Post on 16-Apr-2017
Finance in Cornwall 2016
Scott Bentley - Partner
“Cornwall, we have lift off!”
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Administration
Admin
Timetable
Format
Presenters…
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Presentations and other participants..
And more… (30 presentations in total, covering “full range” of funding and business support options)
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• Follow us on twitter @francisclarkllp
• Tweet about this event using #FCFinanceinCornwall
Francis Clark..
International Network
• We were with Leading Edge Alliance• Changed to PKF network
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Structure of morning
• Background, EU “calls”, grants and Banks (8:30am to 9:50am)
• LEP, Cornwall Chamber, FSB• Grants and Banks (intro)
• Funding and Business Support – stratified by age of business (10:10am to 11:20am)
• Equity, Business Support and Company presentations (11:40am to 1pm)
• State Aid• Crowdcube pitch..
• Q&A one to one/ Networking (1pm to 2pm)
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Scene setting – UK and overseas
“Triple-whammy of disappointing news [for UK economy]”• Services sector grew at slowest pace in 3 years in April• Manufacturing activity contracted in April for the first time in 3 years• Construction activity grew at its slowest pace for nearly 3 years
IMF: World economy 'too slow for too long'
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Scene setting - Cornwall
Cornwall & Isles of Scilly Growth Programme €603,706,863…
Sandra RothwellChief Executive of C&IoS LEP
SME Funding: An Update
For Finance in Cornwall 2016Kim Conchie
Chief Executive
10th may 2016
Access to finance:- UK Stats:• In 2015 total lending (loans and overdrafts) to businesses fell by £10 million, this
compares to a contraction of £12.4 billion in 2014. (Source: Bank of England)
• In 2015 total lending (loans and overdrafts) to SMEs rose by £2 billion, this compares to a
contraction of £3.8 billion over the same period in 2014. (Source: Bank of England)
• 2015 as a whole, total lending (loans and overdrafts) to large businesses fell by £2 billion, this
compares to a contraction of £8.6 billion in 2014. (Source: Bank of England)
• Discouraged demand is the main barrier to making an application with 43% of would-be loan
seekers stating that this was the main reason for not applying. (Source: SME Finance Monitor)
• 85% of SME accounts sit within the ‘big four’ high street banks.
BCC comments: Trust is back, more competition to be encouraged, ease capital limits for alternative lenders including Building Societies, more support needed for BBB, establish regional and sectoral retail bond markets
Businesses and access to finance (Source: SME Finance Monitor)
• 37% of SMEs in 2015 were using external finance, in line with 2014 (also 37%) but remaining lower than in previous years (44% in 2012).
• 8 in 10 of all loan/overdraft applications in the 18 months to Q4 2015 (and reported to date) resulted in a facility. This overall success rate has increased steadily over time (from 69% of all applications reported for the 18 months to Q4 2012).
• An increasing proportion of SMEs hold more than £10,000 and most said that these credit balances reduced their need for external finance. Over time, such SMEs have become less likely to use external finance at all (from 51% in 2012 to 44% in 2015).
• In H2 2015, 41% of SMEs were aware of alternative funding, compared to 22% in the first half of 2014
• Use of this form of finance remained limited (1%). Consideration has increased from 7% to 12% (H1 14 to H2 15).
Business Banking Insight Survey (http://www.businessbankinginsight.co.uk/)
• Business Banking Insight (BBI) is an independent website which looks at how well the UK’s small and medium-sized businesses are being served by banks and other finance providers.
• The site publicly showcases the experiences of more than 20,000 businesses and how they rate their banks and finance providers. It shows how they rate their banks and finance providers, with a view to enhancing trust and transparency between the groups.
• BBI is run by the BCC and FSB and supported by a range of stakeholders from the banking sector (RBS, Barclays, Lloyds and HSBC) and Whitehall.
Meanwhile in Cornwall & Isles of Scilly…A Mixed Picture
• Orders up by 3%; but export orders down by 6% (Referendum?)
• Cashflow 20% down; but turnover and profit each up by 10%
• 10% increase in investment plans and lower pressure on prices; but 15% operating below capacity.
• Cornwall Lenders’ Forum (CLF) seen as paradigm across England, building bridges and trust
• Banks and alternative lenders getting same messages from local marketplace
Meanwhile in Cornwall & Isles of Scilly…
• Lenders giving businesses through CLF consistent messages
• Business confidence in turnover and profit still variable (Source PFA Research QES Analysis)
• CIoS is a paragon of lenders and businesses working together for the greater good of the region
• CLF vital component as Devolution unfolds
Thank You
kimconchie@cornwallchamber.co.uk
A British Chamber of Commerce accredited Chamber of Commerce
Ann Vandermeulen
Development Manager
Federation of Small BusinessesCornwall Region
Grant fundingDavid Armstrong – Corporate Finance Director
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Structure
• The basics
• Which grant is most appropriate for me?
• A selection of schemes
• Disclaimer – not a complete list!
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The basics
• What is a grant?
• An offer of funding receivable upon the achievement of certain targets
• No interest or repayment unless….
