Finance in Cornwall 2015 Segment 3

FFinance in Cornwall 2015

“71% of SMEs approach only one provider of finance”

Richard Wadman – Corporate Finance Director

www.francisclark.co.uk

Structure of morning

• Background, EU “calls” and the Banks (8:30am to 9:42am)

• LEP, Cornwall EU millions and “calls”• Banks and SMEs• Company presentation

• Grants, debt, equity and business support – stratified by age of business (10:02 am to 11:22 am)

• Secured finance, alternative sources of finance, business support (11.42 am to 1.00pm)

• State Aid• Company presentation

• Q&A one to one / Networking (1pm to 2pm)


Of general interest

• “Alternatives”, inc Crowdcube

• Secured Finance

• Grants – round up

• Business Support x 2

• Company presentation

• Networking

RICHARD ECKLEYInvestment Analyst

The Power

of the

Crowd

What are the benefits?

New way to raise

finance

Global Investor Reach

Cost effective

Marketing effect

Crowd feedback

Expertise

Financial return

‘Armchair Dragon’

Support friends and family

Participation

Lower/spread risk

Simple to invest

EQUITY

GOVERNMENT SUPPORT

TOP INVESTOR

#1 FOR SEED STAGE DEALS

BEAUHURST REPORT – “MAKING SENSE OF UK EQUITY INVESTMENT 2014/15”

MARKET POSITION

RAPID MARKET GROWTH

SUCCESS SO FAR

GOVERNMENT SUPPORT

RICHARD ECKLEYInvestment Analyst

[email protected]

linkedin.com/in/richardeckley

THANK YOU AND QUESTIONS

WWW.CROWDCUBE.COM

Secured FinanceTristan Bourdeaux, Senior Business Manager

Finance in Cornwall 2015

The 3 C’s

• Serviceability - Can you cover the monthly repayments?

• Stake – Your contribution?

• Security

Serviceability

• Interest rates at an historic low

• Would the repayments be affordable if rates were to increase?

Stake

• Typically any stake would be non-borrowed funds

• The level of stake would be assessed inline with perceived risk

Security

• Cash

• Stocks & Shares

• Enterprise Finance Guarantee Scheme (EFG)

• Land / Property

Things to be aware of when providing security to a bank…

• Solicitors Fees

• Bank Fees

• Remember to allow sufficient time for transaction to take place

• Professional Valuation required

So why Secured Finance?

• Equity release is usually very quick to access

• Long term funding

• Relatively low cost finance

Grants – An Overview

Finance in Cornwall 2015

David Bullen – Corporate Finance Senior Associate


Structure

• Context

• Live schemes

• Going Live Schemes

• Support


Context - Backdrop

• https://www.gov.uk/business-finance-support-finder

• 271 schemes (down from 742 schemes!)

• 154 schemes relating to agriculture

• Main sources of grants, include

• EU funds (ERDF and ESF)

• Regional Growth Fund

• City Deals

• Big Lottery

• Innovate UK (Technology Strategy Board)

https://www.gov.uk/business-finance-support-finder

https://www.gov.uk/business-finance-support-finder


Context – The sources

Regional Growth Fund

• Monies left behind on dissolution of RDA’s

• £2.4bn

• 2011 to 2015

• Applications > £1m

• Competitive process

• Round 6 closed 30 Sept 2014. Future?

• RGF funded schemes for SMEs

• Incl; ND+ UBI, PWGF1, PWGF 2, GGF+ and Assisted Asset Purchase

• Less sector specific, criteria different for individual schemes


Grants– The Sources

EU

• Convergence: Cornwall 2007 to 2013

• EU (announced June 2013)

Cornwall: €592.9 million (£507 million) between 2014-2020

Devon and Somerset:118 million euros (£100 million).

• Eligibility?

• Process?


RGF

Individual applications (> £1m)

• Quality projects

• Generate private sector investment and create sustainable jobs.

• The level of grant is subject to State Aid rules

• Robust need for grant argument.

• Maximum grant intervention rate c 30%:

• Round 6 applications now being assessed.

• Some Francis Clark successes in previous rounds and some being assessed now..


RGF backed

Cornwall Marine Capital Fund – Round 2 is open now

• Grant funding £50k - £500k for Cornish/ SW based businesses operating in the marine sector;

• Intervention rate 10%-40% depending on value for money, size of business and direct jobs created (large businesses can receive no more than 30%);

• Eligible costs are capital investment into equipment (new and modernisation), premises (building new, modernisation, fit out and bringing old businesses back into use) and marine renewable technology development;

• Allocation of funds to projects within the programme will only be made once proof of match funding has been seen.

