On Wednesday 27 March 2013, Annika Tverin of Social Finance joined Blake Lapthorn's Climate Change group for a green breakfast seminar on social Finance.

1. 1
INTRODUCTION TO SOCIAL FINANCE AND
OUR WORK
MARCH 2013
Annika Tverin, Director
annika.tverin@socialfinance.org.uk

2. 2
SOCIAL FINANCE IS
PASSIONATE ABOUT
IDENTIFYING NEW
WAYS OF TACKLING
ENTRENCHED SOCIAL
ISSUES –
WAYS WHICH ARE
SUSTAINABLE AND
SCALABLE
©Social Finance 2012

3. WHAT DO WE DO? 3
IN ORDER TO
Expand the range of investors
Change the way government Help build and support growth of
able to participate in social
seeks to tackle problems strong, effective social enterprises
investment
AND THEREBY DELIVER SOCIAL CHANGE
©Social Finance 2012

4. OUR ROLE IN THE MARKET 4
SOCIAL FINANCE DESIGNS FINANCIAL STRUCTURES THAT ENABLE MORE CAPITAL
TO REACH THE SOCIAL SECTOR
Investors
Social
Government Finance
Social Service Providers
Research &
Development
Financial Structuring
Capital Raising
Key social issues
Supporting Effective Social Investor Long-term Social
Organisations Market Growth Change
©Social Finance 2012

5. THE STARTING POINT: CONSISTENT UNDER-INVESTMENT IN 5
PREVENTION
Higher level
of spending
on crisis
interventions
Poorer social Fewer
outcomes, resources
more require available for
crisis early
interventions interventions
CAN THE LONG TERM SAVINGS FROM AVERTING POOR OUTCOMES BE USED TO
INVEST IN PREVENTATIVE SERVICES?
©Social Finance 2012

6. SOCIAL IMPACT BONDS CAN UNLOCK THIS 6
SOCIAL
IMPACT
BONDS
Money to invest
in earlier
interventions
More early
interventions
Lower spending on
crisis interventions
Better outcomes;
fewer individuals
requiring crisis
interventions
SOCIAL IMPACT BONDS CATALYSE POSITIVE CYCLES OF GOVERNMENT SPENDING, IMPROVING
SOCIAL OUTCOMES AND REDUCING COSTS
©Social Finance 2012

7. FUNDING REHABILITATION AT PETERBOROUGH PRISON 7
INVESTORS
£5 million Return depends
on success
Payment MINISTRY OF
based on JUSTICE/
SOCIAL IMPACT PARTNERSHIP
reduced BIG LOTTERY
convictions FUND
Reduction in
re-offending
St. Giles Trust Ormiston Trust SOVA Other Interventions
St Giles Trust Other Interventions
Support in prison, Support to Providing volunteer Support needed by the
at the prison gates prisoners’ families support post intensive prisoner, in prison and the
and in the while they are in phase or with lower community. Funded as the
community prison and post risk/need clients pre need is identified eg.
release and post release Lower level mental health
support
3,000 male prisoners sentenced to less than 12 months
©Social Finance 2012

8. RECENT PROGRESS 8
Young people in or on the edge of care
•Awarded contract by Essex County Council to deliver and finance multi-systemic-therapy to over 380
adolescents on edge of care system in Essex over next 8 years – outcomes financed by savings from
reduction in care placements
•Advising Manchester City Council on options to raise social investment to fund multi-dimensional
foster care working with vulnerable adolescents
Improving education and employment prospects for young people
•Awarded two contracts by Department of Work and Pensions to work with specific groups of 14-16
year olds with outcome payments made at agreed milestones
Prisoner rehabilitation
•Chris Grayling has announced an intention to look at the feasibility of rolling out outcome based
rehabilitation projects nationwide
Homelessness
•Advising Greater London Authority on procuring interventions to address rough sleeping financed by
£5 million outcomes budget
©Social Finance 2012

9. 9
BUILDING THE
INVESTOR BASE
©Social Finance 2012

10. ENGAGING WITH KEY POOLS OF INVESTOR CAPITAL 10
NEAR TERM FOCUS MEDIUM TERM FOCUS
HIGH NET
TRUSTS AND MASS INSTITUTIONS CORPORATES
WORTH
FOUNDATIONS AFFLUENT
INDIVIDUALS
£488 bn
£70bn assets in UK ISAs £92bn Could philanthropy
be an asset, not an
Early signs of Local expense in their
Authority Pension balance sheets?
Funds interest.
STRUCTURED FUNDS BIG SOCIETY CAPITAL SEEDED FUNDS
Investor Advisory Global Social Impact The Results Impact Ventures UK Fund
Venture Capital Trust
Services Fund of Funds Fund Nesta Impact Investment Fund
Enterprise Investment Scheme as a Investors
wrapper for SIBs
Intermediaries
©Social Finance 2012

