2015 Finance in the South West - full presentation

Finance in the
South West 2015
May we live in
interesting times…
Sharon Austen
Partner

www.francisclark.co.uk
Administration
Admin
Timetable
Slides – available on request or at http://www.slideshare.net/FrancisClarkLLP
Questions – Please keep questions until coffee/lunch
Presenters…

Presenters and other participants
…and many more

Twitter
Follow us on twitter @francisclarkllp
Tweet about this event using
#FCFinanceSW

Structure of morning
• Background, Debt and Investment ready
(8.30am to 9.50am)
• Key note speaker
• LEP and SME
• Debt and Investment ready (part 1)
• Equity, Grants and Investment ready (part 2)
(10.10am to 11.25am)
• An SME perspective, business support and
closing address (11.45am to 1pm)
• Q&A one to one / Networking (1pm to 2pm)

Key note speaker
Declan Curry
• Award winning business and
economics broadcaster
• Business presenter for the BBC for
more than a decade
• Broadcast in the United States and
Australia as well as throughout the
UK

Declan Curry
Finance in the South West
2015

Chris Garcia
“Driving growth in the Heart of the SW”

Reposition the Heart of the
South West: our prosperity,
profile and reputation,
nationally and globally.
Connecting people, places,
businesses and ideas to
transform our economy,
securing investment in
infrastructure and skills to
create more jobs and enable
more rewarding careers.
Our LEP is working to

What do we do
• Common priorities
• Partnerships
• Attract resources
• Make a difference to
prosperity of businesses
and employees

Strategy - Our LEP
priorities in a nutshell
Creating the Conditions for
Growth
Maximising Productivity and
Employment Opportunities
Building on our
Distinctiveness
Place
Infrastructure for growth:
 Transport and accessibility
 Digital infrastructure
 Sustainable solutions for
flood management
 Energy Infrastructure
The infrastructure and facilities
to create more and better
employment:
 Enterprise infrastructure
 Strategic employment sites
 Unlocking housing growth
The infrastructure and facilities
needed to support higher value
growth:
 Specialist marine sites
 Innovation infrastructure
 Our environmental assets
Business
Creating a favourable business
environment
 A simpler, more accessible,
business support system
Achieving more sustainable and
broadly based business growth:
 Reaching new markets
 Globalisation
Supporting higher value growth:
 Innovation through Smart
Specialisation
 Building innovation capacity
People
Businesses and individuals can
reach their potential:
 Skills infrastructure
 Accessibility to
education/employment
 Employer engagement and
ownership
Increasing employment,
progression and workforce
skills.
 Moving people into
employment
 Supporting people to
progress to better jobs
 Improving workforce skills
Creating a world class workforce
to support higher value growth:
 Enterprise and business skills
 Technical and higher level
 Skills for our
transformational
opportunities.

Achieving our
aspirations
Strategy Resources Delivery
Management
Our
Aspirations
for
Jobs
Growth
&
Prosperity
People
Place
Business
Monitoring and Evaluation of Performance
Marketing and Communications
Back office financial accounting, audit, and procurement
Partnership
LA teams

Successes
• GPF finance for stalled
infrastructure
• Rural Growth Network
initiatives
• Finance for business
growth
• Hinkley Growth Deal 14-15
• Growth Deal 1
• Growth Deal 2

Going forward
Our opportunities and challenges
We know what we have to do but our work is dependent on:
• Funding (we don’t have revenue; ESIF delays a real problem)
• Joined up focus / support from govt to make things happen
• Partnership – with intermediaries and business
Our focus is now on DELIVERY- Lots of
contracts going out door for April

How can the LEP help –
Its your LEP
What the LEP is not:
An agency of HMG like the RDA designed to act as a delivery
arm of central gov, nor are we simply a funder body.
What the LEP is:
A genuinely local platform for collaboration across public
and private sectors, to achieve mutual economic aims.
We support:
• Funding bids for national Government – e.g. Growth Deal
Directing European funds to where they’re needed most
• Influencing national Government strategy
• Strategic partnerships – e.g. with neighboring LEPs

We are always keen to hear your priorities
What can we do more of??
heartofswlep.co.uk

Debt – types and
sources an
overview (do not
forget the
Banks…)
Richard Wadman
Corporate Finance Director
(Richard.Wadman@francisclark.co.uk)

Types of Debt
• Loans and Overdrafts
• Finance secured on assets
• Indexed Linked Securities e.g.
Bonds
See Business Finance Guide pg 18 to 21

Banks: net lending v gross lending
Bank of England, Trends in Lending, January 2015

• Total borrowing facilities
£112.8bn
• £7.9bn of new SME
borrowing approved Q3 2014
• A 13% increase on same Q 2013
• and highest amount since 2011
• Borrowing “broadly based”
across geography and
industry sectors (demand
from ME strong)
But banks are not not lending
Source: BBA Bank support for SMEs – 3rd Quarter 2014

• ‘Net lending’ perhaps not the full story
• Cash deposits increasing as debt repaid
• High approval rates
• Lenders are ‘open for business’ (“truly open”)
• Significant variation in approach/process
But banks are not not lending

Rates and Terms
Source: Bank of England
3.00
3.50
4.00
4.50
5.00
5.50
Jan2009
May2009
Sep2009
Jan2010
May2010
Sep2010
Jan2011
May2011
Sep2011
Jan2012
May2012
Sep2012
Jan2013
May2013
Sep2013
Jan2014
May2014
Sep2014
(%marginoverbase)
SME Lending Rates (BofE)
All SMEs
Small
Medium