• No equity
• Tend not to be retrospective
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Some recent successes
• £12m raised • 20 companies• 700+ new jobs
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Which grant is for me?
• Common misconception
• Eligibility
• Commercial reality:
• How does it fit in with my business plan?
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• South West Growth Fund
• BIG2
• Leader
• European Maritime Fisheries Fund:
• Investment in fishing vessels, portside infrastructure and aquaculture
• €33m fund open until 2020
• https://www.gov.uk/topic/commercial-fishing-fisheries/funding
Capital expenditure job creation
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Research & development
• Variety of sources
• Innovate UK
• https://www.gov.uk/government/organisations/innovate-uk
• £561m for the year 2016 to 2017
• Funding to test the feasibility of your idea, research and develop it and prototypes
• R&D Tax Credits
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Cornwall & Isles of Scilly Growth Programme
• European Programme 2014-2020
• Funding aligned to the European Structural & Investment Funds Strategy
• Administered via around “calls”: Funding available to develop workspace Low Carbon: Call in Cornwall and Isles of Scilly
• More detail - http://www.erdfconvergence.org.uk/growth-programme/erdf
• Transparency & clarity
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Workspace Funding
• Aimed at SME Owner / Occupiers
• New build / extensions
• High quality direct jobs
• Open calls – 6 monthly window – 27 May 2016
• Minimum grant of £250k
• More detail - http://www.erdfconvergence.org.uk/growth-programme/erdf
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Keeping up to date
• http://www.francisclark.co.uk/services/grant-advisory/
• Finance in Cornwall Factsheet
• Bi-monthly funding newsletter
David ArmstrongDavid.Armstrong@pkf-francisclark.co.uk07810 056164
Richard WadmanRichard.Wadman@pkf-francisclark.co.uk07854 763049
Final thought
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Although Cornwall is considered the most lucrative grant
county, during 2015 we secured more grant funding for
businesses across Devon & Somerset than in Cornwall.
Is your business missing out?
LEADER
Jon TeagueCornwall Development Company
Liaison among Actors in Rural Economic Development
Typically up to a maximum of £35,000
40-50% towards project costs depending on priority
Rural Development Programme 2014-2020
European LocalNational
Countryside Stewardship€3.875bn(£3.1bn)
Countryside Productivity€176m
(£141m)
Growth Programme€221m
(£177m)
LEADER€172.5m(£138m)
Rural Development Programme for England
£6m for Cornwall delivered through 4 Local
Action Groups
Local Action Groups are made of volunteers from the private
sector, public sector and voluntary &
community sector
Cornwall Development Company acts as Accountable Body for Local Action Groups
boost rural tourism
increase farm productivity
increase forestry productivity
provide rural services
provide cultural and heritage activities
LEADER funding priorities:
support micro and small businesses and farm diversification
Timescale:The whole application process will take between 4 - 7 months
3. Complete and submit your Full Application for appraisal and decision by the LAG
2. Complete and submit an Outline Application to confirm eligibility and receive feedback from the LAG
1. Contact the relevant LAG Project Coordinator for your area
How to access LEADER funding:
www.localactioncornwall.co.uk
Pick up a flyer from the foyer and talk to a co-ordinator
Liz GilbertProject Co-ordinator
Tel: 01872 324445 Mob: 07973 813803
liz.gilbert@cornwalldevelopmentcompany.co.uk
Caroline HanlanProject Co-ordinator
Tel: 01872 326750 Mob: 07484 011512
caroline.hanlan@cornwalldevelopmentcompany.co.uk
Jon TeagueProject Co-ordinator
Tel: 01872 326751 Mob: 07484 010456
jon.teague@cornwalldevelopmentcompany.co.uk
Josyanne ThatcherProject Co-ordinator
Tel: 01872 326735 Mob: 07484 010458
josyanne.thatcher@cornwalldevelopmentcompany.co.uk
BUSINESS INVESTMENT FOR GROWTH 2
Brent TreloarProgramme Manager
FUND DETAILS
• £3.6 million ERDF voucher investment programme delivered by Cornwall Development Company
• Investments between £2500 and £75,000 targeted at 200 growth business
• Maximum funding 45% of project costs• Enquiries through online expression of interest• Primarily aimed at capital investment projects
WHO IS IT FOR?
