Presentations - Finance Options in a Dynamic Environment 28 February 2019

1. Let’s Talk Business
Support for businesses through Brexit
28th February 2019
Invest N.Ireland Seminar

2. Let’s Talk Business
2
The finance industry is ready to support business customers through any Brexit uncertainty
over the coming months and the potential opportunities over the medium term.
We want to give reassurance to businesses and confidence that banks retain the capacity
and commitment to support viable firms.
All UK (& NI) Banks are well capitalised. They want and have the funds to lend. They will want
to protect their franchises and customer bases.
Let’s Talk Business (www.ukfinance.org.uk/lets-talk-business)
• Let’s Talk Business – to highlight the financial support available to business and let them
know where to turn for information.
• The campaign will encourage businesses with changing financial needs to approach their
lender as early as possible to discuss the support that is available to them.
Support for businesses as the UK prepares to leave the EU

3. Let’s Talk Business
3
The finance industry is here to help, so, Let’s Talk Business.
 Take time to think about how your customers and suppliers could be affected by
any upcoming changes. The sooner you do it, the easier it is to be prepared.
 Ask you bank early on if you think you might need some additional finance.
There’s plenty of support available and it can be quicker and easier than you
might expect.
 Look into alternative finance options. Most applications are successful, but if
your first choice doesn’t work out, there are many different providers to pick
from.
 Know where to go for more information to help your business. Whether you’re
looking to export for the first time or wondering how to manage changes to your
supply chain, start by visiting www.ukfinance.org.uk/letstalkbusiness.
Support for businesses as the UK prepares to leave the EU – Key messages

4. Let’s Talk Business
4
Key Risks and Considerations
Food & Beverage Industry
Key Risks
 Lack of EU Trade Agreement – 60%
exports-worth £22 billion- to the EU.
30% of UK food imports from EU
 Supply of Labour – Industry is heavily
reliant on migrant workers from the EU
 Supply chain disruption – complex
and time consuming customs checks
Key considerations
• Critical Path issues
• Weakest link in supply chain
• Impact of Tariffs
• Interventions:
• Funding & financing
• People exposure
• Hedging – FX, Forward contracts
Agriculture Sector
Key Risks
 Lack of EU Trade Agreement – The UK is
60% self sufficient in food. 25% of UK
Agriculture produce is exported, and 70% of this
goes to the EU, and would be subject to EU
Tariffs in the event of a “no deal”.
 70% of all food imports are from the EU.
Indications from UK Government are that in the
event of “no deal” they may allow EU food
imports to continue unfettered, to maintain
domestic supply and contain Inflation.
 Supply of Labour – parts of the industry are
heavily reliant on migrant workers from the EU,
particularly fruit and vegetable growers.
 Subsidy Reductions – existing Direct Subsidy
payments are be phased out in the period 2021
– 2027, and detail on the quantum and nature of
“replacement” schemes is lacking.
Key Considerations
• RAG assessment on the basis “No Deal – no
Import Tariffs”
• Agricultural Land Values (Impacts on loan
security ?)
• Foreign Exchange

5. Let’s Talk Business
5
Customer Challenges and Impacts
Stocking/Inventory:
•Working Capital
•Financing Options
•Perishable goods/ need for enhanced
storage capacity
•More onerous Terms of Trade
•Border delays
1
2
3
EU Labour Force
• Skilled vs Unskilled
• Automation(Asset Finance)
• Wage costs/Availability
• £Weakening – input cost inflation
Exchange Rate Risk
•£ Weakening v. $ / € - input cost inflation
•Passed on to Consumer / impact on
disposable income & Confidence
Tariffs & Customs Duties
• WTO
• Regulation
• Increased bureaucracy and process (estimated
5x fold increase in volume of customs
documentation)
4
5
6
Border processes for cross
jurisdictional supply chains:
•Wait times & congestion
•Documentation risks
•Capacity impacts of ‘standing’ fleet
Contractual uncertainty:
•Access to product
•Remains significant pending Brexit clarity
•Planning & Forecasting