Funding For Lending
Banks borrow from Bank of England (using business loans
and mortgages as security)
• Reduces interests rate which Bank borrows at
• The more a Bank lends, the more they can borrow and the
lower the fees on borrowing
• Lower interest rates on Loans (1% discount/ cash back)
• Fees being waived
• Increased competition for ‘good customers’

Enterprise Finance Guarantee Scheme
• Designed for businesses that have been turned down by
lenders due to insufficient security
• Decision making on individual loans is fully delegated to
the participating lenders
• Government guarantees 75%. Borrower pays a 2% per
annum premium
• Lenders entitled to take security, personal guarantees but
prohibited from charge over principal private residence
• Export variant - ExEFG

Regional Growth Fund –
Assisted Asset Purchase
• Funding for purchases of new plant and machinery
• Grant for up to 20% of asset cost for small
businesses, 10% for medium
• Criteria apply – job creation/protected, size and
location
• Limitations of amount per job apply
• Taxable and state aid considerations
Residual funds? Future rounds?

Lending – Alternative sources, including
• CDFI
• New challenger banks
• P2P continues to grow (e.g., P2P business lending up 250%)
• Bonds
• Asset backed (plant & machinery, invoices, stock)
• Many others and ‘new ideas’ – what is appropriate for the situation?
• Capital Market Unions (European Commission project to free up €bn’s
of funding for SMEs)
• Growing Places Fund (example of UK government intervention)

Summary
• Banks/debt lenders are keen – but make them keen for your
business by being properly prepared
• Consider the form and source of funding most appropriate for
your business situation
• Market test your terms and understand if you fit into any
lending ‘schemes’ to save costs

Chris Burt
Fund Manager
SWIG Finance

SWIG Finance
• Who we are
• What we do
• Why we do it
• Alternative funding is nothing new..

“
...a CDFI
“Community Development Finance
Institutions (CDFIs) lend money to businesses
(that) struggle to get finance from high street
banks. They are social enterprises that invest in
customers and communities”
SWIG = the South West’s CDFI
www.swigfinance.co.uk
01872 223883
info@swigfinance.co.uk

SWIG Finance
South West wide
Offices in Truro and Bristol
Investment since 2009 – Dec 2014
Percentages = of total lending by value

Who can we support?
• Start Up and existing SMEs
• Investing in growth or efficiency
• Jobs created or safeguarded
• Can’t access sufficient bank finance

Beran Instruments
• North Devon
• 4 loans for growth
between 1999 and
2006 from SWIG
• Grown from 21 staff
members to 130 with
a turnover £9 million

Stay in touch!
Sign up to our newsletter
www.swigfinance.co.uk
info@swigfinance.co.uk
01872 223883

James Lovett
Business Development Manager
A Business Lending Revolution
An introduction to marketplace lending and how it
can help your business grow

What is peer-to-peer lending?
Traditional lending
Peer-to-peer lending
4

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

The growth of alternative options is creating
healthy competition in the market
6.2
1.1
0
2
4
6
8
Total SME lending by provider
Bank lending Non-bank lending
Estimated 85% of SME lending is through the
five big banks
Source: Project Merlin, Bank of England; Funding Circle analysis; does not include loan secured on property
Bank lending includes lending from the five big banks: Barclays, HSBC, LBG, RBS and Santander
Lending pm, £bn
UK Business peer-to-peer lending (P2B) has
now surpassed £700 million
0
100
200
300
400
500
600
700
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Millions
Other Business p2p lending Funding Circle lending

“71% of SMEs approach
only one provider
of finance”
British Business Bank, 2013
6

A global marketplace needs diversity
41
37k retail lenders
Central government
Local government
Passive institutions
Marketplace
for small
business
loans
Active institutions
Unsecured loans
Secured loans
Depth of lendersBreadth of products
Commercial property
Asset finance

Unsecured Loan
£5k - £200k
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
42
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

Funding Circle loans can be used for almost
any purpose
 Working capital
 Buying equipment or assets
 Deposits for property purchase
 Taking on new staff
 General cash-flow
 Buying stock
 General expansion
Replacing an overdraft
Paying down debt
Refurbishment
Growth – buying a new retail unit
Research and development
Marketing
IT upgrade
43

44
Minimum criteria includes
Limited companies, limited liability partnerships & non limited
Established: trading for 3+ years with at least 2 years of filed
accounts
Directors: A good credit history – no CCJs, CVA, CVL or liquidated
companies within past 6 years. UK resident.
Company: Min turnover £50,000, sufficient P&L strength to service
the additional borrowing. Upward growth trend and no consecutive
losses.
Beneficial ownership in UK
Loan supported by PG

45
How to apply
Apply online or use one of our registered introducers
Application reviewed by our credit team – decisions usually take 48 hrs
1
2
3
4
Your loan lists on our marketplace for up to 7 days for lenders to fund
You accept the loan and we transfer the funds to you
Typically14daysfromapplicationtodrawdown

Thank you
50
James Lovett
Business Development Manager
james.lovett@fundingcircle.com
0203 667 2236

• Quick turnaround
• No lengthy application process or forms to complete.
• For deal sizes of up to £50k - 80% of decisions provided
within 4 hours & over £50k within 48 hours or less!
• Documentation completed for you & payment to your
supplier arranged on your behalf.
Simple Process

Other Advantages
• Annual Investment Allowance of up to £500k available
until 31.12.2015 & other Tax advantages.
• Funding for Lending Scheme – 1% reduction in
published cost of funds (subscribed lenders only).
• Regional Growth Fund “RGF” of up to 20% deposit
contribution towards purchase of business critical assets
(conditions apply).
• “Asset re-finance” - raise working capital against assets
already owned.