• Start with an online EOI

• http://www.cornwallmarine.net/52/about-cornwall-marine-network-6/rgf-201/major-new-funding-opportunity-for-cmn-members-376.html

http://www.cornwallmarine.net/52/about-cornwall-marine-network-6/rgf-201/major-new-funding-opportunity-for-cmn-members-376.html

http://www.cornwallmarine.net/52/about-cornwall-marine-network-6/rgf-201/major-new-funding-opportunity-for-cmn-members-376.html


Suite of funds - https://interact.innovateuk.org/

• Specifics:

• SMART – See later slide

• Innovation Vouchers (currently Round 11) – See later slide

• Agri-Tech Catalyst: Late & Early stage awards - https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/agri-tech-catalyst-late-stage-awards-round-4

• Many others (principally energy and feasibility study focused at present but these change)

R&D

Innovate UK/TSB

https://interact.innovateuk.org/

https://interact.innovateuk.org/

https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/agri-tech-catalyst-late-stage-awards-round-4




Previously known as “Grant for R&D”

Science, Engineering and Technology: New Products and Services

Grant support for SMEs:

• Proof of market (9 months, £25k, 60%)

• Proof on concept (18 months, £100k, 60%)

• Development of prototype (2 years, £250k, 35% / 45%)

Competitive / Batch Applications

Smart v R&D Tax Credits - cannot have both for same project

R&D

SMART - https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/smart-2015-16

https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/smart-2015-16

https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/smart-2015-16

http://www.robothespian.com/blog/news-blog.html


Grants of up to £5k

Theme:• External expert to help business grow

• Specialist help

• Criteria:• Starting or running UK micro or SME

• Not worked with expert before

• Needs to be a challenge

• Have not had a voucher before

R&D

Innovation Voucher - https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/innovation-vouchers-round-11

https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/innovation-vouchers-round-11

https://interact.innovateuk.org/competition-display-page/-/asset_publisher/RqEt2AKmEBhi/content/innovation-vouchers-round-11


• Calls - http://www.heartofswlep.co.uk/news/european-structural-and-investment-funds-strategy

• Details?

• Eligibility?

• Timeframe?

• To be continued….

ESIF

http://www.heartofswlep.co.uk/news/european-structural-and-investment-funds-strategy


EAFRD

Rural Development Programme 2014-2020

• Environmental Stewardship - funding to farmers for environmental land management. 87% of the total RPD (pillar 2) budget (£3.5billion) is being allocated to this activity.

• Countryside Productivity Scheme – Being managed nationally. Has £144million in total. The first round (£5m) has already launched and includes support for activity that will improve productivity of primary production, such as:

• Animal productivity, health and welfare

• Arable and horticultural productivity

• Forestry productivity

• Resource management


EAFRD

Rural Development Programme 2014-2020

• LEADER funding - available from cSept 15 to:• local businesses;• Communities;• Farmers;• Foresters; and • land managers.

Delivered through Local Action Groups (LAGs):• 4 LAGs in Cornwall;• awarded a total of £7.3million;• Cover majority of the county (excl. CPR, Penryn and Saltash);• Each LAG has a Local Development Strategy which sets out the local

priorities for investment;• Grants from £2,500 to c£35,000 will be available but in certain cases

larger grants may be possible; and• More information can be found on the Local Action in Cornwall website.

http://www.localactioncornwall.info/


EAFRD

Rural Development Programme 2014-2020• Cornwall Growth Programme – Includes elements of ERDF, ESF and

EAFRDFund will have an allocation of £9.4 million which will align with the wider Cornwall & Isles of Scilly Growth Programme. Support investments in activity such as:

• Agri-tech;

• Renewables and Energy Storage;

• Food Enterprise Zone Supply Chain Development Project;

• Investment Grants for businesses;

• Rural and Farm Tourism; and

• Rural Broadband (2017).

First ‘call’ for projects should be in June/July 2015 and will be for businesses looking to ‘add value to primary produce’.


Coming soon/later

• RGF backed - SWGF

• RGF backed - Innovation4Growth: Round 2 (http://www.innovation4growth.co.uk/)

• Further ESIF calls…

http://www.innovation4growth.co.uk/

http://www.innovation4growth.co.uk/


Grants

Factors contributing to a successful application…

1. Project

2. Eligibility

3. Robust Business Case

4. Business Plan (and Financial Projections)

5. Dialogue with fund holders

6. Understanding their requirements: strategic and operational

7. Need for grant

8. Patience/ Completeness

9. Understanding timelines

10. Match funding – seldom 100% intervention and seldom pay in advance of defrayal

GetSet Business Support

Bespoke & Impartial 1:1 Advice

Investment Readiness

Finance Support

Marketing & Sales Support

Business Model Validation

GetSet KnowHow

Angel Investor Network

Equity Investment Advice

Mentoring Service

Non-Exec Director Network

KnowHow Board

What we do..