6. Let’s Talk Business
6
Working with your Lender
1
2
3
4 Do’s and dont’s of working with a lender
-approaching the bank early/timing
-what the bank will look for ?
-how to get your lender on your side ?
-balance of prudence and realism
-what not to do /say ?Debt Funding for business
- OD, Invoice Finance for working capital
- Term Loan, Asset Based Lending, Leasing/ HP
- Supply Chain Finance, Export Finance
Choice of Provider
- Banks, Specialist providers, P2P Lenders
Scenario Planning
- Impact Assessment (working capital !!)
- Role of Professional advice/support
- Realistic cash flow projections/stress tests

7. Let’s Talk Business
Key message
The finance industry is ready to support
business customers through any Brexit
uncertainty over the coming months and the
potential opportunities over the medium term. 7

8. • Author
• Date
Joel Callaghan
February 2019
Close Brothers
Invoice Finance
Invest NI – 28 February 2019
Finance Options in a Dynamic Environment for
Food and Drink processing businesses

9. Established in 1878, we believe our traditional merchant banking values, based on service and integrity, continue to be relevant today
• Specialist financial services group listed on FTSE 250 with a market capitalisation of c. £2.3 billion1
• More than 3,200 staff, principally in the UK
• Moody’s Aa3 rated
• Close Brothers Commercial Finance in Ireland – funding for SMEs
• Established 2008 – Invoice Finance in offering only in NI (Belfast office)
• December 2010 – Asset Finance product offering added
• November 2011 – Expansion into RoI with opening of Dublin office
• 2013 – Roll-out of Asset Based Lending (“ABL”) offering
• Y-O-Y Growth (financial performance and headcount)
•Modern Merchant Banking
Close Brothers
Notes:
1 At May 2018

10. Invoice Finance
Invoice discounting
Factoring

11. Asset based lending (ABL)
Benefits
• Flexibility – funding that is tailored
• Higher amounts of funding – supports growth
• Suitability – appropriate for a variety of
business needs
• Cost-effective – improve working capital in line
with business growth
• Works alongside our invoice finance solutions
• Releases capital within plant, machinery, commercial
vehicles, property or stock
• Top up cash flow finance is also available in some
instances
• Designed for larger businesses
• Used to fund events such as MBOs, mergers,
acquisitions or for financial contingency

12. Case studies

13. Brighton Gin video case study

14. Invoice discounting facility helps business
grow
Our customer
Existing customer in the logistics and storage sector whose turnover had grown three-fold in 2 years
Business challenge
• Identified an opportunity to expand into different sector
• Need a steady level of cash flow at all times to plan ahead and to ensure delivery for their new customers
• Complicated – business had only recently recovered from a difficult trading period following a loss
The solution
Close Brothers worked with the customer to ensure that the proposal was structured correctly, and ultimately doubled
existing invoice discounting facility to £3.5m. The benefits include:
• The business is confident that funds will be available as soon as an invoice is raised
• Increased working capital has allowed the accelerated growth plan for the business to go ahead as planned
• Business and finance support from a dedicated account manager/single point of contact in Close Brothers
The result
“With the traditional banks it tends to be very fixed rules, not taking into account the day to day requirements of the
business. I found Close Brothers to be much more real world.
Invoice discounting helps the business by giving us consistent streams of money into the business. We’re not having
to make credit control calls, waiting for a customer who may have promised money on a particular date and it comes
in a week later. I know those funds are going to be there later so it makes planning the cashflow a lot easier.”
M.D.

15. ABL finances leveraged MBO
Our customer
FD acquiring a longstanding profitable business, which was non-core part of a larger Group.
Purchase price £1.3m, £250k approved ledger, Sell & forget
Business challenge
• The vendor taking much of the net worth out of the business on acquisition (£1m of cash/assets)
• FD has nominal net worth/limited cash available to meet the outstanding balance (£300k)
• Solution required to generate capital for both acquisition and working capital needs.
The solution
Close Brothers took time to consider the business and its requirements and worked with the FD/their adviser to
design a flexible, bespoke package to meet these requirements, which included a £200k ID facility with and an
additional £50K cashflow loan to complement a £100k deferred payment to the vendor. This provided higher levels
of funding than invoice finance alone, allowing the business to thrive post acquisition.
The result
The combination of invoice discounting and Liquidity Plus loan gave the company more security in both the
immediate and longer term. The invoice finance facility gave the business working capital for everyday expenses,
whilst the liquidity plus loan enabled the FD to complete the acquisition without further demands on the day to day
cashflow of the business.

