Investor brochure (progress) v2 by The Observatory

Investment Proposal Innovative in nature

SECTION 1: The Opportunity

Contents Page

Operating in the market space between the large traditional and the â&#x20AC;&#x2DC;doorstopâ&#x20AC;&#x2122; lenders, Future Finance is risk adverse, but innovative in nature.

www.future.je

02 02 & 03 05 06 & 07 08 09 10 & 11 13 14

The proposition 02 Growth strategy 02 & 03 The market 05 About Future Finance 06 & 07 Business Model 08 The Future journey 09 Locations 10 & 11 Experience and expertise 13 The ideal Future Finance client 14 GRAPHs

16 18 19 21 & 22

Portfolio acquisitions 16 Future growth 18 What are we looking for 19 Management Team 21 & 22

SECTION 1: The Opportunity

“ Future Finance offers

competitive, secured mortgage-based products, loans and factoring services to private individuals and SMEs looking for a bespoke solution to their finance needs.”

From the outset, Future Finance has been clear about its business strategy: to build a sustainable financial lending business, underpinned by strong ethics.

The plan focuses on the three stages of growth:

l oc a

Phase 3: consolidate and sustain the model The business has successfully completed phase 1 of the journey and is now looking to embark on its next steps.

With strong foundations – and an infrastructure built for scalability – phase 2 will see Future Finance develop its proposition and expand into new products, services and markets.

PHASE 3 -

b P H AS E 1 - u i l d pr o f i t a b l e

Phase 2: grow and expand the business

Phase 1: build a profitable local model

te a

nd be s us

t ai n a

3 Years 4 Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years

1 Year 2 Years

nsol i da

To do this, the business is seeking additional funding to support its growth plans and capitalise on current market conditions, including the clear demand for flexible financial solutions.

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With a growth trajectory of 20% year on year, and a sizable loan book in place, Future Finance are now looking to capitalise on increasing demand for finance in key areas, namely bridging finance and property-based lending, primarily driven from the UK.

Since then, the business has grown impressively - both organically and through acquisition - creating a strong, credible brand and an attractive investment proposition.

Founded in 2009, in response to the financial crisis, the business was born out of a need for alternative banking services that could offer a credit line into a large, poorly-served, SME and consumer market.

Future Finance offers competitive, secured mortgage-based products, loans and factoring services to private individuals and SMEs looking for a bespoke solution to their finance needs. With clients in Jersey, Guernsey, Isle of Man and the UK, the business has built a reputation for fast, but robust, local decision-making and excellent, in-depth customer service.

Growth strategy 6

The proposition

SECTION 1: The Opportunity

Phase 1

Phase 2

Phase 3

• Prove concept and build local model • Hit profit by the 3rd year of operations • Build balance sheet to £20m by 5 years

• Receive additional funding • Expand into new markets • Grow business more than 20% a year

• Cosolidate business • Hit £5m profit a year • Have a sustainable business model

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SECTION 1: The Opportunity

The market “ There is a significant

increase in demand for finance in key areas, in particular bridging finance and property-based lending in the UK.”

The financial crisis has changed the way in which individuals and businesses access and obtain credit. Traditional banks, whose reputations are in tatters, no longer hold their place as the ‘trusted’ provider. This, coupled with a lack of transparency, inflexibility and protracted application processes, has opened up the market, giving rise to new alternative providers, supported by governments and welcomed by clients.

The UK environment

Competitors

Future Finance sees longer term growth in the UK. This is due to:

Whilst it is a competitive landscape, many face challenges:

• Size: a bigger market with lots of opportunities

• Traditional banks: disadvantaged by legacy issues

• Demand: gap between supply and demand expected to rise to c.£80 – 190bn over next 5 years (1)

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- reputation - branch closures

• Recovery: performing better than expected

- antiquated infrastructure / systems

• Credit shortage: particularly in large poorly served SME segment

- limited, traditional product offerings

• Improved housing market: stimulating demand for finance and ancillary products

New players that offer both investors and clients a low risk but flexible, product mix have gained traction and are expected to grow significantly as the economy improves. Market conditions, particularly in the UK, strongly favour those lenders who can offer tailored financial solutions without clients having to go through a long drawn out application and approval processes.

- poor customer service

• Support: UK domestic lending is opening up, advocated by the UK Government

• Challenger banks: unable to provide a bespoke client-focused approach

• Margins: have widened since the economic crisis

• Non-UK banks: many are exiting the UK and refocusing on home turf

• Value: SMEs are more willing to pay a premium for bespoke products and speed

• Alternative providers: don’t have the right model, experience or skill set

SECTION 2: The Business – Future Finance

About Future Finance

Future Finance has a unique DNA, which drives a competitive advantage in the market place.