• Asset Finance can assist in financing any moveable asset
from Cattle to Caterpillar’s.
• Finance agreements can be tailored to business needs, with
flexibility of terms & repayment schedule.
• Typical finance amounts range from £1k to £1m+
• Security generally taken on the asset alone, depending on
the asset & covenant of borrower.
• Quick & easy to put asset finance in place.
In Summary

Many thanks for your time!
Paul Caunter – 01872247208
www.ignitioncredit.co.uk

Getting
investment
ready
Andrew Killick
Corporate Finance Partner
(andrew.killick@francisclark.co.uk)

Matching requirements
Understand
your
requirements
Understand
funding
options and
funders
requirements
Debt or Equity Risk?

The Readiness Process
• When, why and what funding is needed
• Communicating the business proposition - Business
plan and projections
• Viable plan and credible management
• Building the relationship

Investment ready – housekeeping
• Compliance and Legal
 Licences / contracts/ legal title?
 IPR ownership in the company?
 Statutory Accounts/management
accounts
 VAT, PAYE/NI, Books and records in
order?

Requirements: Grants
• “Project” eligibility – sector, size, location…
• Timescale – prescriptive, process and panels, not
retrospective
• Match funding
• ‘Need for grant’ versus viable proposition
• Other factors - Environment, Equality, on going
requirements

Requirements: Debt
• Serviceability & Headroom
• Security / Personal Guarantees
• Conduits for government initiatives
• Covenants – achievable / appropriate?

Requirements: Equity
• Exit route and returns to the investor
• Investors expertise vs. loss of independence?
• Be prepared to discuss valuation
• Be aware of FSMA regulations

Investor Ready - Conclusions
• Appropriate funding / understand the funder
• Sufficient information for a risk assessment
• Know the ‘deal breakers’ – due diligence
• Build in sufficient time

Raising finance
– where do your
accounts fit in?
Stephanie Henshaw
Partner

Obtaining finance:
Have you made the best of your balance sheet?
Current assets
- Stock X
- Debtors X
- Bank X
X
Creditors due within 1 year (X)
Net current liabilities (X)
Current assets
- Stock X
- Debtors X
- Bank X
X
Creditors due within 1
year
(X)
Net current assets X
Deferred income X
Deferred income
- Grants
- Customer
deposits
- Payments in
advance

Obtaining finance:
Have you made the best of your balance sheet?
Current assets
- Stock X
- Debtors X
- Bank X
X
Net current liabilities (X)
Current assets
- Stock X
- Debtors X
- Bank X
X
Net current assets X
Creditors due after one year X
On demand
finance
• loans from
directors
• inter
company debt
Repayment <
12 months from
year end
Beware bullet repayments of loans falling due within 12 months
- consider early renewal/ replacement

Obtaining finance:
How is your gearing?
• Fixed coupon preference shares,
fixed redemption shares
• Intercompany or director’s loan
where no intention/ expectation of
repayment
• Presented as debt (liabilities) on
balance sheet
• If redemption due within 12 months,
becomes current liability
• Presented as debt on balance sheet
• Consider capitalising into ordinary or
preference shares (no fixed coupon
or redemption obligation)

Obtaining finance:
FRS 102: new rules, new challenges
Changes to net
assets
Additional provisions
Fair values for
financial instruments
Reporting
performance
Fair value
adjustments
Presentation changes
More complex
accounting
Must understand
detail of funding terms

Retaining finance:
Understand your covenants
• Information covenants
• Which accounts are being tested?
• When does the bank need them?
• Financial covenants
• What basis of accounting has been assumed?
• What are your options when the basis changes?
• Which measures are tested and how are they calculated?

Retaining finance:
FRS 102: new rules, new challenges
Existing
covenants, new
accounting rules
New covenants,
new rules
Which is best:
Renegotiate?
Reconcile?
or…?
Needs discussion
Do you understand
how your accounts
will change?
Impact on covenant
test figures?

Break
Session 2 start time
10:10am
#FCFinanceSW

Finance in the
South West 2015
Equity, Grant and
Investment ready “the
reality check”…
Sharon Austen
Partner

Equity - what it
is, why
consider and
sources
Nick Woodmansey
Corporate Finance Associate
Director
(nick.woodmansey@francisclark.co.uk)

What do we mean by equity
• Private equity – investment into shares and debt in operating
companies which are not publically traded
• Venture capital – broad subset of private equity investing into
businesses that are:
• Start up or early stage
• Business expansion
• Deal support e.g. MBO’s

Why equity
• Its all about risk and reward
• In banking terminology – an equity proposition!
• Ambitious growth
• Lack of security
• Lack of track record
• More than just the initial money
• Drive growth
• Mentoring & discipline
• Introductions
• Further capital

Structuring equity investments
• Cash investment made into:
• Shares – majority of the intended return
• Loans – income stream and return of capital
• Required return
• 20 to 40% IRR (annual yield)
• 3 – 5 x cash multiple
• Majority of the equity return is on exit
• Portfolio return is lower

Equity – what does it look for
• Strong management team with a good track record
• Proven business model with competitive advantages
• Good prospects of high growth in value
• Exit route

Sources of equity
• “Friends, Families and Fools”
• Virtual Networks / Crowdfunding
• Angel Networks
• Venture capitalists and Private Equity
• More than 100 providers active in the region

Equity - summary
• Don’t rule it out
• Growth of Crowdfunding
• Equity investors for SMEs are few and far between
• They can be very choosy and invest in very few deals
• There is still an ‘equity gap’ from £250K - £1m
• Be well prepared (in terms of Business Plans, Projections and
internal house keeping).