11. Two worlds. Brought
together. Investing for
social impact and
financial return.
Specialist VCT:
Social Impact
March 2013
SOCIAL IMPACT VCT plc

12. 12
Summary
Social Impact Venture Capital Trust (VCT)
Type Specialist, 8 year planned exit VCT
Size £20 million
FSE Fund Managers Limited (part of the FSE Group)
Managers
Social Finance
Profitable and/or growth companies delivering measurable
Focus
social impact
Minimum investment size £2,000
Expected timing For tax years 2012/13 and 2013/14
VCT is a well-known product for new market with rising demand

13. 13
Social Returns: Four Pillars of Social Impact
Building Futures Community Socially-motivated Health and
Cohesion Brands Education
Companies engaging Companies working in Companies promoting Companies building
with people who are local communities to thoughtful consumer human capital by
marginalized, support cohesion and brands that create enhancing health and
vulnerable or improve access to their products and education provision for
disadvantaged to help services and services in an ethical or individuals.
build their futures. opportunities. socially-motivated way.
Examples: Examples: Examples: Examples:
Careers Development Charity Technology Cafédirect Bromley Healthcare
Group (CDG) Trust (CTT) Divine Chocolate Central Surrey Health
CRI HCT Group (Hackney JustGiving Avenues Group
Community Transport) JoJo Maman Bébé Cool2Care
Greenwich Leisure Timpson
Limited (GLL)
Commercial revenues generating profit for social purpose

14. 14
Financial Returns: Income and Return of Capital
Investment policy:
• Capital preservation focus
• Returns driven by “current yield”
• Repayment driven by “non exit” or “managed exit” events
Investment Type Returns Capital Repayment
Established Current Yield: High Non-Exit: Refinancing / recapitalisation
Social Enterprises Exit Yield: Low / Nil Exit: Pre-commitment-to-find buyer
Capital gain unlikely to be main driver of return
Contract-underpinned Current Yield: High Non-Exit: Refinancing / recapitalisation
Social Enterprises Exit Yield: Low / Nil Exit: Pre-commitment-to-find buyer
Capital gain unlikely to be main driver of return
Early-stage Current Yield: Medium / Low Non-Exit: Refinancing / recapitalisation
Social Enterprises Exit Yield: High / Medium Exit: Commitment-to-find buyer - or -core
business sale
Capital gain may be material component of return
Focus on established and/or contract underpinned enterprises

15. 15
Worked Example: Bromley Healthcare
“Established social enterprises whose revenue streams are expected to
be underpinned wholly or partially by delivery contracts”
Business Model Social Returns Financial Returns Investment
Structure
Short term – better run Community health, e.g. c.£40M turnover Assumed investment
community services period of 5 years
(Nursing and therapy Healing time of leg £10B market (UK
services) in Bromley, wounds reduced from market for community Structured with a mix of
increasingly specialised 21 to 5 weeks (pilot) health care) debt and equity +
services to avoid structured exit
hospital admissions and Improved productivity Significant
speed discharge. + 15% (18 months) = improvement on 1% Majority of the return
Mid term: Health more patient time launch margin will be linked to the
Management Model debt instrument
delivering health Do not attends 13% - 5% Growth 100% ahead of
outcomes on a payment budget
by results model.
Variable competition
Formed by 800 staff
‘spinning-out’ of the
NHS to form a new
community interest
company (C.I.C.)

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Social Impact VCT: Offering to the Shareholder
1. Support the growth of socially-motivated companies which make a distinct positive
contribution to improving UK society
2. Capital preservation and predictable cashflows due to focus on established companies
and using debt-like, VCT-compliant structures
3. 30% income tax relief in year of investment, tax free dividends and capital gains*
4. Planned-exit – return of capital in years 6, 7 and 8**
5. Dividends planned in respect of the second financial year
6. Annualised Return of 2-3 % post costs and before any tax benefit to an investor,
translating into a target return of 118.5p (tax free) on every 70p net invested***
*UK income tax payers, aged 18 or over, who acquire no more than £200,000 worth of VCT shares in a tax year. The UK tax treatment of
VCTs is on a first in first out basis and therefore tax advice should be obtained before investors dispose of their shares. The income tax
relief is given at the rate of 30% on the amount subscribed regardless of whether the qualifying investor is a higher rate or basic rate tax
payer, provided that the relief is limited to the amount which reduces the qualifying investor’s income tax liability to nil.
**In many cases, it is expected that investment will be held for a 5 year period, structured with a mix of debt and equity, under which
the majority of the return will be linked to the debt instrument, which will have a finite life to facilitate Social Impact VCT’s exit from
the investment.
***100p gross less 30p VCT income tax relief. IRR (Internal Rate of Return), i.e. annualised effective compounded return rate,
calculated as the rate at which the net present value of costs of the investment equals the net present value of the benefits.

