeks, slowest 12 months - All depending on readiness and complexity of the company - Budget timescale 3 months! • Priorities: • Market Opportunity • People • Technology

  19. Finance YorkshireTony Goulbourn

  20. Finance YorkshireProducts • Early Stage – Up to £50k / Net Interest 10% • Established – Up to £75k / Net Interest 8% • Established and profitable – Up to £150k / Net Interest 6% • 3% arrangement fee • Term generally 3 – 5 years • Loans are unsecured but personal guarantees taken

  21. Finance YorkshireFunding Gaps • Lenders may be unable to lend the full amount due to: • Lack of security • Lending Criteria / Policy • Credit rating • Uncomfortable lending 100% • Enterprise Finance Guarantee not suitable • Lenders may take comfort from additional funding for headroom / contingency

  22. Finance YorkshireTypes of Funding Proposals • Capital Expenditure • Commercial Premises - Purchase price / deposit / VAT - improvement / furniture • Plant & machinery - Purchase price / deposit • - Tooling / installation / training • - Bespoke equipment / low resale value

  23. Finance YorkshireTypes of Funding Proposals • Working Capital • Rapid sales growth / new contracts • International business • Headroom / contingency • Alongside Invoice Finance

  24. Finance YorkshireWhat do we look for? • The business is viable and can demonstrate ability to repay • Core market is established businesses • Growth – job and wealth creation • Small part of a larger funding package

  25. Finance YorkshireRequirements • Application Form • Statements of personal assets and liabilities • Business plan • Last 3 years accounts & Up to date management accounts • 3 year forecasts

  26. Finance YorkshireBarrie Hensby

  27. Finance YorkshireProducts • Investments from £100k to £2m • Mixture of equity and mezzanine loans • Investments are typically unsecured • Interest rates for Loan/Mezzanine instruments are priced at a margin above the EU reference rate (1.74%) and will carry a combination of redemption premium/rolled up interest/warrants • Term for Loan/Mezzanine instruments typically reducing over five years • Equity stakes up to 49% • Arrangement fee (3%) and Monitoring fee/NED fee will also be applied

  28. Finance YorkshireWhere are the funding gaps? • Business Expansion • Asset acquisitions - Purchase price/deposits - Tooling/installation/training - Bespoke equipment/low resale value • Intangible assets - IT software & licences/brands • Infrastructure - Staff recruitment/investment IT

  29. Finance YorkshireWhere are the funding gaps? • Working Capital • Rapid sales growth • New contracts • International business • Supporting bonds- performance, advance deposit • Headroom/contingency

  30. Finance YorkshireWhat is required? • Stage 1 • Business plan with historic and projected financials • Management CV’s • Current management accountsStage 2 • Due diligence process • Financial • Commercial • Legal

  31. Finance YorkshireTypical deal? • Businesses with a projects that have a gap in funding that can’t be met by conventional sources • The business is viable and can demonstrate ability to repay or provide an exit in the medium term • Can range from: • Early stage/start-up requiring equity funding; or • Later stage, established and looking for mezzanine funding • Reason for funding is clearly defined

  32. Finance YorkshireCase study - S3 Id Group Ltd The Company - S3 ID Group Limited, the UK’s market-leading provider of innovative location awareness solutions. The Challenge – The Company had a number of significant growth opportunities which required additional funding beyond their current facilities. S3 ID required new investment to continue its expansion.

  33. Finance YorkshireCase study – S3 ID Group Ltd The Solution - The £1.1m equity and loan investment provided a mixture of development capital funding along with additional working capital facilities. This significant equity investment from Finance Yorkshire’s Equity Fund will enable S3 ID to maintain the controlled expansion it has experienced over the last three years. The Investment Rationale - S3 ID have a very experienced management team who have established a leading niche market position with strong barriers to entry. This latest investment will ensure S3 ID’s facility in Rotherham continues to grow, leading the way in new high-end technology.

  34. Finance YorkshireCase study – Badgequo Ltd The Company – Badgequo Ltd, design and manufacture a wide range of branded and private label cosmetic products for major high street retailers. The Challenge - Managing Director Kai Arter said: “We were looking for a different structure and approach to funding and felt Finance Yorkshire would offer us just that and it has been a very smooth, open and straight-forward process from application to completion”.

  35. Finance YorkshireCase study – Badgequo Ltd The Solution - The Finance Yorkshire deal has seen Badgequo receiving an investment totalling £900,000 - made up of a £800,000 equity investment and a £100,000 business loan. The Investment Rationale – The business had an established financial track record with good growth prospects. The strength of the management team and the nature of the operations offered the Fund the opportunity to invest in a established and progressive business.

  36. Finance YorkshireAlex McWhirter - CEO www.finance-yorkshire.com

  37. Finance YorkshireMaking an application • Call us to make sure it’s eligible 0845 649 0000 or make enquiry via website www.finance-yorkshire.com • An Investment Manager will contact you to discuss. • Complete Application Form & the supporting information when advised by the Investment Manager. www.finance-yorkshire.com

  38. Finance YorkshireThe Way Forward • To become the main point of contact for Access to Finance across Yorkshire and Humber • To work collaboratively with the four LEP’s and local authorities • To be seen as a centre of excellence and innovation in the area of Access to Finance www.finance-yorkshire.com

  39. Finance YorkshireQ & A www.finance-yorkshire.com