February 2015
Angel Investment
Philip Tellwright
Chief Executive
SWAIN

Reports of my death have been greatly
exaggerated…
Copyright SWAIN 2013

Changing face of funding sources
Source Platform Black

Market share of the “Crowd”
Source: Beauhurst The Deal 2105/15 Making Sense of UK Equity Investment Public Summary

Seed Crowd Funders v Angel Networks
Source: Beauhurst The Deal 2105/15 Making Sense of UK Equity Investment Public Summary

Ease of doing deals
Simplified Challenging

Visibility in marketplace
Discrete Broadcast Widely

Upper limit on funds available
Smaller Larger

Speed of deal
Weeks 2 Months+

Transaction costs for investor
Lower Higher

Engagement
Low High

Deal documentation
Bespoke Standardized

Deal architecture
Investor /
Advisor
Led
Platform
Led

Valuation
Canny Flexible

Where value is generated
John - 30 investments
• Currently @ 3.5x money
50%30% 20%
Value AddedSelection End Sale

Research into returns
Emerging Significant

Nesta Research 2009 (2)

Key features business angel activity
• Personal – preferably regional
• Confidentiality
• Understand more complicated
businesses
• Add value
• Provide support
• Will follow their money because
of the relationship which has
been established

Crowd plus lead investor

Creating value Fashion goods
April 2013 £150k for 19% (£789k)
£850; £2,140; £3,650
(£167); (£12); £397
Nov 2014 £219k 10.3% (£2,100k)
2.7x in 18 approx. months

Shape is still morphing

Todd Wilson, Investment Analyst

 “Q1 2013 showed the lowest ever level of use of
external finance by SME’s” – SME Finance Monitor, Aug ‘13
 “Access to finance is a “major barrier” to growth for
more than one in five small companies” – FT, Mar ’12
 “Less than one in five SME’s have attempted to
raise finance in the last year – with 40 per cent of
applications rejected” – RealBusiness, Sept ‘13
The problem

 Crowdcube is the world’s first and leading equity crowdfunding platform
giving entrepreneurs a new way to raise investment
 Fully authorised and regulated by the Financial Conduct Authority
The solution

The mini-bond solution
 More than just financial
considerations
 4-5 years trading
 Capacity to engage with tens of
thousands of customers
 £5 million + turnover
 At least EBITDA profitable
 Investment used for tangible growth
i.e. assets rather than restructuring

Success so far
£54 millionfunded so far…
£500,000
largest single investment
+125,000
members
188
£1.9 millionbiggest deal
£3,300
average investment
Successfully
funded deals
£220,000
average deal
Stage of Growth
By Category

Growth
Source: Beauhurst, UK Equity Investment Review 2013, February 2013
UK’s ‘Most Active Seed Investor’ in 2013
Beauhurst report stated Crowdcube has “dominated the
UK equity crowdfunding market since launch and was
responsible for 70% of crowdfunded deals in 2013.”
2012 2013 2014 Growth
Investment £2.2m £12.2 £36m + 195%
Deals 22 54 102 + 90%
Average
investment
£1,800 £2,800 £3,300 + 17%

Why do investors love us?
“Crowdcube is
a breath of
fresh air; it’s a
convenient,
easy-to-use
and makes
investing far
more
accessible.”
Rupa Gantra
Crowdcube Investor

 Leading the transformation of UK investment finance
 No. 1 ‘Seed Investor’ in the UK
 Crowdcube Venture Fund managed by Braveheart
Investment plc
 London Co-Investment Fund
 Enabling business growth on the world’s leading
investment crowdfunding platform
Summary

Todd Wilson
Investment Analyst
todd@crowdcube.com
@todd_l_wilson
01392 241319
www.crowdcube.com

Growth Capital Investors
Introduction to BGF
Ned Dorbin, Investment Director

BGFisaninvestmentfirm
thatprovidesgrowthcapital
of£2m - £10m toUK
businesseswithturnoverof
£5m - £100m.
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

BGF in numbers…
£2.5bn–totalfunds available
£450m –investedtodate
79 – totalcurrentinvestments
60 – non-executivesintroduced
40% –maximum stake
8 – investorsin theBristolteam
8 – UK offices
£5m –minimum turnoverthreshold
3.5–yearsold

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 can offer.
Workingalongsidethe
banks,BGFprovides
growthcapitalina waythat
meetscompanies’needs.

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 can offer.
Workingalongsidethe
banks,BGFprovides
growthcapitalina waythat
meetscompanies’needs.

