Project Jupiter

Haydock Finance – Investor Presentation

This document is strictly private & confidential

Contents

Page
Section 1 Investment highlights 6
Section 2 Business Overview 8
Section 3 Market 22
Section 4 Origination and Underwriting 26
Section 5 Collections 30
Section 6 Existing Infrastructure & Governance 33
Section 7 Portfolio 36
Section 8 Historical Financial Performance 42
Section 9 Financial Forecasts 46

Ref. EY-000029125-01 Project Jupiter 2

Disclaimer
Confidentiality
► This Investor Presentation (“Presentation”) has been prepared by
Jonathan Wilkinson (“Vendor”) with the assistance of its exclusive
financial advisor Ernst & Young LLP (“Ernst & Young” or “EY”) based
on information and opinions provided by Vendor and the management
of Haydock Finance Holdings Limited and its subsidiaries (“Target
Group”).
► This presentation is issued subject to the detailed provisions set out in
the Confidentiality Agreement that you have signed. You are reminded
that in the Confidentiality Agreement, you have undertaken to procure
that all persons to whom disclosure of the Presentation is made by you,
or on your behalf as permitted by the Confidentiality Agreement, are
aware of the contents of the Confidentiality Agreement and adhere to
the terms as if such persons were a party to the Confidentiality
Agreement.
► This Presentation is being made available to you for your exclusive use
and for the sole purpose of assisting you in deciding whether you wish
to make an offer for the whole of the issued share capital of Haydock
Finance Holdings Limited.
► The information and opinions contained in the Presentation are strictly
confidential. Accordingly, the contents of the Presentation and any
other information or opinions subsequently supplied or given to you will
constitute Confidential Information for the purposes of the
Confidentiality Agreement which you have signed and may not, without
the written consent of Haydock Finance Holdings Limited or EY, be
published, reproduced, copied or disclosed to any person other than
your financial advisers having a need to know and who are aware that it
is confidential, nor used for any purpose other than in connection with
the proposed acquisition of Haydock Finance Holdings Limited. You
shall be responsible for any losses accruing to Vendor or Target Group
in the event of any unauthorised disclosure.
► By receiving the Presentation, you agree that you will on request return
or procure the return of this Presentation and all further information and
material sent or made available in connection with the proposed sale of
Haydock Finance Holdings Ltd in accordance with the terms of the
Confidentiality Agreement.
Ref. EY-000029125-01
Investor Presentation
► This Presentation does not purport to be all-inclusive or necessarily to
contain all the information that a prospective purchaser may desire in
investigating Haydock Finance Holdings Ltd and may be subject to
updating, revision or amendment. This Presentation is not intended to
form the basis of any investment decision by a prospective purchaser.
Interested parties should carry out their own investigations and analysis
of the Target Group and of the data referred to in the Presentation and
should consult their own advisers before proceeding with any offer. The
information contained in the Presentation will not constitute or form part
of any offer for sale of shares Haydock Finance Holdings Ltd nor will
any such information form the basis of any contract in respect thereof.
Any purchaser must rely on the terms and conditions contained in such
a contract subject to such limitations and restrictions as may be
specified therein.
Disclaimer
► All information and opinions contained in the Presentation have been
provided by Vendor and/or the management of the Target Group and
the Presentation has not been independently verified as to its accuracy.
No representation or warranty, express or implied, is given by the
Vendor, the Target Group or EY or any of their respective directors,
partners, officers, affiliates, employees, advisers or agents (and any
warranty expressed or implied by statute is hereby excluded) as to the
accuracy or completeness of the contents of this Presentation or any
other document or information supplied, or which may be supplied at
any time or any opinions or projections expressed herein or therein, nor
is any such party under any obligation to update the Presentation or
correct any inaccuracies or omissions in it which may exist or become
apparent. In particular, for reasons of commercial sensitivity,
information on certain matters has not been included in the
Presentation. Such information may be made available at a later stage.
► The projected financial information contained in the Presentation is
based on judgemental estimates and assumptions made by the
management of the Target Group, about circumstances and events that
have not yet taken place. Accordingly, there can be no assurance that
the projected results will be attained. In particular, but without prejudice
to the generality of the foregoing, no representation or warranty
whatsoever is given in relation to the reasonableness or achievability of
the projections contained in in this Presentation or in relation to the
bases and assumptions underlying such projections and you must
satisfy yourself in relation to the reasonableness, achievability and
accuracy thereof.
Project Jupiter
► No responsibility or liability is accepted for any loss or damage
howsoever arising that you may suffer as a result of this Presentation
and any and all responsibility and liability is expressly disclaimed by the
Vendor, EY and the Target Group and EY or any of their respective
directors, partners, officers, affiliates, employees, advisers or agents.
General
► The EY team is acting as financial adviser to the Vendor only and to no
other person in connection with the proposed sale of Haydock Finance
Holdings Limited. Neither receipt of the Presentation nor any
information supplied in connection with the proposed sale of Haydock
Finance Holdings Ltd by any person is or is to be taken as constituting
the giving of investment advice or to constitute any person as a client of
EY in connection with the proposed sale. This Presentation should not
be considered as a recommendation by the Vendor or the Target
Group, or EY or their respective directors, partners, officers, affiliates,
employees, agents or advisers to acquire Haydock Finance Holdings
Limited and each potential purchaser must make its own independent
assessment of the merits or otherwise of acquiring the issued share
capital of Haydock Finance Holdings Limited and should take its own
professional advice.
► Neither the issue of this Presentation nor any part of its contents is to
be taken as any form of commitment on the part of EY or the Vendor to
proceed with the sale envisaged by the issue of this Presentation and
EY or the Vendor reserve the right to amend the proposed timetable
and/or the sale procedure, to terminate the procedure and to terminate
any discussions and negotiations with any prospective purchaser at any
time and without giving any reason.
► In no circumstances will the Vendor, the Target Group, or EY be
responsible for any costs or expenses incurred in connection with any
appraisal or investigation of the Target Group or for any other costs or
expenses incurred by prospective purchasers in connection with the
proposed sale of Haydock Finance Holdings Ltd.
► Any proposal to acquire Haydock Finance Holdings Limited made in
due course must be made in accordance with the procedure set out in
the process letter as communicated via EY.
Distribution
► Should this Presentation (through the act or default of the recipient)
reach other persons without our written consent, the recipient will
indemnify EY and each company in the Target Group and each of its
shareholders against any loss or damage or other liabilities (including
all costs) which they may suffer as a result.
3
Contact details

Project Jupiter team

► This document is confidential and access will be subject to the confidentiality agreement signed by you. Your attention is drawn to the disclaimer on the previous
pages of this document.

Ernst & Young LLP

EMEIA Financial Services
Transaction Advisory Services
Contact details
25 Churchill Place, London, E14 5EY,
United Kingdom
Office: + 44 20 7951 2000

Ian Cosgrove Nick Parkhouse Jordan Blakesley

Partner Executive Director Senior Manager
Contact details Contact details Contact details
Office: + 44 20 7951 1094 Office: + 44 20 7197 7658 Office: + 44 20 7197 7517
Mobile: + 44 7715 704 748 Mobile: + 44 7730 584 443 Mobile: + 44 7876 276 330
Email: icosgrove@uk.ey.com Email: nparkhouse@uk.ey.com Email: jblakesley@uk.ey.com