• The Cornwall College Group are acknowledged by AAT as one of the top four providers in the country.

• National Apprenticeship Award winners two years in a row.

• 92.68% completion rate of apprentices.

• Grants available for apprentices up to £1,500*

• Over 80 different types of apprenticeships including:• Business Admin• ICDT• Sales

• NEW apprenticeships starting September 2015 including Marketing (including Marketing and Social Media), Law and Project Management (using Agile in Businesses)

*subject to eligibility

“Undertaking an accounting apprenticeship is an ideal opportunity to study for a recognised qualification (AAT) whilst learning on-the-job and being paid. We have a long term recruitment plan which identifies and recruits the best student talent, incentivises them with the quality of work they will enjoy and with the prospect of first class training.”

Melody Tuffnell, Human Resources Manager, Francis Clark LLP

EU state aid in Cornwall Marc Shrimpling

May 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

• Identifying opportunities beyond the regional aid / de minimis aid tramlines

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?

Business Growth Service

Finance in CornwallBusiness Growth Manager: Neil Jeffery

Mobile: 07436098674

Email: [email protected]

May 2015

47 | Privileged & Confidential – for internal use only | Version 1 | March 2015

Definition of Eligibility

As has been the case under the previous contracts, organisations need to meet the following criteria to join the service:

*Please reference the ops manual for further details.

2

Fewer than 250 FTEs

(PAYE)

No more than 25% ownership if the collective total of the corporate group exceeds SME criteria*

Under £40m turnover

(or less than £34m on balance sheet)*

Registered in the UK and based in England

(restrictions apply for sole traders)

www.gaininbusiness.com

Universities and Business:

helping you to innovate

Plymouth University and the Growth Acceleration

& Investment Network (“GAIN”)

Mark Smith

Business engagement - the challenge to Universities from the Government

“ 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 & the economy of Cornwall

provide opportunities for our students, staff and the communities we serve through economic development, social inclusion, community outreach and strategic partnerships

build and sustain connections with local, national and international partners to enrich our academic experience and research

raise aspiration amongst those groups under-represented in higher education, and so increase their participation


Pre-incorporationPlymouth• IP guidance• Organisational Needs Analysis

BrokerageFalmouth & Bristol• Falmouth Marine School •Bristol Composite Gateway (ERDF)

• Demonstrator produced

IncorporationPlymouth• New enterprise created

• IP agreement with FMS• New product

Phantom Sports Boats – A Collaborative Case Study


GAIN FinanceGrant programmes

CrowdfundingInvestor readiness

GAIN TalentEmployability

gatewayKTPs

Internships

GAIN Innovation Science Park

Innovation CentresFormation Zones

Helping foster Innovation through Finance, Facilities and Talent


Business Engagement Service

A free phone / e-mail based light touch diagnostic, signposting and referral service for any business

0800 073 2020


...people first, success follows

GoonhillyEarth Station Ltd - Space Science ParkFinance in Cornwall 2015

Presentation by GES Ltd.

May 12th 2015

Stephen JonesCommercial Director

https://services.eutelsat.fr/deploy_DStarSite/site/home/backToCorporate.do?SITE=SKYLOGIC


Goonhilly Earth Station - Opportunity



GES Ltd as a Funding Proposition

* GES negotiated a short term lease commencing 2011 for proof of concept

* In parallel GES negotiated a three year Option to purchase 999 year lease hold at fixed price

• GES used this time to start building a diverse revenue stream with ‘anchor’ commercial contracts.

* Min £1.8m sought to secure long term title and initial cashflow built on ‘base case’ projections. (Upside sales pipeline not included)

* Potential key UK Space Sector infrastructure with experienced Management Team.

* Significant Underlying Security….



Space Science Park – as Security

• 160 acres of the world’s first and most famous satellite ground station.

• Iconic large (3 x c30m) antenna and multi medium size antennas

• Existing functional, key accessed buildings

• 24/7 on-site manned security, extensive site CCTV. (CNI)

• Major diverse fibre-optic connectivity to London, Africa (via Europe), USA and Asia

• On site Back Up power generation plant (CNI)

• Renewable energy generation potential.