October 2011
£4.2m
Employee benefits
software provider
Southampton
August 2014
£2.0m
Specialist pharma
group for prescription
and OTC products
Maidenhead
December 2012
£3.5m
Niche developer of
mobile phones for
major brands
Reading
May 2012
£4.0m
Online garden products
retailer
Reading
June 2012
£3.0m
Leading international
supplier of parts for
ATMs
Camberley
September 2012
£5.4m
Technical scaffolding
for petrochemical, oil
and power sectors
Barry
April 2014
£4.0m
Cloud based IT
services to the public
sector
Corsham
December 2012
£7.0m
Design & manufacture
of high composite
pipes for oil & gas
Portsmouth
August 2014
£8.0m
Manufacturer & retailer
of luxury kitchens
Devizes
August 2014
£3.6m
Sustainable energy
business that designs
& installs systems
Tetbury
November 2013
£2.5m
Specialist in millimetre
wave wireless
backhaul solutions for
mobile telecoms
Newton Abbot
August 2014
£6.0m
Furniture retailer with
40 stores across the
UK
Slough
April 2013
£3.9m
Design, manufacture &
distribution of branded
travel products for kids
Bristol
October 2014
£7.0m
IT managed services
and cloud hosting
Cirencester

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

David Armstrong
Corporate Finance Director
(david.armstrong@francisclark.co.uk)
Grants - overview

Structure
• Grant landscape
• What makes a good grant application
• A selection of schemes
• State Aid

2014 – an interesting year
• Two themes:
• Revolving door
• European Programme 2014 – 2020
• Assisted Area Map
• State Aid Rules

Grant sources
• Grant search for general manufacturing business in
SW generated 439 grant schemes
• EU funds
• Regional Growth Fund – c £3.2bn
• UK Government - Growth Deals
• Lottery

Trigger points:
• Job creation (sometimes job safeguarding)
• Capital expenditure
• Other costs
• Location
• Size
• Sectors

Factors contributing to a successful
application…
1. Project
2. Eligibility including State Aid
3. Business Plan (and Financial Projections)
4. Dialogue with fund holders
5. Understanding their requirements: strategic and operational
6. Need for grant
7. Patience/ Completeness
8. Understanding timelines
9. Match funding – seldom 100% intervention and seldom pay in
advance of defrayal

Why do you need a grant advisor?
• Free money but need time
• Technical points:
• De Minimis
• GBER
• Annex 1
• GVA
• Article 17
• Incentive effect

Keeping up to date
http://www.francisclark.co.uk/services/grant-advisory/
http://www.heartofswlep.co.uk/home
http://gaininbusiness.com

Contact details
David Armstrong
David.Armstrong@francisclark.co.uk
07810 056164
David Bullen
David.Bullen@francisclark.co.uk
01872 276477
Richard Wadman
Richard.Wadman@francisclark.co.uk
07854 763049
http://www.francisclark.co.uk/services/grant-advisory/

G R A N T S
By John Hutchings
Plymouth University

• Regional Growth Fund – government funding
to regions to rebalance the economy
• 6 Rounds so far
• Round 1 – Plymouth University bid for a £1M
delegated fund – successful – first University
in UK to pass due diligence
• 2011 – Plymouth University and Western
Morning News Growth Fund born!

RGF Round 1 – PWGF1
RGF Round 2 – PU did not bid
RGF Round 3 – PWGF2
RGF Round 4 – GAIN Growth Fund+ “GGF+” – part of the Plymouth and South
West Peninsula City Deal
RGF Round 5 – North Devon + UBI
RGF Round 6 – PU submitted a £14M bid with SWW, SWMAS and WMN

….results so far
PWGF1
• Awards made 20
• Average grant £46,000
• Total £920,000
• Jobs forecast to be created 85+
• Cost per job £10,824
PWGF2 (….fully allocated…)
• Awards made 41
• Average grant £90,300
• Total £3,705,000
• Jobs forecast to be created 449+
• Cost per job £8,250
……and has unlocked over £9.5M of private sector investment

Geographic Spread of Applications
6%
42%
26%
15%
11%
Submitted Applications
Cornwall
Devon
Plymouth
Somerset
Torbay
13%
43%22%
17%
6%
EOIs Submitted
Cornwall
Devon
Plymouth
Somerset
Torbay
6%
43%
34%
17%
Companies Awarded Funding
Cornwall
Devon
Plymouth
Somerset

180 Expressions of Interest Received
£18M bids for £3M Fund
Geographically well spread
Cross section of industrial sectors
50% + in manufacturing
GAIN GROWTH
FUND+

PLYMOUTH
Interactive Media Sales Ltd*
Absolute Recycling Ltd**
Tooltech Ltd*
Tufcoat Limited*
Seahawk Workboats Ltd*
The Boringdon Hall Ltd*
Pipex*
New Wave Marine Ltd*
Applied Automation Ltd*
Austen Knapman Ltd*
M-subs*
Cornwall Glass*
DEVON (Not Plymouth or Torbay)
Simpleware Ltd.*
Crediton Confectionery Ltd*
Forthglade Foods Ltd*
Exeter Fabrication Ltd*
Westaway Sausages Limited*
Beco Ltd*
Amano Technologies Ltd*
Grey Matter Ltd*
Hansford Bell*
Blackhill (Supacat)*
TORBAY
Investment Casting Systems Ltd*
Interframe Ltd*
Hymid*
SOMERSET
Exmoor Plastics Ltd*
Integrated Data Needs Ltd*
Elecsis Switchgear*
Liz Dove Ltd*
CORNWALL
Kernow Confectionery Ltd t/a
Kernow Chocolate*
St Eval Candle Company Ltd*
Seasalt Limited, trading as
Seasalt*
Keynvor MorLift Ltd**
Hydra*
* Awarded
** Withdrawn

BREAKDOWN
contracted……..
Total Allocated £3,155,341 BIS Targets
New Jobs
Forecast
493 420
Cost per Job £6,400 £6,905
Co-investment £14,219,776 £6,371,000
“Intervention
Rate”
18% 31.28%
..and yes, we have over allocated!