Ref. EY-000029125-01 Project Jupiter 4

Abbreviations and definitions

Abbreviations Definition Abbreviations Definition

AML Anti-Money Laundering HP Hire Purchase
APR Annual Percentage Rate IT Information technology
BoE Bank of England JV Joint Venture
Balloon payments A lump sum repayment made at the end of a finance term, KPIs Key Performance Indicators
servicing interest only on this element each month KYC Know Your Customer
CAGR Compound Annual Growth Rate; a progression ratio that LTV Loan to Value
provides a constant rate of return over the time period
MLRO Money Laundering Reporting Officer
CCA 1974 Consumer Credit Act 1974
NNR Net Nominal Rate, being the interest rate that the customer
FCA Financial Conduct Authority pays being fixed for the term of finance, after allowing for
FLA The Finance & Leasing Association commission paid to the introducer upon inception of the
asset finance transaction
FSV Forced Sale Valuation
OPB Outstanding Principle Balance (capital outstanding)
FTEs Full-time equivalent
PEP Politically Exposed Person
GNR Gross Nominal Rate, being the interest rate that the
customer pays being fixed for the term of the finance P&L Profit & Loss account
before allowing for any commission to the introducer P&M Plant and machinery
Group/Haydock Haydock Finance Holdings Ltd, Haydock Asset Finance RFL Road Fund Licence
Ltd, and Haydock Finance Ltd
RoE Return on Equity
HAFL Haydock Asset Finance Limited
SMEs Small and medium-sized enterprises (annual turnover
HFH Haydock Finance Holdings Limited <EUR€50mn)
HFL Haydock Finance Limited STB Secure Trust Bank plc

Ref. EY-000029125-01 Project Jupiter 5

 Section

Investment highlights

Ref. EY-000029125-01
Investment Highlights
Strong platform poised for rapid but deliverable growth

Key differentiators Profit & Loss account

► Long established and well respected presence in the marketplace £’000s FY15 FY16 FY17 FY18 FY19 FY20 FY21

► Proven origination capability as demonstrated by growth since 2014 Gross revenue 9,061 12,477 14,535 22,234 30,695 39,325 46,846

Interest (3,168) (3,973) (5,545) (7,533) (9,657) (13,665) (15,515)

► Underwrites ‘story’ credits, achieving attractive yields for service and flexible
approach, as much as risk Profit share/commission 1,535 2,822 4,440 - - - -

Broker commission (1,525) (1,843) (2,272) (3,234) (4,326) (5,360) (6,159)

► Rigorous approach to credit risk management resulting in low loss
Net Earnings 5,903 9,484 11,157 11,466 16,712 20,299 25,172
performance
Other Income 540 676 835 1,396 2,070 2,726 3,296
► High quality and experienced team throughout the organization
Bad Debt Provisions (91) (791) (1,288) (2,164) (3,373) (4,235) (5,053)
► Low execution risk. A simple plan to leverage a proven origination capability Gross Profit 6,352 9,369 10,705 10,698 15,410 18,790 23,415

Admin expenses (2,606) (3,687) (4,083) (5,189) (5,943) (6,477) (7,176)

Transaction
Profit before tax1 3,746 5,682 6,622 5,509 9,466 12,313 16,240
► The business was founded by Jon Wilkinson in 1980. Jon is currently the
Chairman and majority shareholder of Haydock Finance Holdings Limited. His
four sons own the balance of shares and are looking to divest their Balance sheet
shareholding alongside Jon
£’000s FY15 FY16 FY17 FY18 FY19 FY20 FY21
► Having directed the business for over 35 years, Jon has spent recent years Fixed assets and
1,843 1,655 1,853 1,776 1,593 1,458 1,359
investing in building a strong management team, capable of continuing to goodwill
maximise Haydock’s existing strong market presence Net receivables 72,830 92,419 142,401 234,496 328,792 415,765 491,322

► EY has been mandated to sell the business and as part of the mandate, is Other assets 3,911 5,290 4,874 7,185 9,098 10,861 12,375
working to develop and put in place a financing structure on a soft staple basis Cash 2,704 4,032 6,414 4,233 5,040 1,878 1,085
that will be shared with potential bidders including Private Equity Total current assets 81,288 103,396 155,542 247,689 344,523 429,961 506,142
► Alongside the right partner, and with access to additional funding sources, the Mezzanine Funding 1,947 10,185 17,787 18,165 15,428
management team aim to capitalise on the momentum obtained in recent years Block Funding 80,655 69,288 64,319 62,799 69,391
and scale the business significantly through:
Senior Funding 46,441 136,283 221,776 297,255 355,378
► Increasing origination onto its own book from markets (Tier 3 & 4) in which it Total funding 45,432 63,436 129,042 215,756 303,883 378,219 440,197
is already well established
Total other creditors 1,406 1,902 1,302 2,273 3,312 4,362 5,248
► With a new, more efficient funding structure, accessing customers in lower Total current liabilities 64,842 83,611 130,344 218,029 307,195 382,581 445,446
pricing tiers (Tier 2) and increasing volumes as a result
Net assets 16,446 19,785 25,198 29,660 37,328 47,379 60,696
Source: Management accounts and forecast financial model
Note: 1 The historical PBT has been adjusted for non recurring items

Ref. EY-000029125-01 Project Jupiter 7

 Section

Business Overview

Ref. EY-000029125-01
Key milestones
An established and successful specialist lender - well positioned for further growth

Haydock founded EFT acquired by the Growth of the asset New wholesale £205mn total book
by Jon Wilkinson Bank of Scotland finance business funding line size (of which
Began as a model secured with RBS £93mn is own book)
consumer car £113mn book, 81 (3 year revolving 39 staff
finance business staff credit facility)

1995 2000 2006-2013 2015 2017

1980 1997 2005 2014 2016

Business sold to Jon Wilkinson re- Haydock enters the property Secure Trust Bank
EFT Finance acquires a market and is subsequently plc appoints
£35mn book, 20 controlling interest impacted by the financial crisis Haydock as its
staff and secures a credit The non-property finance book Authorised
facility from the sees continued profitable Representative
Bank of Scotland growth, with Haydock
maintaining strong asset cover
over the period

Ref. EY-000029125-01 Project Jupiter 9

Corporate Structure
Current structure and transaction rationale

Ownership Structure
Jamie Ben Jon Robert Thomas
► As founder and Chairman, Jon Wilkinson is the majority shareholder of Wilkinson Wilkinson Wilkinson Wilkinson Wilkinson
Haydock Finance Holdings Limited
► Jon’s four sons own the balance of shares and are willing to divest their 7.5% 7.5% 70% 7.5% 7.5%
shareholding alongside Jon
► HFH’s operating subsidiaries underwrite all asset financing agreements, with
HFL recording all block funding and business written from its own cash
resources, and HAFL recording all agreements financed by the RBS facility
► Income from the arrangement with Secure Trust Bank plc is recorded in HFL
Haydock Finance
Holdings Limited (‘HFH’)
Transaction Rationale
► Having directed the business for over 35 years, Jon has spent recent years
investing in building a strong management team, capable of continuing to
maximise Haydock’s existing strong market presence
► Jon is keen to remain involved with the business going forward but is looking
for the right partner to support and add to the management team in driving the 100% 100%
next phase of growth
► Alongside the right partner, and with access to additional funding sources, the Haydock Finance Limited Haydock Asset Finance
management team aim to capitalise on the momentum obtained in recent (‘HFL’) Limited (‘HAFL’)
years and scale the business significantly

Ref. EY-000029125-01 Project Jupiter 10

Management team
A talented, experienced and ambitious team

Jon Wilkinson ► Jon is the founder and Executive Chairman

Executive Chairman ► As an entrepreneur, Jon drives the future strategy of the business with particular focus on channels to market
► Jon manages some of the broker relationships and has also been driving the growth of Haydock’s direct lending
proposition

Steve Worrall
Managing Director (ACIB)
Ian Barr
Credit & Risk Director (FCIBS)
► Steve joined Haydock from RBS in 2000, where he held the position of Operations Director
► In 2009, Steve joined global engineering company, IMI PLC, as Finance Director (Emerging Markets, IMI
Hydronic Engineering)
► Steve re-joined Haydock in 2014 as Managing Director, and maintains responsibility for the operations of the
business on a day-to-day basis together with maintaining the relationship with Haydock’s funders
► Steve is appointed as Money Laundering Reporting Officer (MLRO) and is approved by the FCA in relation to
controlled functions
► Ian joined Haydock in 2014 as Credit & Risk Director, and is a member of the Board
► Prior to joining Haydock, Ian spent 14 years at National Australia Group, where he held the position of Head of
Asset Finance
► With extensive banking experience and knowledge of the corporate, commercial & SME sectors, Ian is
responsible for the entire credit function within Haydock (including underwriting and collections)