“ Focused on strong financial

Adaptable

Mission:

to deliver seamless, bespoke financial solutions that enable individuals and SMEs to fulfil their personal goals and business aspirations

Vision:

to be the trusted lender for life

Nimble Approachable Ethical

control, live management information and cash flow details ensure the management has current data to enable them to make informed decision.”

Business philosophy Wholly-funded by private investment, Future Finance attributes much of its success to its overarching business philosophy: in-depth, tailor-made customer service. The co-founders bring a wealth of experience in the banking and lending space, the business focuses on the client ‘experience’ and developing a life-long relationship where Future Finance becomes the lender for life.

Charitable

Unlike other providers, Future Finance is independent, nimble, innovative and provides the most appropriate solution for the client. Decisions are made locally, by local people who know their clients’ needs and objectives, and understand local market idiosyncrasies and legislation.

Service-focused

In essence, against a backdrop of stringent corporate governance, Future Finance goes the extra mile to provide a bespoke service that is flexible, swift and pain-free.

Innovative

Operating in an environment where the major players have reputational and legacy issues, this approach provides a highly attractive alternative to traditional options.

Entrepreneurial Open-minded Trustworthy 06

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SECTION 2: The Business – Future Finance

Business Model

Feb 2010 £10m investment Future Loans is formed Staff numbers increase to 10 based in Jersey

“ Operating strict risk

and lending criteria, the business has robust financial management and control.”

March 2010 Back office function is set up in Mauritius

Advancing in excess of in excess of £100m in a 4 year period, Future Finance has three core business lines:

Typical lending criteria:

• Secured Lending : bridging, property-related development and HNW personal mortgages

• Average loan size: approximately £300,000 with an advance rate of 65% and a maximum of 70% in certain instances

• Future Loans: loans for a wide range of needs, home improvements, ar and boat purchases, and business assets

• Average Term: between 12 and 36 months, for bridging and property development respectively

• Future Invoicing: debt factoring in Jersey, IOM and Guernsey

• Pricing: Up to 2% for arrangement, monthly rate and 2% for exit

In addition to the company’s own lending capability, Future Finance accesses additional funding through its partner and affiliate network of investors. These include HNW individuals, as well as larger lenders, whose funds are successfully deployed via Future Finance on projects that do not fit the company’s business model and risk appetite.

• Exposure of any one facility not to exceed 5% of total receivables’ balance

June 2010 Future Invoicing is established

May 2011 Establish IOM business July 2011 3 staff hired in IOM

The Future Finance journey

The company adheres to a strict lending criteria, which ensures it lends responsibly and not to the detriment of the business or the customer.

Feb 2009 Future Finance is created

May 2010 Sentinel, administration system, deployed Nov 2010 Purchase of Citi loan portfolios Clients in Jersey, Guernsey, Isle of Man and the UK

Aug 2011 £10m capital injection Nov 2011 Future UK starts trading

Dec 2013 Year end results: £1.169m NP 2013 & £3.4m reserves (not including FIF or FM) Purchase St Helier offices June 2013 Staff numbers hit 30 staff

Sept 2014 FCA approval for UK

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SECTION 2: The Business – Future Finance

Locations

Isle of Man United Kingdom Jersey

Jersey

United Kingdom

Future Finance was established in Jersey - Channel Islands – and, as a result, this jurisdiction is the company’s most developed market. With a significantly high concentration of high net worth individuals and a strong and flourishing finance community, the island offers stable and secure market conditions with an appetite for growth.

Future Finance entered the UK in 2011 and, after a lengthy process, gained FCA approval in 2014. Taking advantage of the growing demand for alternative finance, specifically within the bridging finance and property procurement space, the business has seen demand in the UK market increase significantly. With several years’ trading behind the business, the company believes this offers the greatest opportunity investors.

Its size makes it an ideal environment to build a brand and develop new products and services. The team has extensive business and personal relationships, and has been successful at generating and converting leads quickly. Performance in this market has been impressive. The business has seen year on year growth in all business lines.

Isle of Man Like Jersey, the Isle of Man (IOM) is an affluent, relatively small, market with a strong economy. As a result, Future Finance has been able to penetrate the retail and business community and make strong inroads. The island has a diverse economy, including the aerospace, finance and manufacturing industries, all of which are responding well to an improving economy. Offering both Future Mortgages and Loans in the IOM, the business sees further opportunity in the invoicing business line, as well as continued brand profiling to capture further market share.

“ With a successful pan -

island business under its belt, Future Finance is now turning its focus to the UK market.”