Models of Funding Considered:

In order to create options, the GES Team made direct and also supported approaches to institutions to assess :

Asset backed commercial loans

Grant funding

Equity Release

A mixture of the above

Ultimately a deal was secured ahead of the January 2014 deadline…

…. and the business arrived at the start line


As new owners of the site…..• Significant Capital spend on infrastructure to

support growth plans• Key employees identified and secured• Major Framework Contracts negotiated with the

largest Global Satellite Operators• Significantly increased Revenue in the first year.• Secured £m Grant Funding to support site

development.



The Forward Plan – several coherent activities:

1) Space Communications Gateway using Antennas– Deep Space Communications & Fundamental Space Science (includes Radio Astronomy).- Additional Satellite communications activity.- Low Earth Orbit (LEO) tracking- Missions Control capability (primary & back up)- Goonhilly acts as a UK communications gateway to Space.

2) New public “Space Outreach Centre”− Space & Science promotion to inspire future generations − UK & Regional Space sector capability promotion to ‘000’s p.a.− Provide STEM Inspiration & encourage increased uptake− Showcase an inspiring operational environment & raise youth education & employment aspirations

3) An open Innovation Centre / Site redevelopments– Practical & operational environment– Facilitates knowledge transfer between Industry & Universities. Multi University engagement beneficial– Data Centre capability on site & other redevelopment potential

4) Practical & Innovative CPD & Training– Using Goonhilly facilities, address identified industry skill gaps & encourage skills transfer



Thoughts on the Journey to Date

The availability of Finance is an easier conversation with contracts in

place

Continue researching multi streams of funding to create options

Add resources/employees in line with building a sustainable

business

No is sometimes no, but often its because of the wrong question

Perseverance and Resilience comes from conviction in your business

and is powerful weapon.


FFinance in theCornwall 2015

“71% of SMEs approach only one provider of finance”

Richard Wadman – Corporate Finance Director


Summary

• Some uncertainties and “some things are a changing” but…

• SMEs – the country and county needs you

• Cornwall a great place to do business

• Some great businesses in Cornwall

• Funding and support – options

• Thank you


Presentations and other participants..

And more… (30 presentations in total, covering “full range” of funding and business support

options)


But before you go…

http://www.francisclark.co.uk/

news-views/blog/

The ROC 5K 2015

Thursday 11th June 2015 5.30 for 6.30pm start

Lemon Quay in Truro

www.roc-uk.org/ROC5K2015

Twitter: @roc_uk #ROC5K Facebook: ROC 5K 2015


(c) copyright Francis Clark LLP, 2015

You shall not copy, make available, retransmit, reproduce, sell, disseminate, separate, licence, distribute, store electronically, publish, broadcast or otherwise circulate either within your business or for public or commercial purposes any of (or any part of) these materials and / or any services provided by Francis Clark LLP in any format whatsoever unless you have obtained prior written consent from Francis Clark LLP to do so and entered into a licence.

To the maximum extent permitted by applicable law Francis Clark LLP excludes all representations, warranties and conditions (including, without limitation, the conditions implied by law) in respect of these materials and /or any services provided by Francis Clark LLP.

These materials and /or any services provided by Francis Clark LLP are designed solely for the benefit of delegates of Francis Clark LLP. The content of these materials and / or any services provided by Francis Clark LLP does not constitute advice and whilst Francis Clark LLP endeavours to ensure that the materials and / or any services provided by Francis Clark LLP are correct, we do not warrant the completeness or accuracy of the materials and /or any services provided by Francis Clark LLP; nor do we commit to ensuring that these materials and / or any services provided by Francis Clark LLP are up-to-date or error or omission-free.

Where indicated, these materials are subject to Crown copyright protection. Re-use of any such Crown copyright-protected material is subject to current law and related regulations on the re-use of Crown copyright extracts in England and Wales.

These materials and / or any services provided by Francis Clark LLP are subject to our terms and conditions of business as amended from time to time, a copy of which is available on request.

Our liability is limited and to the maximum extent permitted under applicable law Francis Clark LLP will not be liable for any direct, indirect or consequential loss or damage arising in connection with these materials and / or any services provided by Francis Clark LLP, whether arising in tort, contract, or otherwise, including, without limitation, any loss of profit, contracts, business, goodwill, data, income or revenue. Please note however, that our liability for fraud, for death or personal injury caused by our negligence, or for any other liability is not excluded or limited.

Disclaimer & copyright

Finance in Cornwall 2015 Segment 3

Economy & Finance

Transcript of Finance in Cornwall 2015 Segment 3