Other Key Team ► Kate Ashton, Management Accountant (8 years service)

Members ► Andrea O’Brien, Sales Manager (14 years combined service)
► Wendy Jones, Credit & Risk Manager (2 years service)
► Hayley Baldwin, Collections Manager (13 years service)
► Debbie Hallam, Operations Manager/PA to EC (27 years service)

Ref. EY-000029125-01 Project Jupiter 11

Team Structure Chart
Motivated employee base of 39 FTEs, many with longstanding service

Jon Wilkinson [TBC] Directors

Founder & Executive Chairman/ Executive Non-Executive
Executive Chairman Chief Executive
Jon Wilkinson Ben Wilkinson
Steve Worrall Susan Wilkinson
Steve Worrall Ian Barr
Managing Director

Ian Barr [TBC]

[TBC]
Credit & Risk Finance
Sales Director
Director Director

Hayley Debbie Hallam

Andrea Wendy Jones Kate Ashton
Baldwin
O’Brien Operations
Credit Risk Management
Collections Manager/PA to
Sales Manager Manager Accountant
Manager EC

2 6 3 1
[TBC] Broker
Regional Sales Senior Transactional
Direct Sales Relationship
Manager Underwriter manager
Manager Manager

3 1 3 1 2 3 2 3
Marketing Collections & Personal Broker Accounts Pay-out and
Direct Sales Broker Admin1
Assistant Recoveries Assistant Support Admin Assistant Administration

Note: 1 Includes 1 temporary Admin Support

Ref. EY-000029125-01 Project Jupiter 12

Customers and Products
Providing financing to UK SMEs for business critical assets

Typical Customer Assets Financed

10% Heavy Comm Vehicles - Used
SME’s across the UK including: 11%
► Diverse customer base
2% Ind Plant & Machinery
► Limited Companies 3% Contractors Plant
from sole traders to
3% Buses & Coaches public bodies
► Sole Trader (must be UK resident) 11%
Comm Vehicles - Used
3% ► A focus on funding
► Partnership Comm Vehicles - New
business critical ‘hard’
4% Agricultural Machinery
► Public Body assets, particularly
Heavy Comm Vehicles - New
4% Cars - Used
commercial vehicles
The average customer loan is c.£56k and plant & machinery
11% Cars - New
5% Trailers
Miscellaneous
5% Biomass Boilers
Audio Visual
10%
6% Cranes
6% 7% Other

Customer Concentration Industry sectors Geographic coverage

Capital Outstanding Customers are based in a variety of sectors: 4% 2% 0%
5% Scotland

► Manufacturing 5% 25% South East

8% London
► Engineering
10% 5% North West
► Logistics and freight
West Midlands
Top 5 Customers
► Transport 6% East of England
Top 6-15

19% 16-50 ► Plant hire Wales

Yorkshire & the Humber
63% Remainder ► Crane/lifting operators & hire 9%
South West
► Vehicle rental 16%
East Midlands
North East
12%
Other
Source: 24th May Data Tape 13%

Ref. EY-000029125-01 Project Jupiter 13

Customers and Products
Varied product offering with flexible loan terms

Hire Purchase Finance Lease Other

► Fixed interest, fixed term hire (new, used and
refinance opportunities)
► No VAT on rentals
► VAT can be deferred up to four months (with
certain credit), it is not usual for Haydock to offer
VAT deferral for new start businesses
► The asset sits on the customer’s balance sheet but
title remains with Haydock until a final option to
purchase fee is made
► Balloon payments are an option (c.7%)
► Customer never owns the asset
► Rentals attract VAT
► Mainly require finance leases for cash flow and
expense/deprecation benefit
► Restriction on Balloon payment options
► Secondary rentals a common feature
► Eventually, asset sold to a third party, up to 99% of
which is passed to the customer as a refund of
rentals
Loan
► Haydock provides a limited number of commercial
loans
► Fixed interest, fixed term loan product, usually
offered in conjunction with a Chattels Mortgage
Fixed Term Rentals
► A finance lease which includes a repurchase
undertaking, usually from the original supplier

Typical Terms1 Product Split

► Average origination balance: £80k 2%

► Average Rate: 11.2% GNR

► Average contractual term: 47 months 35%
► 96% of loans (by number) are unregulated with the Finance Lease
balance being regulated lease agreements to Hire Purchase
business customers (not subject to the regulations Other
2

of CCA 1974) 63%

► Security package often includes unsupported

Personal guarantees from the proprietors

Source: Management Information, as at 31 December 2016

Note: 1 Averages based on 2016 originations, including 3rd parties

Note: 2 Other: Cumulative loans and Fixed term rentals

Ref. EY-000029125-01 Project Jupiter 14

Case Studies
Standard finance solutions
Haulage company
► Customer: Family owned haulage
company, looking to update fleet to
benefit from increased fuel
efficiencies
► Asset: New tractor unit
► Product: Finance lease
► Supplier: Franchised dealership
► Requirement: £100,000 + VAT
► Terms: Deposit of one month’s
rental on signing followed by 47
monthly payments
Security package often includes unsupported guarantees from connected parties (associated companies/principle business driver)
Ref. EY-000029125-01
Coach operator
► Customer: Long established coach
operator
► Asset: 73 seater used double
decker coach to specifically service
a new school contract
► Product: Hire purchase
► Supplier: Known coach supplier
► Requirement: £50,000 + VAT
► Terms: £20,000 deposit (by way of
part exchange of existing coach)
with balance repayable over 36
months
Project Jupiter
Engineering company
► Customer: Precision engineering
company, specialising in parts for
the aviation industry
► Asset: New machining equipment
► Product: Hire purchase
► Supplier: Manufacturer
► Requirement: £265,000 + VAT
► Terms: 30% deposit being partially
funded by grants, balance repayable
over 48 months
Van courier
► Customer: Self employed courier,
working on behalf of Amazon/Yodel
► Asset: 2 x new vans
► Product: Hire purchase
► Supplier: Franchised dealership
► Requirement: £26,000 in total
(including Road Fund License)
► Terms: 10% Deposit with balance
repayable over 60 months
15
Case Studies
Innovative finance solutions
Refinance to facilitate a
management buy-out
► Customer: Bus and Coach
company (established as a family
business in 1999)
► Asset: Fleet of used coaches,
servicing school and council
contracts
► Product: Refinance (sale & hire
purchase back)
► Requirement: £200,000 + VAT
► Terms: VAT-only deposit over 60
months with 25% balloon (£50K) in
month 60
► Other: 9 months “high” payments
with 3 months “low” in January,
February and March
Security package often includes unsupported guarantees from connected parties (associated companies/principle business driver)
Ref. EY-000029125-01
Revolving lines of credit
for a phoenix company
► Customer: Car/van rental
► Asset: New and used motor cars
and light commercial vehicles
► Product: Finance lease
► Supplier: Main suppliers
► Requirement: £400,000 revolving
line of credit
► Terms: Deposit of one months
rental on signing followed by 47
monthly rentals
Project Jupiter
Refinance to facilitate
investment
► Customer: Farming co-operative
► Asset: Tractor units, milk trucks and
milk tankers/trailers (13 Assets)
► Product: Refinance (sale & hire
purchase back)
► Requirement: Deposit to support
investment in a new cheese making
facility (£8mn)
► Terms: £332,000, repayable over
48 months
Funding business growth
► Customer: Hire and sale of access
platforms
► Asset: New & used assets (up to 3
years old) - cherry pickers, boom
lifts, access platforms
► Product: Fixed rate hire purchase
with VAT deferral
► Supplier: Known equipment
supplier
► Requirement: £300,000 revolving
line of credit
► Terms: 10% deposit over
36 Months
► Other: Additional 5% by way of
accelerated payments in 1st 12
months
16
Distribution
A strong broker network with increasing focus on direct business