SPREAD
Recipients :
Area Total
Awarded
Jobs
Cornwall (4) £349,642 59
Plymouth (12)
£1,190,112
196
Torbay (3) £358,772 41
Devon (10)
£796,815
124
Somerset (4) £460,000 73

INDUSTRY SECTOR
Sector Amount Jobs %age
Marine £201,827 20 6
IT/Digital £500,628 81 16
Adv Manufacturing £1,281,272 178 41
Environmental £286,090 43 9
(72%)
Food & Drink £418,396 72 13
Retail/
Wholesale
£316,028 59 10
Tourism £151,100 40 5

WHAT NEXT?
NORTH DEVON PLUS - £5M – HotSW LEP ONLY
---- now opened (after 9 months due diligence)
RGF6 BID –
PURE GROWTH FUND £8.8M grant pot – HotSW
and Cornwall&IOS LEPs …… together with
SWMAS – areas as above but also Dorset, and
North Somerset/Bristol/Gloucestershire/Wilts

Forthcoming Regional Growth Funds
• Unlocking Business Investment – North Devon + in partnership with Plymouth
University now open for Expressions of Interest
• Covers Heart of the South West LEP area (Plymouth, Devon, Torbay,
Somerset)
• Fund of circa £5 million
• Grants from £25,000 to £499,000
• To be spent 2015 to 2017
• Direct job creation is key
• Open to SMEs and Larger Businesses

• RGF 6 bid – Plymouth University/SWMAS/South West Water/WMN
• Covers Heart of the South West plus Cornwall and Isles of Scilly LEPs
• ….and also extends to Dorset and North Somerset/Bristol/Gloucs/Wilts
(through SWMAS)*
• Funding of £10M total – conditional approval received from BIS*
• Subject to due diligence*
• Proposed grants £15,000 to £1M to SMEs and Larger Businesses*
• “Extras” ;
o Resource Audits – undertaken with assistance of South West Water
o Manufacturers Advisory project assistance from SWMAS

Further information
GAIN Website
(includes access to Grantfinder) http://gaininbusiness.com
North Devon+ UBI https://s3.plymouth.ac.uk/ubi
John Hutchings 01752 588340 john.hutchings@plymouth.ac.uk
John Lewis 01752 588903 john.lewis@plymouth.ac.uk
Assisted Areas Map 2014 - 2020
http://www.ukassistedareasmap.com/ieindex.html
The SME Definition
http://ec.europa.eu/enterprise/policies/sme/files/sme_definition/sme_user_guide_en.pdf

Grants –
Round Up
David Bullen
Corporate Finance -
Senior Associate
(david.bullen@francisclark.co.uk)

Structure
• Live schemes
• Going Live Schemes
• Support schemes

Grants Round Up – The Schemes
‘Live’
• Cornwall Marine Capital Fund
• Assisted Asset Purchase Scheme/RGF schemes
• Innovate UK – SMART
• GROW: Offshore Wind
Going live
• RGF Round 7?
• Agri & fisheries funds
• Others covered by previous presentations

Grants Round Up – The support schemes
Growth Vouchers - 50% subsidy up to £2k for advice on:
• Managing cashflow, late payments and negotiating finance
• Developing skills and taking on staff
• Improving Leadership and Management
• Marketing, attracting and keeping customers
• Making the most of digital technology

Business Growth Service
UK Trade &
Investment
Strategic
Development
GA Business
Development
Coaching
MAS Strategy
Consulting
Innovation,
Design & IP
GA Growth Through
Innovation
MAS Innovation
Design Mentoring
IP Audits
Finance
Optimisation
GA Access to
Finance
Growth
Showcase
Leadership &
Management
GA Leadership &
Management
Productivity
& Operational
Improvement
MAS Efficiency
Supply Chains
MAS Supply Chains
Closely linked to:
UK Export
Finance
British
Business
Bank
Innovate UK Growth hubs
Connectivity
GrowthCommunity
MAS – Product and Service offering for clients

UKTI
Support to........
• Develop an export strategy – Passport to Export, Gateway to Global
Growth (12-month programme with ITA)
• Undertake market research (including identifying potential partners) –
EMRS (upto 50% match), OMIS (subsidised)
• Visit & develop new export markets – MVS (No current funding)
• Improve international communications: website, email, languages &
culture – ECR (subsidised)
• Exhibit overseas – TAP (£1,000 to £2,500)
• Carry other marketing and sales development activities - European
funding (ERDF) (new programmes have not yet been contracted)

State aid and the South West
Marc Shrimpling
February 2015

DO I NEED TO THINK ABOUT STATE AID?

STATE AID – THE RATIONALE
• To prevent governments from unjustifiably protecting local or national industries from
fair competition
“State aid control comes from the need to maintain a level playing field for all
undertakings active in the Single European Market”
• Positive benefits of State aid – if invested prudently
• Targeted use of public funding can help deliver important macro-economic
objectives: (i) green energy; (ii) thriving SMEs; (iii) incentives to innovate and
engage in R&D; (iv) supporting disadvantaged sectors, regions and groups “…
investing in the right projects in the right places at the right time”

KEY LEGAL IMPLICATIONS OF STATE AID
• Unlawful State aid must be repaid (with interest)
• Third parties may seek injunctive relief and/or damages from the UK courts
• Risk of investigation:
• reputational damage
• diversion of management time
• potential exclusion from public procurements

OPTIONS FOR MANAGING STATE AID
‘State aid’?
De Minimis?
GBER?
Existing scheme?
Specific sectors?
6. Notify?

TWO PRACTICAL TIPS
1. Always think “State aid” early
• A five-minute call can prevent weeks of travelling down dead ends
• The earlier we think about State aid, the more options stay on the table
• Spotting opportunities – not just flagging problems
2. Don’t assume that awarding bodies know best
• Leipzig-Halle – paradigm situation of public bodies becoming over-cautious
• At some point, the onus will be on aid recipients to self-assess
• Can we get a more favourable/robust view from another source?

