Finance Yorkshire Welcome

1. Finance YorkshireWelcome www.finance-yorkshire.com

2. Finance YorkshireTony Parsons - Director www.finance-yorkshire.com

3. Finance YorkshireWhy are we here this morning? • Strengthening relationships with stakeholders, partners, intermediaries and clients • Demonstrating how we are working in partnership with our LEP to support business growth • Looking to the future • Dialogue and questions www.finance-yorkshire.com

4. Finance YorkshireAgenda • Tony Parsons, Director, Finance Yorkshire • Alex McWhirter, CEO, Finance Yorkshire • David Grey - Local Enterprise Partnership • Seedcorn Case Study – Chris Wright, Faradion • Business Loans Case Study – Peter Skipworth, Ecus • Equity Linked Finance Case Study – John Peters, GSE Research • Questions & Answers www.finance-yorkshire.com

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

6. Finance YorkshireWhat we are… £90m Venture Capital and Loan Fund Finance sourced from: £30m European Regional Development Fund £15m Yorkshire Forward/Business Innovation and Skills £45m European Investment Bank www.finance-yorkshire.com

7. Finance YorkshireOur business approach… • To fully invest the £90 million fund through helping SME’s constrained by finance to grow • To create a sustainable fund • To be recognised and respected as a key participant in the SME business and professional sectors • To stimulate demand for finance in our key market segments • To realise good returns for investors and value for money www.finance-yorkshire.com

8. Finance YorkshireOur investment performance so far... • 346 investments totalling over £39 million • On track to meet economic targets; jobs created & safeguarded; increase in turnover; business starts and private sector leverage • On track to achieve full investment by December 2014 www.finance-yorkshire.com

9. Finance YorkshireInvestment Profile www.finance-yorkshire.com

10. Finance YorkshireInvestment impact... • Created or safeguarded 5620 jobs • Over £64 million Private Sector Leverage, resulting in £2 levered for every £1 invested • £44.2 million in value added sales • Legacy fund to be invested in region’s businesses in line with original objectives - to be utilised after 2019 www.finance-yorkshire.com

11. Finance YorkshireInvestment performance by location... www.finance-yorkshire.com

12. Finance YorkshireInvestment performance by location... www.finance-yorkshire.com

13. Finance YorkshireInvestment performance by sector... www.finance-yorkshire.com

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

15. Finance YorkshireThree portfolios • Seedcorn Finance • Business Loans • Equity Linked Finance www.finance-yorkshire.com

16. Finance YorkshireSeedcorn Finance • Start up or early stage innovative businesses • Involves strong technological ‘know-how’ and credible founders • First products or services developed with potential for rapid growth • Can invest up to £780,000 over the lifetime of the business through equity-based, tranched investments • Investments of £2m+ when syndicating with other funds www.finance-yorkshire.com

17. Finance Yorkshire Case Study – Xeros • Environmentally friendly cleaning company backed by Finance Yorkshire Seedcorn Fund. Cleans laundry with vastly reduced water using Xeros polymer bead technology • Major savings in power, detergent and effluent production with superior cleaning • Recently completed a £10 million fundraising from existing and new investors. New funds • will be used to roll out the Xerox commercial laundry cleaning system and finalise the household system www.finance-yorkshire.com

18. Finance YorkshireBusiness Loans • Fixed rate loans typically between £15,000 - £150,000 as syndicated or complete financial packages for businesses • Financial packaging with other forms of debt finance including the banks • Range of investments include; Working Capital, Capital Expenditure, Investment in Premises and development capital www.finance-yorkshire.com

19. Finance YorkshireCase Study – Wilson Benesch • Sheffield based company which manufactures high end audio loudspeakers and turntables • Regarded as world class innovator in its field • £50,000 Business Loan which enabled the company to introduce new technologies and buy specialist tooling equipment. www.finance-yorkshire.com