Brokers Annual originations, by source1

► 91% of Haydock’s 2016 new business volume was originated though a broker1 80
with approximately 125 approved brokers on Haydock’s panel

£ Millions
70
70
► The increase in broker originations represents a CAGR of 32% since 2012 as
60
the business has increased its ability to fund and service an increasing book 53
50
► Recently there has been an increased amount of broker consolidation in the 41
market. This is leading to a smaller pool of brokers to originate business from 40

30
23
Direct Sales 20
21

► In order to reduce the reliance upon the broker route to market, Haydock has 10
begun to expand its direct sales capability and expects this channel to become
-
a material source of new originations going forward. The direct sales team 2012 2013 2014 2015 2016
currently stands at six FTEs
Direct Broker
► Direct sales have increased from 4.0% of originations in 2015 to 8.9% in 2016
Source: Management Information
► By the end of the 5 year forecast period, Haydock is targeting c.40% direct
sales in order improve their relationships with the end customers and be the Originations by channel (2016)1
driver of repeat business. Haydock is planning and implementing a direct
marketing strategy through targeting current customers initially and expanding 9%

this through growth of the direct sales team. This is discussed further on
28%
page 20

Direct
Top 5 brokers
5-10 largest brokers
Other brokers
41%

22%

Source: Management Information

Note: 1 Haydock only but management believe this is representative of all originations

Ref. EY-000029125-01 Project Jupiter 17

Distribution
Structured broker operating model

Broker Application Process Broker Categorisation Structure1

► All brokers are subject to the same application process, regardless of size. Number Description % 2016 Originations
2

This typically involves the following:
► Haydock representative visits the broker premises
► Credit checks and references completed
► Broker application forms completed and signed by Haydock (and 3rd
parties, where applicable)
► FCA authorization evidence and continued monitoring
A 20 ► Highest volume and value of business 62%
► Category A brokers see themselves as business partners of
Haydock (relationship built on two-way trust)
► Close involvement with the management of their portfolio
► Document preparation service provided
B 30 ► Growing relationship and potential to increase volumes 16%
► Haydock is one of a number of strong relationship funders
► More price and commission focussed with less long term
relationships

Relationship management C 44 ►

►
Early stage relationship or low volumes
Deals introduced require closer scrutiny
15%

► A clear differentiator of Haydock is that every broker has a dedicated D 32 ► Low volumes 4%
underwriter and relationship manager who communicate regularly and build ► Controlled by the centre only
mutual trust and understanding over time ► No field servicing requirement

Note: 1 Haydock only but management believe this is representative of all originations
► Clear and open lines of communication giving the broker the opportunity to
Note: 2 A minor number of brokers have been excluded due to data limitations
discuss individual cases to optimize conversion and provide transparency
throughout the process Top 5 Brokers (2016 Originations, %)1
► Brokers are categorised in groups A-D, with differential levels of service
applying to each, see table opposite

GMG Asset Management UK Limited3

Broker Review process 13%

► Broker review meetings occur monthly between the credit team, broker
relationship management and sales team who evaluate all broker originations. GMG Asset Valuation Limited
This encompasses a review of: 14%

► Business proposed 8% 6% 4% 4%
► Conversion rates GMG Crystal Business Allied Finance (UK) Premier Asset Asset Finance
Finance Ltd Ltd Finance Ltd Solutions (UK) Ltd
► Portfolio performance
Source: Management Information
► Haydock removes brokers from its panel if performance falls below reasonable
Note: 3 GMG Asset management and GMG asset valuation are connected, however, they have a different shareholder
expectations structure.

Ref. EY-000029125-01 Project Jupiter 18

Distribution
Incentive structures

Broker commissions Gross and Net Yields (%)

► An intrinsic part of the relationship between Haydock and its brokers is the 18.0%
payment of commission for business introduced 16.0%
14.0%
► Underwriters have minimum rates and maximum commissions levels that they 12.0%
Maintaining
must operate within while taking market pressures into consideration 10.0% broker
8.0% commission
► The business operates to a standard rate card in respect of minimum NNR and 6.0% despite market
commission levels 4.0% pressure
2.0%
► An escalation process exists for deals proposed that fall outside the standard 0.0%
rates.
► Haydock is keen to ensure that it doesn’t compete for broker originations on
price alone but predominantly on service Average GNR Average NNR
► Commissions for brokers are carefully monitored to ensure they are
appropriate in relation to the NNR achieved by Haydock and the GNR paid by Source: Management Information

the end customer Broker rate card – standard pricing and maximum
► Weighted average broker commission for agreements written in 2016 was commission
4.0% of the advance
► Commissions are paid upon inception of new business and amortised in the
P&L over the life of the agreement
► Commission can be clawed back on a pro-rata basis in the case of early
repayments or arrears within the first 12 months of inception

► Pricing will be subject to the individual risk of the finance opportunity

(customer, broker, asset) together with sales negotiation
► Commission will be paid on the net advance (after deposit/initial rentals and/or
amount subject to a VAT deferral)
Source: Management Information

Ref. EY-000029125-01 Project Jupiter 19

Future distribution plans
Further growth of the direct sales channel

Key benefits Direct sales operating model

► In the face of increasing consolidation in the broker market, Haydock plans to
increase the volume of business it originates directly and reduce its reliance on
this source of new business Field Sales Team Telemarketing
Lead
► Furthermore, by building relationships with end users/customers, Haydock can Generation
increase its ability of winning repeat business from these customers in the
future Develop new
► An increased physical presence in the direct market will also expand relationships
and manage
addressable market available to the business existing
relationships
Direct salesforce development
► The direct sales team will operate as set out opposite Other 3rd Parties
Equipment, plant
e.g. accountants,
► Haydock will focus on SME’s located within a 30 mile radius from the central insolvency co’s,
and vehicle End Users
dealers/suppliers
function in Blackburn, widening the geographical scope until there is regional other finance co’s
representation in North, Midlands, Scotland & South
► The appointment of a sales director to mentor and guide the regional
Canvas for new
managers will add strategic direction in line with agreed objectives and credit opportunities
appetite to grow the business and manage new Generate
proposals new
► The continued expansion of the internal sales team, will enable the canvassing opportunities
of potential opportunities whilst assisting regional managers in order to e.g., close to
facility expiry
maximise penetration rates date
Internal Sales Team Existing Customers
Manage
Settlement
and End Of
Lease
Enquiries

Ref. EY-000029125-01 Project Jupiter 20

Future distribution plans
Investment in a new front end capability

Key benefits Portal Development

► Haydock plans to invest c. £0.5mn in developing a new front end capability (the ‘portal’)
that it believes will deliver a number of benefits
► The introduction of automated workflow will create a significantly more scalable platform,
enabling the business to efficiently handle increased volumes without a relative increase in
expenses, producing a proportional reduction in processing costs
► The speed and flexibility of the portal service will further improve broker service levels
► The development of the automated screening/scoring capability will increase the speed of
decisions, thus enhancing conversion ratios
► The development of a credit score functionality will open up new market opportunities
► The scope of work will be commenced in Q3 2017 resulting in
the appointment of a preferred provider to facilitate detailed
costings and key deliverables (including quotation facilities,
proposal processing, automated searches, implementation of
policy rules into a score card, issue acceptances)
► This will be conducted while remaining mindful of the changing
market demands by building a robust model which has the ability
to be enhanced in the future via upgrades/bolt-on functions to
create incremental opportunities

Outline Portal Schematic

Phase 1
Automated Searches
Phase 2

Required Searches completed

and populated in workflow
DECLINE
Broker Web Based Front Automated
Quote Engine Underwriting Workflow
End Portal Screening/Scoring
Information Applications
Flow Screened
Brokers New facilities Decision Support team
complete APPROVE
obtain quotes proposed communicated Decision
manual inputs Communicated

Valuations, fraud
Brokers/Suppliers Underwriter
checks etc.