16. • Appetite to fund complete business cycle from start up to £30m funds out
• UK and Ireland-wide Sales force provide easy access to SMEs, and face to face support
• Quick decision making with local credit authority
• Experienced Client Managers offer first class support and advice
• Unique IDealTM system giving clients lower workload and real time processing
• Full ABL Capabilities and expertise
• UK Best Factoring and Invoice Discounting Provider for 5 consecutive years 2014-2018 –
Business Moneyfacts Awards
Close Brothers Invoice Finance

17. LENDING │ DEPOSITS │ WEALTH MANAGEMENT │ SECURITIES
• Close Brothers Invoice Finance
• Centrepoint, 24 Ormeau Avenue
• Joel.Callaghan@closebrothers.com
• 07894 810 371
• Jane.McDaid@closebrothers.com
• 07717 660 351
• www.closebrothers.com
• Belfast, BT2 8HS

18. Credit Insurance
28th February 2019
Finance Options in a Dynamic Environment for Food and Drink
processing businesses

19. •
19Document Title - Name - Function - Business Unit DD/MM/YYYY
Atradius – Who Are We?

20. 20
Economic Outlook 2019
20
• Global – Global economic growth is expected to have peaked in 2018 at 3.0% and to ease to 2.8% in 2019. Tightening global
monetary conditions, fading US fiscal stimulus, and increased volatility in financial markets are driving the slowdown.
• Eurozone – GDP growth is likely to decelerate to 1.6% in 2019, as stronger import growth results in a negative contribution
from net trade.
• Advanced Markets – Growth in the US is likely to lose some steam in 2019, as downside risks increase from trade and
monetary policy. Growth in the US is likely to recover somewhat in 2019, but remains vulnerable to Brexit developments.
• Emerging Markets – Economic growth in emerging markets is supported by solid global demand, but trade tensions between
the US and China and policy rate hikes by the US central bank continue to cloud the growth outlook.
• Credit and insolvencies – The global insolvency outlook remains benign, but the level of insolvencies is expected to stabilise
near current levels in 2019.
Broker Briefing 2019
1 Tradewarproliferation Tradewarbetween USand Chinaextendsto EU Severeconstraintson globaltrade m oderate high
2 Misguided Fed policy
Financialm arketturbulence,flowsto em erging
econom iesplum m et
Tightercreditforfirm sin em erging econom ies;debt
serviceissues
m oderate/low high
3 Financialm arketcorrection
Strong,rapid and sustained correction on equity
m arkets,nottriggered byrisk1-2 or4-6.Can be
reinforced ifinvestorsbecom em oreriskaverse.
Fallin confidenceaffecting spending.Negativewealth
effectshouseholdsaffecting consum ption in theUS,
with globalim pact,epeciallyifinvestorsbecom em ore
riskaverse.
low/m oderate m oderate
4 Geopoliticalrisk
European politics:Italy,hard Brexit.Increasing
tensionsin MiddleEast,especiallybetween Saudi
Arabiaand Iran.
European politics:Italian yieldsm uch higher,m uch
lowergrowth EZ;hard Brexit:2019 growth depressed
in UK and EU.MiddleEast:Loweroilproduction and
GDP,oilpricevolatility,fallin confidence.
low/m oderate m oderate
5 Oilpricevolatility
Lagging oilindustryinvestm entswith strong dem and.
Pressureon oilpricestocks.
Uncertaintyaffectsconfidence,especiallyfirm s.
Unexpected swingsin inflation.Lowerinvestm ent.
low/m oderate m oderate
6 Chinahard landing
Unstablebanking sector,creditconstraints,
acceleration capitaloutflows,pressureon currency
Financialm arketvolatility,spill-overinto dependent
em erging econom ies
low m oderate
Risksto the globaleconom icoutlook
Source:AtradiusEconom icResearch
Risk Sym ptom s Effects Probability Im pact