20. Finance YorkshireEquity Linked Finance • Equity-linked investments from £100,000 to £2m and Mezzanine loans • Some start ups, largely growth, development capital or expansion • Work alongside other finance providers to invest in larger transactions • Tailored deal structures to give maximum benefit to the investee companies www.finance-yorkshire.com

21. Finance YorkshireCase study – Fluent Communications • Sheffield based IT lead generation company. Combines telemarketing, social media and digital marketing for IT sector • £210,000 Equity Linked investment to help triple its workforce in the coming year. • Investment will also help to purchase office equipment, upgrade IT and support working capital www.finance-yorkshire.com

22. Finance YorkshirePortfolio performance to date.. • Finance Yorkshire has: • completed 346 investments • Invested a total of £39.43m • Seedcorn Finance – 44 investments totalling £7.93m • Business Loans – 270 Investments totalling £15.00m • Equity Linked Finance – 32 Investments totalling £16.50m www.finance-yorkshire.com

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

24. Finance Yorkshire David Grey Sheffield City RegionLocal Enterprise Partnership www.finance-yorkshire.com

25. The SCR LEP was formed in Autumn 2010 • One of 24 in the first wave of LEPs – there are now 39 LEPs across the country (100% coverage) • A genuine partnership between the public and private sector • Board composition - 19 members: • Private sector Chairman – James Newman • 10 business representatives, including a University Vice-chancellor • 9 Council Leaders (inc. Doncaster Mayor) • Seven SCR LEP Sector Groups represent the voice of business • Strong / productive relationship with Government

26. Priorities set out in our Economic Overview document (updated January 2013) Our priorities fall into two main areas: • Maximising the potential of our key growth sectors; and • Putting in place the foundations for growth. • Key Principle 1: Leading on issues of Sheffield City Region significance • Key principle 2: The importance of a true public and private sector partnership • Key principle 3: Adopting a collaborative approach • Key principle 4: Driving innovation to promote growth 26

27. Putting in place the foundations for growth SCR / LEP PRIORITIES

28. Key team initiatives include… • Economic Strategy / Growth plan – shaping the SCR economic programme in light of proposed devolution of powers / funding (including European Structural Funds) • Management of the SCR Enterprise Zone (FT ranked ‘number 1’) • Growing places fund – prudent investment decisions (including JESSICA investment fund) • City Deal – particularly relating reform of Skills system

29. …Key team initiatives include • Regional Growth Fund programme (‘Unlocking Business Investment’) - £25 million, ~£100m of direct business investment, footprint of 2,000 new jobs by March 2016. • Inward investment – additionality and generating new leads • Sheffield City Region Investment Fund (SCRIF) – GVA driving infrastructure investment • Sector Groups – voice of key industry sectors

30. Finance Yorkshire Seedcorn Fund Testimonial Chris Wright, Faradion www.finance-yorkshire.com

31. Investee Business

32. Location Investee Business • Kroto centre, University of Sheffield, Yorkshire • Access to the Materials Science and Engineering department • One of the leading departments of its kind in the UK Faradion Investment Opportunity

33. Company Overview Investee Business • Committed to driving down the cost of battery technology • For storage of renewable energy • For electric vehicles • Faradion`s principal focus is Na-ion battery technology: • comparable performance to Li-ion • lower cost • enhanced safety • Strong IP portfolio • 2013: • Na-ion battery demonstrator cells within the next 12 months • low cost LiFePO4 cathode – early revenues • Recent £500K investment Faradion Investment Opportunity - Confidential