Ref. EY-000029125-01 Project Jupiter 21

 Section

Market

Ref. EY-000029125-01
UK leasing and asset finance market overview
A sizeable and growing market

Demand Trends Total asset finance new business volume

► In 2016, members of the FLA provided £30bn of asset finance to UK 35
businesses (of which Haydock originated £150m) 30.2
29.1
30
► This market has grown at a 10.5% CAGR since 2013 25.4
25 22.4
► In its 2016 statistics, the FLA reported that its latest industry confidence

Market size (£bn)

survey suggests a broadly stable outlook, with modest new business 20
growth in 2017
15
► The FLA’s most recent release (April 2017) reported that the asset finance
market made a strong start to 2017, with new business up by 12% in the 10
first two months of the year
5
► Additionally, the BoE’s latest quarterly Agents Summary of Business
Conditions (March 2017) reported business’ investment intentions picking 0
2013 2014 2015 2016
up from their previous review in November 2016

Supply trends Composition of asset finance in 12 months to Dec 16

By Asset By Product
► In response to this strong demand, market supply has also increased
Aircraft, Plant and
► New entrants have emerged in the form of specialist/challenger banks and ships and machinery Other
rolling finance finance
broker to lender conversions stock 21% 13%
Finance
finance leasing
► Funding to the non-bank lending segment of the market has also increased 2% 13%
Car
through increased block funding, wholesale (including conduit) facilities and finance
the British Business Bank 34%

► This has led to some increased competition and pressure on rates Operating
leasing
► A core part of Haydock’s future strategy is to access cheaper funding 22%
facilities to enable it to maintain margin in its current market segments and
access lower yielding, but larger, market segments

Business Hire
equipment Commercial purchase
finance 9% vehicle 52%
finance
Source: FLA, BoE Quarterly Inflation Report 2017, Maxxia, EY Analysis IT equipment 27%
finance 8%

Ref. EY-000029125-01 Project Jupiter 23

Haydock’s position in the UK asset finance market
Asset/Credit quality and net rates relative to competitors

UK SME Asset Financing competitor landscape

Tier 1 Current position

Tier 2 Future growth

Opportunity
Asset & Credit quality

Tier 3
Tier 4

Tier 5

1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% +

Source: Management estimates NNR
Tier 1 characteristics Tier 2 characteristics Tier 3 characteristics Tier 4 characteristics Tier 5 characteristics

► High asset quality, primarily ► High asset quality, often from ► Good asset quality, new or ► Good asset quality, primarily ► Often good asset quality,
from new assets new assets used used normally used
► Often higher ticket value ► Often higher ticket value ► Average ticket value c£100k ► Average ticket value c£50k ► Often refinance
► Low credit risk ► Low credit risk ► Medium credit risk often refinance ► Higher credit risk
► Low margins ► Low margins ► Improved margins ► Medium credit risk ► Enhanced margins
► Significant competition for ► Focus on asset resale value ► Focus on asset resale value ► Enhanced margins ► Focus primarily on asset resale
volume and cash flow/serviceability and cash flow/serviceability ► Focus primarily on asset resale value
► Focus on cash flow and ► Includes significant volume of value and shortening of any
serviceability transactional deals collateral gap
► Proof of serviceability

Ref. EY-000029125-01 Project Jupiter 24

Position in the UK Asset Finance market
Loan book size and growth rate relative to competitors

50
Current position
High (> £500 m)

Future growth
Opportunity
Medium (c. £100-500 m)
Loan book size

25
Low (< £100 m)

0
0.0 0.5 1.0
Low Medium High

Sources: Latest annual reports of September 16 or December 15, Asset Finance International 2017 report Growth rate

Ref. EY-000029125-01 Project Jupiter 25

 Section

Origination and
Underwriting

Ref. EY-000029125-01
Process Overview
Robust process with high levels of efficiency & service

Prior to Underwriting Relationship

Application Payout Welcome Funding
application and Packaging and Servicing

► Preliminary informal ► Application received ► Applications individually assessed ► Document preparation ► A welcome pack is ► The loan is matched ► Dedicated contact
discussion around from broker or direct including adverse media searches services are offered to issued containing: by Haydock to the provided to the broker
risk appetite and typically via email ► Valuation obtained selected brokers. This ► Confirmation of most appropriate or client
pricing ► Admin team perform differentiates and helps finance terms wholesale funder
► Review of credit suitability (financials, to increase new business based on their
► Indicative terms and initial screening bank statements, Experian) ► Confirmation of
conditions discussed (including credit ► The agreement will be respective criteria,
► Site visit for larger advances (>£250k) funds i.e. cost of funds,
► Opportunity to bureau searches and checked to ensure the
initial valuation) ► From a review of the information delegated authorisation ► Annual VAT type of asset and
reinforce the benefits schedule where availability
of dealing with ► A review of any collated, pricing will be determined procedures have been
based on the underwriter’s experience followed and that the relevant applicable
Haydock existing customer
exposure is and within the set underwriting criteria individuals have authorised
undertaken ranges the agreement as appropriate
► Application loaded ► As additional information is obtained, ► Payout made to verified
onto HAMIS pricing is adjusted or additional security supplier following thorough
is sought as appropriate checks and reviews by two
► Accelerated and seasonal payment authorised individuals New business proposals (2014 – 2016)
profiles are analysed previously unconnected with
the transaction
► Letter of acceptance issued with key 100% 3000
pre-funding terms ► HAMIS go live and financial
90%
terms locked
► Ensure that proposed asset and 2500
80%
proposed repayment profile will be
70%
suitable for wholesale funding channels 2000
60%
► Fraud mitigation checks, including KYC
information & onsite as appropriate 50% 1500
40%
1000
30%
20%
500
10%
0% 0
2014 2015 2016

Accepted Declined - Haydock

Declined - Broker Total proposals

Source: Management information

Ref. EY-000029125-01 Project Jupiter 27

Controls
Flexible underwriting approval controlled within a strong risk framework and culture

Credit policy Authority limits and escalation process

► Formal Credit Policy, maintained on the Haydock Intranet – updated regularly to ► Haydock has a number of authorisation limits and yield guidelines as set out in
reflect market conditions, strategic objectives and best practice findings (such as the tables below
post mortem enquiries following a delinquency) Haydock
► Haydock’s key risk philosophy is to avoid concentration of risks for both the source Authorisation Limits Delegated Mandates
of new business and asset type concentration Up to £150,000 Individual Mandates*
Up to £250,000 2 signatures
Deal review process
2 signatures + 1 director OR
Up to £500,000
► A monthly independent review is performed by the Credit and Risk Director on a 2 directors
sample of underwriting files £500,000 + Must be signed off by credit committee
► Each file is classified as either satisfactory, marginal or unsatisfactory. For an *i.e. Underwriter A can sign £100k alone or £150k together with underwriter B, or £500k with Ian Barr
outcome other than ‘satisfactory’, the Credit and Risk Director will take the or £1m with Jon Wilkinson/Steve Worrall
following action: ► Authority limits relate to aggregated exposure per customer, including any
► Marginal – The same underwriter’s file will be reviewed again in 6 months connected parties

► Unsatisfactory – Review a sample of this underwriter’s last three month’s deals

Haydock - Yield Mandates (Net)