Contact details
Marc.SHRIMPLING@footanstey.com
Mobile: 07817 121018

Investment
Ready: the
reality check
Andrew Killick
Corporate Finance Partner
(andrew.killick@francisclark.co.uk)

A view from the funders position
Would you fund a proposal if it:
x Contained errors and key omissions?
x Positioned poorly?
x Appeared to be a low priority?
What would your perception of management be?

Are you entitled to receive funding?
• In short - “No”
• Growing competition for limited resources
• Increasing consideration of risks
• A great idea presented badly often fails to raise
funds
• Even if presented well it needs to be backed up
by delivery

Examples
We see a wide range of proposals where:
 Balance sheet doesn’t balance/ cashflow
doesn’t add up!
 Over ambitious
 Lack of narrative/ detail
 Unclear funding requirement
 Poor MI
 ‘just an idea’
 Lack of ownership

What can you do?
 Get the basics right!
 Fit for purpose
 Clear on funding requirement
 No surprises when a reader gets to the projections
 Step back - challenge the assumptions
 Seek a ‘cold review’

Benefits of a well presented plan
• The better presented the higher the chances of
success
• Competitive process = improved funding terms
• Increases focus on the strategy and will gain
‘board buy in’
• Identify real business risks to address

“You are often trying to persuade a stranger
to give you somebody else’s savings…”

Break
Session 3 start time
11.45am
#FCFinanceSW

Finance in the
South West 2015
An SME perspective,
Business support and
closing address…
Sharon Austen
Partner

Building partnerships through creative solutions
EUROPE’S LEADING AVIATION
SERVICE PROVIDER
Case Study – JMC Group
Hollie Crook – Head of HR & Payroll

SERVICE PROVIDER

EUROPE’S LEADING AVIATION SERVICE
PROVIDER
Who do we support?
95% of our clients are supported on a sole supplier basis, including the following
organisations;

JMC – A Global Presence
 Europe - Austria, Bulgaria, Denmark , Estonia,
Germany, Greece, Holland, Hungary, Italy, Lithuania,
Malta, Republic of Ireland
 Africa – Botswana, Kenya
 Asia – Australia, China, Indonesia, Philippines, Taiwan
 South America – Peru, Bolivia
 North America - Canada
UK Offices
Liverpool
Cambridge
BasingstokeExeter & HQ
EUROPE’S LEADING AVIATION SERVICE
PROVIDER
Non-UK Offices;
Malta
Budapest
Puerto Rico (Opening 2015)

SERVICE PROVIDER
The Journey so Far
• Turnover
• Contractor Numbers – Av 50 per wk in 2008, Av 1000 per wk
in 2015
• Total Employees – 4 in 2008, 45 in 2015
• ISO 9001 – Supported growth in Europe
0
10
20
30
40
50
60
70
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8
(exp)

SERVICE PROVIDER
Funding & Business Support
• Invoice Discounting – Main source of funding
• Francis Clark – Advice on funding, guidance and support with
expansion and advice on business with non UK companies
• Skills Shortage - Tier 2 Sponsorship
• Apprenticeships/Transition Course
• Paint Hangar – Support only in Enterprise Zones, facilities not
readily available elsewhere in UK

SERVICE PROVIDER
Reflection
• Sufficient insurance for customer debts, to ensure limited
disruption to cash flow if payment terms are not met
• Funding Limits – Growth quicker than expected
• Permanent Recruitment – Expanding range of services to
reduce risk

SERVICE PROVIDER
The Future
• Expansion – Asia, Middle East, US & Caribbean

SERVICE PROVIDER
The Future
• Local Community – Apprenticeship & Exeter City FC
• Continue 100% customer retention
• Achieve CAA accreditation
• Opening of Paint Hangar

SERVICE PROVIDER
Thank you

Introduction to
GrowthAccelerator,
Access to Finance & the
For: Francis Clark – Finance in The South West
Date: February 25th 2015
Region: South West

Growth Accelerator,
Manufacturing Advisory Service
(MAS), Intellectual Property
Audits and Design Mentoring
have integrated to become the
Business Growth Service.
The service provides tailored business support to
small and medium sized firms with ambition and
potential to grow.
Throughout their journey, participants will have a
single point of contact with the Business Growth
Service with export support being provided by UKTI
and UKEF. The service is closely linked to
InnovateUK and the British Business Bank.
What is the Business Growth Service?

GrowthAccelerator – Access to Finance
• GrowthAccelerator delivers through 3 main streams
– Business Development Coaching
– Growth through Innovation
– Access to Finance
All of which provide a blend of
• Business Coaching, supported by
• Workshops and Masterclasses
With access to matched funding for Leadership &
Management training
• Government backed and makes a financial contribution

The Business Growth Service Mission
Our vision
We are the trusted growth partner
for businesses with growth
potential.
We work with them to identify and
overcome barriers and act in their
best interests, bringing
identifiable
and quantifiable value to each
stage
of their growth journey.
We are the place to go to grow.
Our mission
To deliver the right support at the
right time and help small and
medium sized firms to reach their
growth potential.

