Finance Yorkshire Welcome

Finance Yorkshire James Newman - Chairman

Finance Yorkshire Why are we here this morning? Accountability to stakeholders, partners, intermediaries and clients Building relationships Looking to the future Dialogue and questions

Finance Yorkshire Agenda 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

Finance Yorkshire Alex McWhirter - CEO

Finance Yorkshire Our 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

Finance Yorkshire Sector Spread of investments 59% of investments made in 3 sectors; Manufacturing/Engineering (27%) Business Services (19%) Digital/ICT (13%) Others (41%)

Finance Yorkshire The 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

Finance Yorkshire Fund breakdown £90m Investment Capital £30m European Regional Development Fund £15m Yorkshire Forward – Capital £45m European Investment Bank (JEREMIE) £10m Yorkshire Forward – Revenue

Finance Yorkshire Three portfolios Seedcorn Finance (up to £780k) £15m Business Loans (£15k – 150k) £27m Equity Linked Finance (£100k - £2m) £48m

Finance Yorkshire C ustomers 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

Finance Yorkshire Ed French

Finance Yorkshire Seedcorn Finance Litecool £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

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

Finance Yorkshire Example companies

Finance Yorkshire Market for Start-up Capital * BVCA Report on Investment Activity 2010

Finance Yorkshire 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 – Q %:50% split

Finance Yorkshire 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: 1.Market Opportunity 2.People 3.Techno logy

Finance Yorkshire Tony Goulbourn

Finance Yorkshire Products 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

Finance Yorkshire Funding 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

Finance Yorkshire Types 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

Finance Yorkshire Types of Funding Proposals Working Capital Rapid sales growth / new contracts International business Headroom / contingency Alongside Invoice Finance

Finance Yorkshire What 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

Finance Yorkshire Requirements Application Form Statements of personal assets and liabilities Business plan Last 3 years accounts & Up to date management accounts 3 year forecasts

Finance Yorkshire Barrie Hensby

Finance Yorkshire Products 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

Finance Yorkshire Where 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

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

Finance Yorkshire What is required? Stage 1 Business plan with historic and projected financials Management CV’s Current management accounts Stage 2 Due diligence process Financial Commercial Legal

Finance Yorkshire Typical 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

Finance Yorkshire Case 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.

Finance Yorkshire Case 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.

Finance Yorkshire Case 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”.

Finance Yorkshire Case 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.

Finance Yorkshire Alex McWhirter - CEO

Finance Yorkshire Making an application Call us to make sure it’s eligible or make enquiry via website An Investment Manager will contact you to discuss. Complete Application Form & the supporting information when advised by the Investment Manager.

Finance Yorkshire The 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

Finance Yorkshire Q & A