21. •
21Broker Briefing 2018
Brexit

22. • Challenges
• Delays could hit products being shipped via Britain but bound for other EU countries in an scenario where the UK and
Europe do not operate within the same customs regime. This could have particular implications for products with
shorter shelf lives.
• If the EU and UK were to operate different tariff structures, then that could hit Irish food and drink exports to Britain,
primarily by driving up their cost
• Regulatory Alignment - Any divergence from the EU food safety regime could constitute a reduction in protection of
UK consumers and could therefore open the UK up to inferior, lower cost imports. Irish exporters might have to
satisfy different standards thereby increasing costs.
22Document Title - Name - Function - Business Unit DD/MM/YYYY
Food

23. • Challenges
• Hard border between ROI and NI causes delays and cost implications
• Currently, around 80 percent of all Irish goods exported to Europe travel via the Channel Tunnel between England
and France. Irish hauliers have warned new routes around UK would almost treble transit times resulting in food
spoiling before it even reaches the Continent. Already the 2 main Irish shipping lines have announced new ships and
routes to Europe.
• Skills needs and potential shortages after Brexit particularly in customs procedures.
23Document Title - Name - Function - Business Unit DD/MM/YYYY
Transport

24. •
24Document Title - Name - Function - Business Unit DD/MM/YYYY
Atradius Claims Experience in UK

25. •
25Document Title - Name - Function - Business Unit DD/MM/YYYY
Atradius Claims Experience in
Republic of Ireland

26. • Atradius exposure to Northern Irish companies totalled €1.12BN as at December 2018
• We insure sales on more than 3,000 separate businesses with 9,000 separate credit limits
• Our top 5 trade sectors are
• Food including food retail (22%)
• Construction (13%)
• Agriculture (12%)
• Fuel & Transport (11%)
• Chemicals (9%)
26Document Title - Name - Function - Business Unit DD/MM/YYYY
Northern Ireland & Atradius

27. • The number of claims paid on NI companies increased by 80% between 2017 and 2018.
• The value of claims paid on NI companies increased by 450% between 2017 and 2018.
• The average claim payment in 2017 was €28k; in 2018 it was €79k.
• 7 of the top 10 claims were in the construction sector
27Document Title - Name - Function - Business Unit DD/MM/YYYY
Northern Ireland & Atradius

28. Compiling Information
 Atradius Database (Buyer Ratings)
 Information Providers(Experian, Graydon, D&B etc.,)
 Companies House (Statutory Filing Requirements)
 Directly Sourced Information (Buyer Meetings, Calls)
 Our Policyholders (Payment History)
 Internet (Press Articles, Company Websites)
Title of Presentation, Date, Name of author/unit 28
How we underwrite

29. Assessing the risk
 Type of buyer (Sole Trader, Limit Liability Company, Unlimited, PLCs)
 Annual Accounts (P+L, Balance Sheet, Cash Flow)
 Management Accounts (Open dialogue is key)
 Sector Knowledge
 Macro and Micro Economic Factors
 Country Rating/Political Risk
 Banking Facilities/Support
 One to One Visits.
Title of Presentation, Date, Name of author/unit 29
How we underwrite

30. Title of Presentation, Date, Name of author/unit 30
How we underwrite

31. Fraud – on the increase
Title of Presentation, Date, Name of author/unit 31

32. Fraud – on the increase
Title of Presentation, Date, Name of author/unit 32

33. Title of Presentation, Date, Name of author/unit 33

34. •
34Document Title - Name - Function - Business Unit DD/MM/YYYY

35. CREDIT RISK BROKERS
Be Sure.
Insure.
28th February 2019

36. • Founded in 2011 by recognised Credit Insurance professionals
• Serve businesses across Ireland and UK from offices in Belfast and Dublin
• Founding member of the global Farosol network of leading brokers
• Industry knowledge, professional reputation, quality service
• Strong industry relationships with all Insurers…
Credit Risk Brokers