Monitoring Authority Levels Advance <£100,000 Advance >£100,000

Below Director Various 10-12% Various 9-11%
► Subject to credit conditions imposed on the individual transaction although usually
Director 9% 9%
include aspects such as verification of ongoing financial viability via management
information, periodic audit of assets subject to funding, regular customer visit 2 x Director 8.5% 8%

Credit and underwriting committee

► Credit and underwriting committees take place each month. These review the
loans that have been issued and evaluate the yield, value and performance of the
loans. They evaluate the market using information available in the public domain in
relation to rates/yields and the credit appetite of peers

Training
► Risks are mitigated through the long tenure of experienced staff. Staff attend a
number of training courses annually to ensure consistent and up to date skills

Ref. EY-000029125-01 Project Jupiter 28

Lending criteria
Flexible criteria focusing on the customer story within a strong risk framework

Standard criteria
Min advance £5,000 (for economic reasons only due to average processing cost)
Max advance £2,000,000 per customer or group (strategically restricted given current net worth & funding structure)
Max LTV Ideally 95% FSV (100% FSV, less 5% disposal cost)
Max Term 60 months
Repayments Monthly or seasonal profile, sometimes with balloon option (dependant upon lifespan of the asset)
► Hire Purchase (non-regulated) ► Fixed Terms Rental agreements with repurchase undertaking
Products ► Finance Lease (non-regulated and regulated) ► Refinance
► Non-regulated Commercial loans ► VAT deferral
► Company
► Sole Trader (must be UK resident)
Acceptable customer ► Partnership
types ► Public Body
► Other legal entity with full legal capacity
► All legal entities must be incorporated in England, Wales, or Scotland
► Only available to established companies (i.e. not start-ups)
VAT deferrals
► Between two and four months
Assets ► Saleable hard or soft assets only
► Cars – 5 years ► Plant – 10 years
Age limits (preferred) ► Commercial vehicles – 8 years ► Machinery – 15 years
► Buses & Coaches – 15 years ► Cranes – 15 years
► Forced Sale Valuations to be used as standard
Valuations
► Non-wheeled single assets over £250k net advance require more comprehensive valuations (often PI backed)
► £195 with net advance of up to £75k
► £295 with net advance over £75k
Acceptance Fees
► £35 Annual Fee on all agreements
► Asset inspection fee negotiated on refinance and multiple asset deals

Ref. EY-000029125-01 Project Jupiter 29

 Section

Collections

Ref. EY-000029125-01
Collections Overview
Proactive and rigorous collections approach resulting in strong credit performance
Monthly payments
► All agreements are collected using
monthly Direct Debits
► BACS information is uploaded to HAMIS,
unpaid Direct Debits list and arrears
report is generated
► Cancelled Direct Debit list is also
generated from the BACS information
Ref. EY-000029125-01
Early warning triggers
► Haydock has a number of early warning
triggers, including:
► Experian Business Monitoring which
includes, change of director, change
of control, striking off action, CCJ’s
winding up petition or appointment of
an Administrator
► Failed payment (bounced Direct
Debit)
► Cancelled Direct Debit
► Each settlement request is monitored
from an ‘asset risk’ point of view
► Regular Fraud Meeting, an informal
gathering of peers to share market intel
re deception techniques and activities of
specific counterparties
Project Jupiter
Arrears Action
► Upon notification of the failed or cancelled
Direct Debit, immediate contact will be
made to establish the reason for failure
and Haydock will either take payment or
set a diary entry for an agreed payment
date. If initial contact efforts are
unsuccessful, Haydock will continue to
attempt contact throughout the day
► The full arrears list is monitored daily
► HAMIS generates an arrears reminder
letter on day eight
► If no payment or contact has been made
by day sixteen a termination notice is
issued and an approved agent will visit all
available premises
► The agent will either collect cash or the
asset, if the asset is collected the
agreement is then ‘frozen’ on HAMIS and
the asset placed in stock to sell
► If the customer cannot make payment and
refuses to return the asset, Haydock will
consider legal action against the company
and any guarantors
► If an asset has not been recovered and
the agreement reaches 90 days in arrears,
the agreement is frozen on HAMIS by the
collections team and the HAMIS status
shows the agreement within ‘Collections’
Repossession Action
► Assets are recovered by approved
agents to Haydock’s approved auction
houses i.e. Gateway Auctions Ltd,
Commercial Vehicle Auctions Ltd or
GMG (if in Scotland)
► The majority of assets are sold within six
weeks of being collected. There may be
exceptions to this with a seasonal asset
i.e. coaches in winter
► Sell via live or online auction (Bidspotter)
► Reserves are set or the assets are not
sold without Director approval.
► Once the asset is sold and the debt has
been crystalised Haydock will seek
recovery of any shortfall via the
guarantees it has in place. Firstly through
trying to establish a payment
arrangement in house, and if this is not
successful, legal action (i.e. charging
order or statutory demand) is considered
► This approach has resulted in low
historic write-offs with only 1% net write
offs in 2016 being below the market
norm of c.1.25%
31
Provisioning Policy & Write Off Process
Haydock manages its portfolio diligently achieving low arrears

Provisioning Policy Arrears Balances

► Where indicators are present that the customer will not be able to continue to 31 December 2016 31 January 2017
pay amounts due (for example due to insolvency), the agreement will be Number of agreements in arrears 38 31
classified as ‘frozen’ on HAMIS over 16 days
► All agreements that exceed 90 days in arrears are frozen, irrespective of likely % of total agreements in arrears 1.6% 1.3%
recovery actions over 16 days
Total arrears £290k £158k
► Upon classification as frozen, no further interest is accrued and all existing
unpaid but accrued interest is cancelled - 16 to 30 days £114k £69k

► Where assets are frozen but not repossessed, a provision is created for the full - 31 to 60 days £129k £89k
capital outstanding balance - 61 to 90 days £47k -

► Where assets have been repossessed, a valuation is obtained and a provision

created for the difference between the value and capital outstanding Source: Management information

► Upon sale of the repossessed asset, any difference between the sale value
achieved and the book value after provision is immediately recognised in the
income statement

Ref. EY-000029125-01 Project Jupiter 32

 Section

Existing Infrastructure &

Governance

Ref. EY-000029125-01
IT Systems and premises (current)
Tailored and scalable IT system

Core Systems
► Haydock uses a number of IT systems to support the operations and growth of
the business. Key systems include:
HAMIS
► Salesforce, a system used for Customer Relationship Management. The Experian

Database
sales team and broker relationship managers document all customer HPI
conversations on the system, ensuring up to date information is readily to Companies House
hand. This also helps inform the sales representatives of broker Land Registry
VAT validation
performance Mouse Price
► Sage accounting software
► HAMIS, a packaged loan administration system with bespoke tailoring
specifically for Haydock. HAMIS is a Leasesoft system provided by NetSol
Technologies Inc.
► Business Objects Crystal, which is used to extract data from HAMIS and

Extraction Tools
provide management reporting
Backed out
calculations from
Data backup procedures/BCP Sage to Netsol
► The backup strategy involves full recovery of all data systems at a 3rd party
serviced office of the Company’s choosing in East Lancashire within 48 hours Sales team
of the disaster occurring report

► Haydock implemented their BCP in March 2017 with a successful outcome

without any loss of operation
(AUDDIS)
Premises
► Haydock operate from Challenge House, Challenge Way, Greenbank
Outputs

Business Park, Blackburn BB1 5QB. This is owned by Jon Wilkinson’s SIPP.
Haydock benefits from a lease at fair market rent on the entire building for 25
years from June 2015, with the right to sublease. Haydock sublet 25% of the
building to a category A broker, this sublease was executed on an arms-length
basis in March 2016 being for an initial duration of three years Excel Excel/Accounts & MI Excel