Mauritius Capitalising on cost and time zone benefits, Future Finance operates a low cost operating model from its administration centre based in Mauritius. This centre is responsible for providing financial reporting that is transparent, up-to-date and accurate. The team, made up of 15 employees, work directly with Future Finance head office to ensure client data is reconciled overnight and available at the touch of a button the very next morning.

Mauritius

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SECTION 2: The Business – Future Finance

Experience and expertise “ The business has grown

impressively - both organically and through acquisition - creating a strong, credible brand and an attractive investment proposition.”

The business has grown rapidly over the last few years and attracted a number of talented and experienced employees, all demonstrating the qualities of Future Finance’s DNA. Committed and ambitious, the team are made up of both experienced and qualified individuals, with x% of staff holding or currently undertaking professional qualifications. Those carrying out the underwriting have expertise across all of the jurisdictions’ legal systems and, as a result, specific products are chosen within robust parameters.

Credit decisions are made by a qualified and experienced Risk Committee, in line with the company’s credit policy. This group ensures the appropriate and rigorous analysis of each individual case, and there is total transparency throughout the process. The due diligence procedures – including KYC; AML; full income, expenditure, credit profiling and debt analysis; and information on the person’s / businesses’ goals and aspirations - is paramount. All staff are trained on this critical aspect as part of their induction to the company.

Financial control The team use a variety of financial measures and data to analyse, manage and govern the business. Focused on strong financial control, live management information and cash flow details ensure the management has current date to enable them to make informed decision. A dedicated team are responsible for maintaining financial dashboards which give a snapshot of the business as any one time. All systems, both financial and operational, have been built and developed with growth and increased capabilities in mind, with an over-arching objective to build a highly robust platform to enable sustained growth.

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SECTION 3: Clients

SECTION 4: Performance

The ideal Future Finance client “ The business has a phased Operating in the market space between the large traditional and the ‘doorstop’ lenders, Future Finance is risk adverse, but innovative in nature.

Clients are typically looking for mid to short term solutions for asset finance, corporate lending and / or bridging products, specifically for property development and procurement.

Focused on secure lending, the company works within strict regulatory and risk-based parameters, but offers a broad and diversified product range that meets clients’ needs. This combination creates a high demand, strong returns and managed risk.

growth strategy: Phase 1: build a profitable local model; Phase 2: grow and expand the business; Phase 3: consolidate and sustain the model.”

Further copy to be received

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SECTION 3: Clients

SECTION 4: Performance

Performance

The company’s growth strategy to date has been successful ……

Insert Harvey financials

Narrative around this.

Use diagrams to illustrate performance.

Further copy to be received

SECTION 4: Performance

Portfolio acquisitions “ The financial crisis has As well as seeing strong organic growth, Future Finance has been opportunistic. In November 2010, Future Finance acquired a loan portfolio from Citi Holdings, a vehicle set up to dispose of Citi Financials non-core products. Made up of both performing and non-performing loans, as well as a portion of bad debt, the portfolio spanned Jersey, Guernsey, IOM and the UK. Valued at £15m, with in excess of 5,000 accounts, the team at Future Finance negotiated a positive price, carried out the appropriate due diligence and successfully migrated the administration and management of the loans across to the company’s operating system in less than 3 weeks. Badly performing and bad debt, products underwent a program of stimulation and recovery which involved interrogating data, managing clients’ expectations, re-writing terms and conditions and setting out new payment plans.

Skill set The team use a variety of financial measures and data to analyse, manage and govern the business.

changed the way in which individuals and businesses access and obtain credit.”

The acquisition gave the business solid experience in: • spotting opportunities and diversifying into new areas • carrying out the appropriate due diligence required for portfolio purchases • integrating challenging books of business • turning round bad performing loans and debt • successfully migrating complex data into the Future Finance systems

In less than 12 months, the portfolio was performing positively - within new, set perimeters. In line with our ethical policy and company those, customers were treated fairly and many were reassessed and new loans agreed, contributing a healthy addition to the company’s revenue.

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SECTION 5: Strategy

Future growth

What are we looking for

Future Finance is ambitious and has a clear strategy built on capitalising on the growth opportunities, predominantly in the UK.

At present, the business is funded through private investment and existing profits. Whilst the company boasts a healthy cash flow position and a solid asset book, the current funding is insufficient to meet current demand. Additional funding lines are being sought to support the increasing demand in the UK, as well as meet the desire to diversify the company’s overall funding proposition.

“ The business focuses

on the client ‘experience’ and developing a life-long relationship where Future Finance becomes the lender for life.”