37. Our Global Network
In 2016, over 400,000 per day was paid out to UK companies under Credit Insurance policies.
The following year, The Insolvency Service reported that 17,000 companies went into liquidation.
In Q1 2018, underlying insolvencies climbed 13% from the previous quarter. Don’t be part of the statistics in 2019.
CRB has the network to tailor and manage the best policy for your company.

38. • Credit Insurance protects the money due to a supplier of goods or services sold on
credit
Credit Insurance is protection against the non-payment of
invoices issued on credit terms due to insolvency or
default.
It helps your business to:
• Protect balances due on outstanding invoices
• Minimise the risk of bad debt
• Reduce the administrative burden
• Win favourable bank terms, trade finance
• Give confidence to your suppliers
• Improve cashflow
• Explore new markets, improve competitiveness
• Increase profitability
• Grow and trade with confidence
What is Credit Insurance?

39. • A strong performing sector, aiming to increase turnover to £7bn by 2020 by export led growth (NIFDA)
• The largest contributor to sales and employment within NI manufacturing
• Every direct job in a member company generates at least 3 more in supply chain
• 100k jobs: employing 22,000 directly and 78,000 more in farming and support services.
CREDIT INSURANCE CAN HELP TO CONSOLIDATE AND FUTUREPROOF YOUR COMPANY AND YOUR
SECTOR
NI Food & Drink : A Strong Sector in Uncertain Times

40. Trade Characteristics/Risks in your Sector
• Tight margins
• Fluctuations in supplier/commodity pricing
• For some, exposure with over-reliance on a single or few customers
• Retailers ‘squeezing’ suppliers on price and slow payment
• Competition
• Changes in consumer tastes and expectations
BREXIT: Uncertainty and Possible Challenges
• Duties and tariffs, especially given strong export focus for NI food sector
• Supply Chain, logistics and movement of stock (cross-border)
• Cost effective labour
• Changing credit terms
• Market intelligence / Customer Analysis
• .. and perhaps the biggest risk of all ..
Challenges to Trade in Your Sector

41. • Over a quarter of UK companies have been hit by the domino effect of another company’s insolvency in
the last six months (The Association of Business Recovery Professionals - R3)
• Hotels, restaurants, retailers and retail chains all bring their own risks
• NI companies in the food supply chain include producers, manufacturers, suppliers, processors,
distributors, many supplying each other.. The domino risk is very real!
… Insolvency & The Domino Effect

42. • Do you overly rely on a single or a few customers, suppliers or partners?
• Do you have up to date credit information on all current and target customers?
• Has your company a robust credit management and risk mitigation system in place?
• Is your business strong enough to survive in the event of recurring bad debts or insolvency of a key
customer?
• Is your own house in order?
• Have you checked your own credit rating?
• Given the above, could your business benefit from credit insurance?
FOOD for Thought: Have You an Appetite for Risk?

43. ARE YOU PREPARED TO GAMBLE THE
FUTURE OF YOUR BUSINESS?
Take the first steps to protect your
business with
Credit Insurance.
CRB are offering every attendee
FREE assessments of your 10 key
buyers.
 AVOID BAD DEBT
 PROTECT YOUR BUSINESS
 REDUCE RISK
 IMPROVE PROFITS
 TRADE CONFIDENTLY
BE SURE. INSURE.
Today’s Message: Protect, Facilitate & Increase Trade

44. WhiteRock Capital Partners LLP
Invest NI – Food & Drink event
28th February 2019

45. Access to Finance

46. Funds Status
Closed - £55m fully committed. Final
investments made September 2018
Growth Loan Fund II – GLF
successor fund, part of INI Access
to Finance
£30m fund
Targeting NI based SMEs
Investments £100k - £500k
“Growth Finance Fund”
£30m fund
Targeting NI based SMEs
Investments £500k - £2m
Growth Loan Fund I – Previous GLF
fund, part of INI Access to Finance
£55m fund
Targeting NI based SMEs
Investments £50k - £1.25m
Actively investing – investment period
commenced 1 October 2018
Actively investing – investment period
commenced 30 November 2018