GrowthAccelerator - Access to Finance
• How to improve your company’s readiness for
investment or funding
• Gain an understanding of who to contact about
sources of potential finance
• Build a strong management team with match
funding for Leadership and Management
training
How your business will benefit

• Learn from top specialists about raising finance
• Access to investors and legal specialists
• Through peer-to-peer learning benefit from sharing
ideas and experiences with other delegates
• Build knowledge & expertise and get more from
your one-to-one coaching sessions
How the Masterclasses will help
you

GrowthAccelerator – Access to Finance
• Understanding Finance
– Gain a better understanding of the advantages and disadvantages
of different types of external finance
• Preparing for Finance
– Prepare your business plan and craft a strong ‘pitch’ to increase
chances of success in accessing finance
• Closing the Deal: Legals & Valuation
– Help and guidance on how to proceed when you get an offer for
finance
What Masterclasses are
available?

• Bank won't support with any funding requirements
• Want an investor who will bring in expertise and
contacts
• Haven't had to raise finance before - what are the
options?
• Bank wants to factor – is it the best option?”
Many reasons for seeking
funding

Access to Finance – Product & Service
Eligibility
• SMEs only - fewer than 250 employees and
less than £40m turnover
• Ambition to double in turnover, profits or
employees in 3 years
• Registered in England
• Independently owned
• Any sector

Access to Finance – Designed for you
1. This is a Selective Service - for the suitable and eligible
2. It is specific, designed to address your business challenges
3. It is the UK Government Investing in High Growth
Businesses, delivered by a consortium of private sector
partners
4. It uses commercial, experienced coaches (800 across the
country – 200 specialist Access to Finance)
5. The service is focused on Results

Access to Finance – So far
1. GrowthAccelerator worked with over 18,000 high
growth businesses across England
2. Raised finance for a wide range of companies in the
South-West – ranging from: traditional debt, invoice
finance, asset backed RDF, matched funded TSB,
angel (traditional and crowd), funding circle and VC

For more information:
Rob Edwards
Business Growth Manager
Access to Finance South West
r.edwards@oxin.co.uk
07841 920902

Access all Areas: Tools to help your business
innovate and grow
The Growth Acceleration
& Investment Network
25th February 2015

SME engagement - the University
challenge
“Universities have an extraordinary potential
to enhance economic growth…from local
SME support and supply chain creation to
primary technology leadership and
breakthrough invention”
“Universities should assume an explicit
responsibility for facilitating economic
Growth”

Plymouth University - Our mission
– - build and sustain connections with local,
national and international partners to
enrich our academic experience.
– - raise aspiration amongst groups under-
represented in higher education
– - provide opportunities for our students,
staff and the communities we serve
through economic development, social
inclusion, community outreach and
strategic partnerships.

Creating innovation environments
GAIN Innovation
Science Park
Innovation Centres
Formation Zones

Driving Innovation through talent
GAIN Talent
Employability
gateway
KTPs
Internships

Funding Innovation
Grant Programmes
Innovation vouchers
GAIN Finance
Grant programmes
Crowdfunding
Investor readiness

Phantom Sports Boats – A
Collaborative Case Study
Pre-incorporation
Plymouth
• IP guidance
• Organisational Needs Analysis
Brokerage
Falmouth & Bristol
• Falmouth Marine School
•Bristol Composite Gateway (ERDF)
• Demonstrator produced
Incorporation
Plymouth
• New enterprise created
• IP agreement with FMS
• New product

Finding solutions
Business Engagement Service
A free phone / e-mail based light
touch diagnostic, signposting and
referral service for any business
0800 073 2020
www.gaininbusiness.com

www.british-business-bank.co.uk
@britishbbank
British Business Bank
Programme
25 February
Andrew van der Lem

@britishbbank
How we operate

@britishbbank
How we operate II

@britishbbank
Focused funding in the market
Start-up Scale-up Stay StrongSegment
Need Mentoring and funds
to “be your own boss”
Funds for high growth
potential
More funding options
and choice of provider
Start-up loans Angel Co-Fund
Investment
Programme
• Focus on
• Outcomes not
volume
• Economic and
social return
• New funding structure
• Multiple delivery
partners to be close to
the market
• Startuploans.co.uk
• £100m funding
• Supports syndicates of
angel investors
• Angelco.co.uk
Venture Capital
• 17 funds in the market
• British-business-
bank.co.uk
Growth Loans
• Clear market gap shown
• RfP for pilot to be
announced around budget
• £250m of awards to new
platforms, debt funds
and asset based lenders
Enable
• Capital focused guarantees
to grow small bank lending
• Capital markets funding for
smaller asset based lenders
Enterprise Finance
Guarantee
• Guarantees to extend
banks’ risk appetite where
security is weak

@britishbbank
The business finance guide
The Business Finance Guide
shows the journey from
start-up to growth.
Devised for businesses and
advisers by the British
Business Bank and the
ICAEW Corporate Finance
Faculty
Supported by a further 17
major professional,
membership and
representative
organisations.

@britishbbank
The finance journey

@britishbbank
Working together

@britishbbank
Credit data

@britishbbank
Our delivery partners
218

Structure of morning
• Background, Debt and Investment ready
(8.30am to 9.50am)
• Key note speaker
• LEP and SME
• Debt and Investment ready (part 1)
• Equity, Grants and Investment ready
(part 2) (10.10am to 11.25am)
• An SME perspective, business support and
closing address (11.45am to 1pm)
• Q&A one to one / Networking (1pm to 2pm)

Presenters: thank you
…and many more

Finance in the
South West 2015
Thank you
and please network
Sharon Austen
Partner

(c) copyright Francis Clark LLP, 2015
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To the maximum extent permitted by applicable law Francis Clark LLP excludes all representations, warranties and conditions (including, without limitation, the conditions implied
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