The business has developed its proposition, built significant market share and seen its operating model work successfully. It is the fasted growing independent lender in Jersey and IOM, and has built a credible business in Guernsey and the UK. With a successful pan-island business under its belt, Future Finance is now turning its focus to the UK market.

an initial injection. This additional facility will be solely used to support the growing demand in the bridging and property-based lending space, predominately in the UK Future Finance is open to financing structures and can be flexible as to requirements and terms.

Based on current demand, it is envisaged the business will need a funding line of £20m to £30m as

Strategy in a snapshot Win a greater slice of a large and growing market by: • generating additional funding to capitalise on increased demand for bridging finance and property procurement in the UK • increasing our secured lending offering, particularly in the UK

Why back Future Finance? • Market focus: high growth, secured and bespoke lending solutions to private individuals and the SME market

• raising our profile and brand within the UK market

• Track record: 5 years’ successful and diligent trading, driving strong credit performance and yields across portfolios

• acquiring positive and distressed portfolios in key or complementary markets and turning them into significant revenue generators

• Client base: sticky customers with opportunities to service lifelong finance needs

• providing a diversified and innovative product mix • operating a scalable low cost model • becoming the lender for life by creating positive, seamless, ‘experiences’ for clients • generating low risk robust return for investors

• Operating model: scalable, low cost, back-end administration hub in Mauritius • DNA: a team personality that drives success and enables superior customer service • Risk management: low and stable cost of risk driven by strict risk management practices and relatively low LTVs, a robust credit underwriting process and extensive industry knowledge • Modern IT infrastructure: engineered to be scalable and information rich to meet growth plans • Entrepreneurial leaders: experience and vision to build a differentiated product

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SECTION 6: Management Team

Phil Austin

Denny Lane ASI IAC

Chairman

Director

Appointed as the Chairman of Future Group in November 2010, Phil has spent most of his career in banking, working for HSBC in the UK and Jersey. He left the bank in 2001, following a 4 year stint as the Deputy Chief Executive of the bank’s business in the Offshore Islands. From here, he set up and ran Jersey Finance Ltd, a body that was formed to represent and promote the island’s finance industry.

Denny is a qualified financial and investment advisor with a proven track record in business. He has 16 years’ experience in lending and finance, most recently at Close Bank where he worked for six years as the Sales Director.

Between 2006 and 2009, Phil was the Managing Director at Equity Trust where he had direct responsibility for Jersey, Guernsey and Switzerland, as well as being a member of the Group Executive Committee. He has since taken a number of directorships in companies in the financial services sector, including the role of Senior Independent Non-Executive Director of 3i Infrastructure Plc. Phil is a Fellow of the Chartered Institute of Bankers and a Fellow of the Institute of Management.

CISI - Chartered Institute for Securities & Investments- qualified, Denny is highly experienced in all aspects of lending including: arranging facilities, preparation of proposals to UK board of directors, underwriting and account management. Benefitting from an established client base and strong relationships with financial advisors, mortgage providers, banks, local finance companies, lawyers and accountants, Denny co-founded Future Finance with Craig Dempster in 2009.

Craig Dempster

Harvey Nijjar

Director

Chief Investment Officer

Appointed as the Chairman of Future Group in November 2010, Phil has spent most of his career in bankCo-founder of Future Finance, Craig is a vastly experienced, senior corporate manager with 15 years’ experience in lending and finance. Prior to setting up the business, Craig was the Managing Director of xxxxxx from xxx to xxx.

A qualified accountant with over 14 years’ experience in financial services, Harvey has held various senior roles in large banks, and more recently in a challenger bank environment.

Expert in all aspects of corporate funding and business planning accounts analysis, he has an established client base and strong relationships with financial advisors, mortgage providers, banks, local finance companies, lawyers and accountants. His local client base is diverse and includes a number of high net worth individuals.

Working for the likes of Aldermore Bank, CITI and HFC Bank, he has strong links into the city and extensive contacts within the corporate finance and private investment space. Harvey’s experience has included leading asset disposals for a large US bank during the financial crisis and strategic planning for a bank ready to go to market. Harvey joined Future Finance in 2014 and heads up the London office.

Contact Jersey: Salisbury House, 1- 9 Union Street, St Helier, Jersey, JE2 3RF Telephone: +44(0)1534 493933 / Facsimile: +44(0)1534 493944 / Email: info@future.je Isle of Man: 30 Athol Street, Douglas, Isle of Man, IM1 1JB Telephone: +44(0)1624 613217 / Facsimile: +44(0)1624 613248 / Email: info@future.je Guernsey: Telephone: +44(0)1481 715633 London: 1st Floor, 189 â&#x20AC;&#x201C; 193 Earls Court Road, London SW5 9AN