47. What we have done

48. Deal examples
£1,000k
£ 1,000k
£600k
£675k
£500k£ 1,500k
£ 2,000k£ 350k
£ 1,250k
£ 750k
£1,250k
Strand Hotel - £1,000k
£ 2,000k
£ Undisclosed
£ 250k
£ 750k

49. Complimentary Funding

50. Use of Funds

51. • £30m Growth Loan Fund II lending approx. £6m per year over a 5 year period
• Funding provided by Invest Northern Ireland through ERDF funding
• Loans between £100k and £500k per transaction, over 2 - 7 year term with repayments generally on monthly amortising
basis with some ability for interest only periods and partial bullet repayments
• Can provide loans up to £1.5m subject to INI approval
• Pricing dependent on risk assessment of each company but generally interest rates of between 6%-8% (including cost of
funds), plus an annual fee
• Loans will generally be provided on an unsecured basis, however appropriate security may be sought
• Complimentary to existing sources of finance including banks, trade finance and equity
• Requirement for a business plan and up to date financials to progress and company must demonstrate ability to service the
loan repayments

52. • £30m Growth Finance Fund lending approx. £7.5m per year over a 4 year investment period
• Funding provided by The British Business Bank, Invest NI and NILGOSC
• Loans between £500k and £2m per transaction to fund growth
• Loans will be provided on a flexible basis to include an expected term of 2 -7 years
• The loans will typically be provided on an unsecured basis, however second ranking charges or
appropriate security may be sought where relevant
• In addition the fund will retain the ability to provide capital and/or interest moratoriums and partial
bullet repayments to align with the funding request
• The Fund will also be able to support transaction related opportunities– this will come with certain
restrictions in relation to overall funding structure and the level of new capital being invested
alongside the Fund

53. WhiteRock Team

54. Disclaimer
Nothing in this presentation is intended to constitute a
financial promotion for the purposes of section 21 of
the Financial Services and Markets Act 2000. In
addition, nothing on this presentation amounts to a
personal recommendation or advice on the merits of
any transaction or service. WhiteRock Capital
Partners LLP is not therefore responsible for providing
you with protection afforded to its clients and you
should seek your own legal, investment and tax
advice before acting on anything contained in this
presentation. This presentation has been issued by
WhiteRock Capital Partners LLP which is authorised
and regulated by the Financial Conduct Authority.

55. Patrick Dewar – Invest NI

56. Overview
• NI Small Business Loan Fund background
• Lending ranges & Interest rates
• Financing needs supported by the Fund
• How to find out more information

57. NI Small Business Loan Fund
• £8m loan fund for NI based SMEs and micro enterprises
in the start-up or growth phase of development
• Over 400 businesses supported since the launch of Fund
I in April 2013
• Can help bridge a gap where your business has been
unable to access mainstream finance.

58. Key Features
• Loans range from £10k to £100k
• Start-ups (businesses trading for less than 2 years) can
apply for up to £15k
• Interest rates typically range from 6% to 8% (APR c11% to
15%)

59. What can finance be used for ?

60. What finance providers will not
support
1. HMRC debts
2. Finance losses
3. Businesses in distress
4. Where equity funding is more suited

61. Business Finances
1. Provide the last 2 years financial accounts and any management
accounts bringing the finances up to date.
2. Provide an up to date statement of affairs.
• Aged debtors and creditors report
• Analysis of current bank debt and monthly repayments
• Last 3 months bank statements
• Identify any other assets or liabilities the company may have eg HMRC
debt
3. Provide financial projections showing the impact our loan and the
new project will have on the business considering both the costs
and the revenues.

62. How to apply
Website www.nisblf.com
E-mail enquiry@nisblf.com
Telephone 0800 988 2879