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Investment Manager and Investment Adviser
FSE Fund Managers Limited(1) Social Finance Limited(1)
Community Economic and social impact fund Not-for- Corporate finance advisor
management Improve access to capital for those
Interest profit
driving social change
AuM £31.8M + Angel Investor Network Social Impact Measurement, monitoring and
reporting
Experienced, CEO: 30+ years funding experience
equity and Design and 1st Social Impact Bond (SIB) in
Head of Equity Funds: 15+ years September 2010 that funds
debt team experience in VC and PE investment
delivery of
interventions to reduce reoffending
Social Impact among short sentence offenders from
Head of Debt Funds: 20+ years Bonds HMP Peterborough
experience in SME lending Now 4 SIBs under management
Proactive “Hands on” due diligence and £10 million (2010-2012)
monitoring
Capital
investee Raising
management Mentor, Coaching and NXD support
/ support Private Robin Black, 27-year career building
and managing entrepreneurial
Follow on investment: 204 investees equity
raised £116M+additional funding businesses
Accelerator £14.6m + invested via 173 loans Social Structuring expertise
Fund Understanding of socially-motivated
10% return on investments (pre
enterprise
companies’ sensitivity around external
overheads, post provisions) via current network capital
yield only
Independent Investment Committee and separate VCT Board
(1) The FSE Group’s subsidiary FSE Fund Managers is authorised and regulated by the Financial Services Authority. FSA No. 458820
Social Finance is authorised and regulated by the Financial Services Authority. FSA No: 497568.

18. 18
Why Invest?
•Become a lead investor in this new, growing and exciting market
•Provide capital for successful social entrepreneurs who make a real difference in
addressing social issues
•Receive potential projected returns of 2-3% over the life of the VCT, an up-front
30% tax break and tax free dividends*
•Social Impact VCT will be managed by a leading social impact investment
management team, with breadth of experience and excellent track record. The team
combines investment on commercial principles with in-depth understanding of
social impact
Social Impact VCT is an investment to be proud of.
* Assuming £20m capital raise and subject to eligibility

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Further Information
Social Impact VCT website:
www.socialimpactvct.co.uk
Further questions, please contact:
Social Finance Ltd
131-151 Great Titchfield Street
London W1W 5BB
Tel 0207 667 6370
Marechale Capital Plc
3rd Floor
New Broad Street House
35 New Broad Street
London EC2M 1NH
Tel 020 7628 5582
Social Finance is authorised and regulated by the Financial Services Authority. FSA No: 497568.
The FSE Group’s subsidiary FSE Fund Managers is authorised and regulated by the Financial Services Authority. FSA No. 458820