34. The Team Investee Business Andrew Dixey, Chairman Over thirty years managing global organisations. Former President and COO of the Titanium Metals Corporation; Director of Special Metals Company; Managing Director of London & Scandinavian Metallurgical Co. Limited; CEO of Atraverda Dr. Chris Wright, CEO Former Group Operations Director of AEA Technology PLC, responsible for Lithium battery licensing, and CEO of IP2IPO Ltd (now IP Group). Highly experienced entrepreneur and former executive chairman at Covesion Ltd and Molecular Vision Ltd Dr. Jerry Barker, CTO Former Chief Scientist at Valence Technology Inc. and inventor on > 90 issued and ~50 pending US battery patents. Inventor of Li-ion active materials: LiVPO4F, Li3V2(PO4)3, LiMSO4F, Li2MP2O7, LiFe(Mg)PO4 and the Carbothermal Reduction (CTR) manufacturing method. IBA Technology Award, 2012 Faradion Investment Opportunity 34

35. Finance Yorkshire’s involvement Investee Business • A significant role in creating the company • Helped us get established with premises and links to professional advisers • Provided financial backing for the company • Gave assistance in early days when applying for grants • Finance Yorkshire’s Seedcorn Fund provided invaluable strategic and tactical advice. Faradion Investment Opportunity - Confidential

36. Finance YorkshireBusiness Loans Testimonial Dr Peter Skipworth, Ecus www.finance-yorkshire.com

37. Investee Business Finance Yorkshire Business Loans Customer Viewpoint and Experience Pete Skipworth

38. Investee Business Presentation – Business Loans • My experience and observations of using this type of finance • £15k to £50k for early stage businesses • £15k to £75k for established businesses • £15k to £150k for established and profitable businesses • In a number of companies • Finance Yorkshire • (and predecessor fund, South Yorkshire Investment Fund)

39. Investee Business Environmental Monitoring Environmental Consultancy Infrastructure Management

40. Investee Business • Environmental Monitoring Solutions Ltd • www.em-solutions.co.uk “Industry’s Environmental Partner” • ~£0.5m t/o in 2009 to ~£2m t/o in 2012 • Full-time MD (day job!) • backed by South Yorkshire Investment Fund

41. Investee Business • Ecus Ltd • www.ecusltd.co.uk Environmental Consultants • Full development life-cycle • pre-planning, planning/design, post-completion • ~£1.5m t/o – turnaround just returned to pre-recession level • Non-Exec Chairman • Recent Equity Investment by Finance Yorkshire to go multi-office and ~£5m t/o

42. Investee Business • SEAMS Ltd • www.seamsltd.co.uk • Infrastructure Management Software and Consultancy • co-founder and MD from 2002 – 2009 • grew from start-up to ~£3m t/o • backed by South Yorkshire Investment Fund

43. Investee Business Why Finance Yorkshire Business Loans? • They will consider things that the banks won’t • .......(or the banks won’t unless there’s lots of security) • Often unsecured • Taking the risk alongside the business • Net interest rates only slightly higher than banks • They are interested in getting to know the business and require reporting

44. Investee Business What Have I Borrowed Money For? • Developing the business • e.g. A marketing push • e.g. Recruitment of BD (a general requirement for working capital) • New product development • e.g. Software • ......things which are less tangible than, say, buying an asset

45. Investee Business Syndicating • Finance Yorkshire Business Loans funding with: • bank funding • self-funding (from profits) • “All jumping over the edge together!” • Finance Yorkshire Business Loans funding as part of Equity Investments with Finance Yorkshire Equity Linked Finance team

46. Investee Business Fore-runner to Equity Investment • Finance Yorkshire from £15k to £150k depending on company’s stage of development • So, more one-off projects than game-changing company development • In all 3 cases (EMS, ECUS, SEAMS) this type of funding has been a fore-runner to Equity Investment • .....”getting to know you”

47. Investee Business Conclusion • A big help along the road of developing companies • Fills a gap in the availability of finance • For growth or difficult-to-fund projects • A stepping stone to bigger things • Will work flexibly and effectively with other funders

48. Finance YorkshireEquity Linked Finance Testimonial John Peters, GSE Research www.finance-yorkshire.com

49. Investee Business January 2011: “…just a kid with a crazy dream” www.gseresearch.com

50. Investee Business February – April 2011: Too small for PE; too big for angel investors; nothing from banks www.gseresearch.com