• Aimed at growth businesses• Innovative products and services• Strong competitive advantage in your markets• National and/or international customer base• Capability to create new skilled jobs• Seeking gap finance to enable project to proceed
NEXT STEP
• Check eligibility and download EOI (expression of interest) at:
www.cornwalldevelopmentcompany.co.uk/big2
• Fund open for applications until December 2018
R G FGrant Funds
John HutchingsProgramme Manager, RGF Grant Funds
Plymouth University
R G F Rounds 1, 3, 4
Cornwall & Isles of Scilly LEPHeart of the South West LEP
1000+ new jobs£15M+ of private sector co-investment
Helped over 90 businesses
RGF4 SPREADRecipients under GAIN Growth Fund+ “GGF+”
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 (85%)
Retail/Wholesale
£316,028 59 10
Tourism £151,100 40 5
R G F 6South West Growth Fund
£10M Fund, grants from £15k to £1MTarget – 1068 new jobs
£22.3M of private sector co-investmentMainly supporting capital expenditure projects
CARE : some restrictions
R G F 6South West Growth Fund
State Aid restrictions will applyIntervention Rates most favourable in Cornwall
New job creation and private sector co-investment key to success
Competitive process giving maximum value for money for the public purse
R G F 6South West Growth Fund
ContactJohn Hutchings/John Lewis (Grants Team)
john.hutchings@plymouth.ac.ukjohn.lewis@plymouth.ac.uk
www.gaininbusiness.com
…each application is assessed…
….and recommended or
otherwise……by an expert and
friendly team
Hey, that last bid wasn’t half bad……..
……..no, it was all bad !!!!!
Sectoral RestrictionsThe fisheries and aquaculture sectors.
The primary production and marketing of agricultural and horticultural products.Forestry.
Shipbuilding (although small craft building - vessels less than 100gt - is not restricted).
Airports.The coal sector.Steel making.
Manufacture of synthetic fibres.Certain energy generation, distribution and infrastructure projects.
The transport sector (excluding improvements to socially necessary services in rural areas).
Sectoral RestrictionsRetail.
Tourism (including hotels and leisure facilities).Warehousing.
Education.Health services (including medical services and residential
care).Business services.Financial services.
Franchise operations.Property development and investment.
Investment ready Richard Wadman– Corporate Finance Director
May 2016
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Funding options
Understand your
requirements
Understand funding
options and funders
requirements
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Requirements: Grants
“Project” eligibility – sector, size, location… Timescale – prescriptive, process and panels Match funding ‘need for grant’ versus viable proposition On going requirements State Aid; Procurement; etc
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Requirements: Debt
Serviceability & Headroom: Ability to repay Security / Personal Guarantees Conduits for government initiatives
Assisted Asset Purchase (RGF)Funding for LendingEnterprise Finance Guarantee Scheme
Covenants – achievable / appropriate?
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Requirements: Equity
Equity funder requirements » growth Exit route and returns to the investor
SEIS/ EIS Investors expertise vs. loss of independence? Be prepared to discuss valuation Due diligence (questions) Crowd – “being part of something”? (BrewDog)
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Distillation and Communication: including Business Plan and Financial
Projections
Purpose of funding
needed? (When, why, what for and
how long for)
Proof of market / Route to market
Credibility including
‘catalyst’ for step change
Acknowledging risks and mitigate
Team: ability to deliver
The Business
Case
Investor Ready – Business Case
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Investment ready – housekeeping
Licences / contracts?IPR ownership in the company?Books and records in order?VAT, PAYE/NIStatutory Accounts/management accounts
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Investor Ready - Summary
Appropriate funding (understand the options)Business Case
Know the ‘deal breakers’Build in extra timeBuild relationships
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Banks –£107.56bn lent to SMEs
https://www.bba.org.uk/news/statistics/sme-statistics/bank-support-for-smes-4th-quarter-2015/#.VysgAz_2bcs
81%
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“Challenge to the Status Quo” – UK Challenger Banks
• Phrase coined by Vince Cable
• Big 4 (HSBC, Lloyds, RBS, Barclays) plus Santander and Handlesbanken
• Metro bank – first new banking licence for more than 100 years
• Other challengers – Virgin, Paragon, Aldermore*, Shawbrook*, OneSavings*
• Interestingly (*) are Private Equity owned.
• Can they “challenge” the Big 4. Time will tell Flexible Speed of response Impact of a downturn? Critical mass? More consolidation?!!
Finance in CornwallAldermore Bank PLC. Jon Myerscough
Commercial & Residential Mortgages
Founded by CEO Phillip Monks with backing from AnaCap Financial Partners LLPMay 2009Successfully floated on the London Stock ExchangeMarch 2015
Total Customer Lending
£6.1bn
Customer Deposits
£5bn
Number of Aldermore Clients
195,000
Working Capital Finance
£1bn+
Confidential Invoice DiscountingFactoringConstruction FinanceTrade FinanceBad Debt Protection
Asset Finance£893mHire PurchaseLease FinanceRefinance
SavingsWide product rangeMarket Leading Rates
FTSE 250
June 2015
Start-Up
• Supplier Payment Terms• Cost of Credit Control• Weekly salaries
Start-Up
Growth
• Organic Working Capital gap • Residential Mortgage
Start-Up
Growth
Maturity
• Working capital headroom• Savings
Start-Up
Growth
Maturity
Expansion
• Mergers and Acquisitions• Purchase premises• Plant and Machinery Investment
Start-Up
Growth
Maturity
Expansion
Exit
• Succession – MBO• Savings
Thank you for your time
Finance in Cornwall 2016
Scott Bentley – PartnerThe next 90 minutes…
Break (20 mins)Session 2 start time
10.10amScreen 1 (> 2 years trading)
Screen 2 (< 2 years trading)
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