20. 20
Disclaimer
This document comprises the presentation of Social Impact VCT Plc (the "Company") concerning the proposed admission to trading on the official list of the London
Stock Exchange plc and to trading on the main market of the London Stock Exchange plc. This document is being solely issued to and directed at (a) persons who
have professional experience in matters relating to investments and who are investment professionals as specified in Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Financial Promotions Order”); and (b) persons certified by an authorised person as
sophisticated investors within the meaning of Article 50 of the Financial Promotions Order (but for the avoidance of doubt not those who are self-certified within the
meaning of Article 50A of that Order).This document is exempt from the general restriction on the communication of invitations or inducements to enter into
investment activity and has therefore not been approved by an authorised person, as would otherwise be required by section 21 of the Financial Services and Markets
Act 2000. Any investment to which this document relates is available to (and any investment activity to which it relates will be engaged with) only those persons
described in (a) or (b) above. Persons who do not fall within the above categories of investor should not take any action nor rely upon this document, but should
return it immediately to Social Finance (“Investment Adviser”), 131-151 Great Titchfield Street, London W1W 5BB.
It is a condition of your receiving this document that (i) you fall within, and you warrant to the Company that you fall within, one of the categories of person described
in (a) and (b) above; and (ii) if you fall within category (b) above, it is a condition of your receiving this document that you warrant to the Company that: (aa) you are a
person who has a current sophisticated investor certificate, signed by an authorised person and dated no earlier than 36 months preceding the date of receipt of this
document, confirming that, in the opinion of such person, you are sufficiently knowledgeable to understand the risks associated with an investment in an main
market quoted company; and (bb) that within the last 12 months you have signed a statement in the terms set out in Article 50(1)(b) of the Financial Promotions
Order. If you are uncertain with regards to your eligibility you should seek independent professional advice in this regard.
This document is for informational purposes only and does not constitute nor forms any part of any offer or invitation to sell or issue or any solicitation of any offer to
purchase or subscribe for any shares in the Company nor shall they or any part of them, or the fact of their distribution, form the basis of, or be relied on in connection
with, any contract with the Company relating to any securities. Any decision regarding any proposed subscription or purchase of shares in the Company must be
made solely on the basis of the information contained in the prospectus to be issued by the Company (the “Prospectus”). This document is not intended to be
distributed or passed on, directly or indirectly, or to any other class of persons. It is being supplied to you solely for your information and may not be reproduced,
forwarded to any other person or published, in whole or in part, for any other purpose. Recipients of this document who intend to apply to subscribe or purchase
ordinary shares in the Company following the publication of the Prospectus in final form relating to the Company are reminded that any such application may only be
made on the basis of the information contained in such document which may be different from the information contained in this document.
No reliance may be placed for any purpose whatsoever on the information contained in this document, nor on its completeness. Any reliance on this communication
could potentially expose you to a significant risk of losing all of the property invested by you or the incurring by you of additional liability. No representation or
warranty, express or implied, is given by the Company, its directors or employees, or their respective professional advisers as to the accuracy, fairness, sufficiency or
completeness of the information, opinions or beliefs contained in this document. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered
or incurred as a result of the reliance on such information, opinions or beliefs. Recipients of this document should conduct their own investigation, evaluation and
analysis of the business, data and property described in this document.
If you are in any doubt about the investment to which this document relates, you should consult a person authorised by the Financial Services Authority who
specialises in advising on securities of the kind described in this document. Neither this document, nor any copy of it, may be taken or transmitted into the United
States, Canada, Australia, the Republic of Ireland, the Republic of South Africa or Japan or into any jurisdiction where it would be unlawful to do so.
Any failure to comply with this restriction may constitute a violation of relevant local securities laws.
Social Finance is authorised and regulated by the Financial Services Authority. FSA No: 497568.
The FSE Group’s subsidiary FSE Fund Managers is authorised and regulated by the Financial Services Authority. FSA No. 458820

21. 21
Disclaimer (cont.)
Venture Capital Trusts (VCTs) were introduced by the UK Government in 1995 to encourage individuals to invest in smaller UK companies. The Government achieved
this by offering VCT investors a series of tax benefits. The total invested in VCTs between 1995 and 2011 was more than £4.2 billion.
The Company is structured as a VCT to allow qualifying investors to take advantage of substantial tax benefits, including 30% income tax relief on the amount
invested. The income tax relief means that taxpayers should benefit from a £3,000 reduction in their tax bill for every £10,000 invested, provided that the Ordinary
Shares are held for a period of five years. In addition, qualifying investors should benefit from dividends paid by the Company being tax free and no capital gains tax on
a disposal of Ordinary Shares. This is only a brief summary of the UK tax position for investors in VCTs and is based on the Company’s understanding of current law
and practice. Investors should seek independent tax advice.
Key points to remember about VCTs:
•VCTs invest in unquoted shares including new shares of privately owned companies, and new shares of companies that are traded on the Alternative Investment
Market (AIM) and PLUS Market.
•VCTs are complex and may be higher risk than conventional investment companies. They should be viewed as long-term investments.
•Though VCTs offer generous tax benefits, you should not invest in a VCT simply for the tax benefits (also to obtain tax benefits investment should be held for a
number of years).
•It can be difficult to sell VCT shares on the secondary market, although some VCTs offer a ‘buy-back’ facility.
•Past or simulated performance may not be a reliable indicator towards future performance.
•As with any equity investment, returns are not guaranteed and you may get back less than you invest or nothing at all in extreme cases.
•If you are unsure whether VCTs are suitable for you, you should take professional advice.
Social Finance is authorised and regulated by the Financial Services Authority. FSA No: 497568.
The FSE Group’s subsidiary FSE Fund Managers is authorised and regulated by the Financial Services Authority. FSA No. 458820