Ref. EY-000029125-01 Project Jupiter 34

Regulation
Fully authorised but processing a low level of regulated business

Regulation Documentation
► Haydock is regulated by the FCA, obtaining Full Permission for a range of ► The facility documentation has been created alongside solicitors Morton Fraser
controlled functions in April 2016. (being industry specialists) and was recently reviewed by Addleshaws as part
of the due diligence process undertaken separately by RBS and British
► The regulated activities that are authorised to be undertaken are:
Business Bank before the provision of finance.
1. Agreeing to carry on a regulated activity
► Haydock has undergone regular audits as part of its current funding
- only carry on the regulated activities specified in the FCA Notice
arrangements
2. Credit Broking
3. Debt Administration
4. Debt-collecting
5. Entering into Regulated Consumer Hire Agreements as owner
6. Exercising or having the right to exercise the owner’s rights and duties
under a regulated consumer hire agreement
► 96% of loans are unregulated with the balance being regulated lease
agreements to business customers (not CCA regulated)
► Steve Worrall is the approved person for the controlled functions which involve
a Money Laundering Reporter. Haydock performs PEP/sanctions/AML and
KYC checks prior to working with a customer

Ref. EY-000029125-01 Project Jupiter 35

 Section

Portfolio

Ref. EY-000029125-01
Existing Portfolio
A diversified loan book with an attractive yield

Loan term in months

Loan portfolio as at 24 May 2017:
60m+
► £98m Loan Portfolio comprising of 2,625 live loans
► Average loan size – £55.7k 48m-60m

► Weighted average NNR – 11% 36m-48m

► Weighted average term – 47 months

24m-36m
► Weighted average seasoning – 11 months
12m-24m

<=12m

0% 5% 10% 15% 20% 25% 30% 35% 40%

Loan Yield (NNR) Loan size segmentation

£
45%
40%
40% >1m

35% 32% 600k-1m

30%
300k-600k
25%
25%
200k-300k
20%
150k-200k
15%
100k-150k
10%

5% 50k-100k
2% 1%
0%
0% <50k
0-4% 4%-8% 8%-10% 10%-12% 12%-16% >16%
NNR 0% 5% 10% 15% 20% 25% 30%

Source: Management Information, as at 24 May 2017

Project Jupiter

Ref. EY-000029125-01 37
Recent origination analysis
Proven ability to originate increased volume

► Haydock has increased its originations significantly over the historical period
► Originations for 3rd parties averaged £7m per month in 2016 in comparison to £5.7m per month of own book originations
► Recent origination levels have been lower, primarily due to 3rd parties’ credit and pricing appetite. Through accessing further funding, Haydock plans to return to, and
exceed, the level of originations achieved in 2015/16

Originations (£m)
20

18

16

14

12

10

0
Apr-14

Aug-14

Sep-14

Oct-14

Nov-14

Dec-14

Apr-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Apr-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16
Jan-14

May-14

Jun-14

Jan-15

May-15

Jun-15

Jan-16

May-16

Jun-16
Mar-14

Mar-15

Mar-16
Feb-14

Jul-14

Feb-15

Jul-15

Feb-16

Jul-16
HFL parties
Originations for 3rd Party

Source: Management information

Ref. EY-000029125-01 Project Jupiter 38

Performance – Early Settlements
Stable performance is the output of robust originations and collections

► The graph below shows, for months post origination, the percentage of loans that settled early on a cumulative basis
► Reasons for early settlements include: defleeting, insurance write off, change in transactional requirements, financial considerations, and upgrades. This improves
the performance of the business as the customers are legally obliged to pay all outstanding interest due for the life of the loan at the point of settlement. In order to
retain customers and in cases of financial hardship, Haydock does negotiate settlement discounts outside a customer’s contractual entitlement

Early settlements

25%

20%

15%

10%

5%

0%
0 5 10 15 20 25 30 35 40 45 50 55 60

2012 2013 2014 2015 2016 Model Assumption

Source: Management Information

Ref. EY-000029125-01 Project Jupiter 39

Performance – Defaults & Recoveries
Stable performance is the output of robust originations and collections

► The graphs below show the cumulative amount of balances that are frozen (defaulted) as a percentage of the origination balance, and the cumulative amounts
recovered on the balance when frozen
► Haydock has a rigorous collections and recoveries approach that has led to low historic net bad debts with only 1% net bad debts in 2016. Haydock believe that this
is highly credible given the market tiers it operates in. Across all tiers, management believes the market averaged 1.25% net write-offs
► Haydock undertakes a proactive approach to defaults, taking ownership of assets quickly. Whilst this leads to higher and quicker levels of default, the benefit of this
approach is reflected in a higher recovery rate
► Haydock uses an auction process to recover the value of assets, which has historically led to a c. 80-90% recovery rate (typically achieved within the first 10 days
after ownership of the asset is taken)
► The assumptions used for the forecasts have considered historic performance, forecast origination in higher quality segments and the assumption of a less benign
credit environment going forward

Frozen (Defaults) Recoveries

16%
100%

14% 90%

80%
12%
70%
10%
60%
8% 50%

6% 40%

30%
4%
20%
2%
10%
0% 0%
0 5 10 15 20 25 30 35 40 45 50 55 60 Unknown 4 9 14 19 24 29 34 39 44 49 54 59

2005 2006 2007 2008 2005 2006 2007 2008

2009 2010 2011 2012 2009 2010 2011 2012
2013 2014 2015 2016 2013 2014 2015 2016
Model Assumption Model Assumption

Source: Management Information

Ref. EY-000029125-01 Project Jupiter 40

 Section

Historical Financial
Performance

Ref. EY-000029125-01
Historical performance
Profit and Loss

► Strong revenue growth (40% CAGR) has been driven by the growth in new Profit & Loss Account
originations since the business accessed new funding lines from 2014
Y/E: 31st Dec (£’000s) FY14 FY15 FY16
► Net yield including early settlement income has been maintained over the
Gross revenue 6,394 9,061 12,477
period in the range of 12-13%.
Interest (1,969) (3,168) (3,973)
► Profit share/commission reflects income from the relationship with Secure
Profit share/commission - 1,535 2,822
Trust Bank plc
Broker commission (1,122) (1,525) (1,843)
► Other income comprises primarily of arrangement fees (at inception), option to
Net Earnings 3,303 5,903 9,484
purchase fees (at conclusion of Hire Purchase), secondary rentals (after the
primary period on a Finance Lease) and retention of sales proceeds (disposal Other Income 516 540 676

of assets subject to Finance Lease). Bad Debt Provisions (Adjusted) (268) (91) (791)

Gross Profit 3,552 6,352 9,369

► Bad debts in FY14 and FY15 have been adjusted for prior year property
transactions Admin expenses (1,741) (2,606) (3,687)

Profit before tax 1,811 3,746 5,682

► The cost income ratio of the business has decreased over time as it has
benefited from operational leverage Normalisation adjustments

Costs attributable to family members (323) (428) (399)

► The profit adjustments reflect costs relating to Wilkinson family members, non-
Non-recurring other costs (109) (234) (86)
recurring one off costs and bad debts attributable to the legacy property
business Bad debt attributable to legacy property 28 (803)
business
► All of the above has culminated in delivering an attractive RoE of 22.6% in PBT (per management accounts) 1,408 2,281 5,197
2016
Tax 290 (476) (1,103)

Profit after tax 1,698 1,805 4,094

KPIs

New originations (£’000s) 40,700 52,400 68,000

Net Yield (on average receivables) 11.7% 12.0% 12.9%

Cost of funds 5.1% 5.8% 5.5%

Commissions 2.8% 3.0% 3.0%

Bad Debt Ratio 0.5% 0.1% 1.0%

Cost : income ratio 52.7% 44.1% 38.9%

RoE 11.2% 22.6%

Source: Management accounts

Ref. EY-000029125-01 Project Jupiter 42

Historical performance
Balance Sheet

► Residual goodwill relates to the acquisition of Haydock Asset Finance Limited, Balance Sheet
this is being amortised on a straight line basis over a period of 10 years
Y/E: 31st Dec (£’000s) FY14 FY15 FY16 CAGR FY14-16
► Net receivables have continued to increase since the business accessed new
Goodwill 1,964 1,777 1,573 -11%
funding lines from 2014
Fixed Assets 877 66 82 -69%
► Cash has increased over the period as management has sought to be prudent
Net Receivables 52,719 72,830 92,419 32%
and ensure the business has a strong liquidity position
Cash 1,612 2,704 4,032 58%
► Funding facilities are discussed further on page 45
Other Assets 4,236 3,911 5,290 12%
► Shareholder/Director loans are from the Wilkinson family and have been used Total Assets 61,408 81,288 103,396 30%
to increase the equity base of the business and support growth in new
Block Funding (21,350) (37,153) (54,539) 60%
originations. It is assumed that these loans will be repaid at completion of the
RBS Bank Facility (24,082) (26,282) (27,170) 6%
transaction
Total Other Creditors (125) (1,406) (1,902) 290%

Total Current Liabilities 45,557 64,842 83,611 35%

Net Assets 15,851 16,446 19,785 12%

Share Capital 2,066 2,066 2,066 0%

Retained (loss)/profit 10,357 11,437 14,930 20%

Shareholder Funds 12,423 13,503 16,996 17%

Directors loans 1,070 987 698 -19%

Shareholder Loans & Loan Notes 2,358 1,956 2,091 -6%

Adjusted Shareholder funds 15,851 16,446 19,785 12%

Source: Management accounts

Ref. EY-000029125-01 Project Jupiter 43

Current Funding
Diversified funding base

► The loan book is primarily funded through Funding Lines1

a combination of a wholesale facility from
RBS and block funding lines with ten 30 28.5 £30,000,000
different partners. There are a small 2% 25.0
amount of receivables (£5.8m) which (as 25 £25,000,000
at 30th April 2017) are not subject to
funding (effectively 100% equity funded) 20 37% £20,000,000

Funder balances (£m)

although this “stock” will be subject to new 15.0
drawdowns via block facilities 15 £15,000,000
98%
► The RBS facility is £28.5m and the block 43%
10.0 10.0 10.0
10 8.4 £10,000,000
facilities in aggregate total £90.5m, giving 63% 19%
39% 6.0
Haydock total funding facilities of £119.0m.
5 75% 4.0 £5,000,000
As at 30th April 2017, Haydock has utilised 81%
61%
48% 100%
57% 48% 1.2
£84.5m 1.0
25% 52% 52% 100%
0 100% £0
► RBS facility – 85% advance rate, 3.5% RBS Block - BBB Block - Block - Block - Block - Block - Block - Block - Block - Block -
Shawbrook Investec Hampshire Triple Point Hitachi PEAC Lombard Aldermore Siemens
margin over 1 month LIBOR plus annual
review fees
Funding balance Availability
► Block facilities – advance rate c90%,
Note: 1 Funding as at 30th April 2017
c5.25% average margin plus “reasonable”
Source: Management information
annual renewal fees, which vary across
the providers Haydock Finance Holdings Ltd (HFHL)
Nostrum
Backup Servicer
► The British Business Bank (‘BBB’) facility
provides a block facility which matches the
terms of the selected commercial block
Unsecured guarantee

funders on a pari passu basis

Haydock Finance Ltd Haydock Asset Finance Ltd
(HFL) - Servicing Entity Servicing (HAFL)
contract

Block Funding RBS Investec

Small block line in run-off,

less than £5k, due to be fully
repaid soon

Ref. EY-000029125-01 Project Jupiter 44

 Section

Financial Forecasts

Ref. EY-000029125-01
Growth Strategy
Haydock will grow its own book significantly, transitioning away from its JV and increasing its
profit over the forecast period
► A key component to Haydock’s future growth strategy Origination Assumptions
is gaining access to cheaper cost of funds at scale
£m 2017 2018 2019 2020 2021
► This will enable it to redirect origination previously
directed to third parties onto its own balance sheet in Tier ¾ - Hard assets 68 68 75 85 95
Tier 3 and 4 of the market Tier 3 – Hard assets 23 60 75 80 90
► It will also enable it to expand its market and write Tier 2 – Hard assets 9 37 40 60 70
incremental business in both the Tier 2 and Tier 3 Tier 1 – Soft assets - 5 25 35 45
space
New volumes 100 170 215 260 300
► Controlled entry into the provision of Tier 1 business Net receivables 142 234 329 416 491
critical soft assets (such as teleco equipment, IT
Tier 3/4 (HFL) 10.8% 10.5% 10.4% 10.4% 10.4%
hardware/peripherals, EPOS systems) where credit
covenant and financial strength of the customer is Tier 3 7.5% 7.4% 7.3% 7.2% 7.1%
sufficiently robust Tier 2 6.0% 5.8% 5.7% 5.5% 5.3%
► Furthermore over time, as Haydock grows its net Tier 1 7.1% 7.2% 6.9% 6.8% 6.8%
asset base, it can increase its individual customer Weighted NNR inc. LIBOR 9.6% 8.6% 8.6% 8.5% 8.4%
exposure limits
Weighted GNR 12.0% 10.7% 10.7% 10.6% 10.5%
► Given the origination volumes the business has Broker Broker Broker Broker Broker
Channel Mix
achieved in the recent past, management believe the
80.0% 66.7% 64.6% 62.5% 59.0%
assumptions for growth in new originations are very
supportable Direct sales Direct sales Direct sales Direct sales Direct sales

► Given the change in mix, together with management’s 20.0% 33.3% 35.4% 37.5% 41.0%
assumptions around the impact of future competition
on yields, the assumed weighted average yields Source: Forecast financial model
decrease over the forecast period (net of modest
assumed interest rate increases over time)
► Whilst increasing originations in lower yielding
markets, management believes it can access a lower
cost of funding and maintain an attractive yield after
cost of funds

Ref. EY-000029125-01 Project Jupiter 46

Proposed Haydock financing structure
Access a conduit facility and retain block funding lines

► The future funding strategy revolves around obtaining access to a conduit facility with the addition of mezzanine funding to improve the overall advance rate
► The forecasts assume an initial £125m conduit facility with a margin of 1.8%, upfront fee of 0.5% and a revolving period of three years, as well as a mezzanine facility
providing a further advance of 7% at a 8% cost.
► The business will also likely retain its access to block funders to place deals outside of the eligibility criteria for the conduit facility and to keep diversification of
funding.

Haydock Finance Holdings Ltd

Orphan SPV
(HFHL)

Security
Trustee
Unsecured guarantee

Sale of
receivables
Haydock
Haydock Finance Ltd Haydock Asset Finance Ltd
Securitisation No. 1 Account Bank
(HFL) - Servicing Entity (HAFL)
Servicing (Newco SPV)
contract Principal
+ Deferred

Note Backup
Proceeds
issuance Servicer

Block Funding Conduit Vehicle

Ref. EY-000029125-01 Project Jupiter 47

Growth Strategy
Haydock will grow its own book significantly, transitioning away from its JV and increasing its
profit significantly over the forecast period
► Strong revenue growth (34% CAGR) driven by increases in origination albeit at Profit & Loss account
a lower average net yield
Forecast
► The profit share reflects nine months under the current STB arrangement and CAGR (2017-
a one off exit payment (£’000s) FY17 FY18 FY19 FY20 FY21 2021)
► The cost of funds decrease over the forecast period as an increasing Gross revenue
proportion of lending is funded through the conduit facility. This is net of an (including 14,535 22,234 30,695 39,325 46,846 34.0%
settlement income)
assumed increase in LIBOR over the forecast period
Interest (5,545) (7,533) (9,657) (13,665) (15,515) 31.8%
► Broker commission rates are assumed to remain constant over the forecast
period although the absolute amount paid to brokers grows less quickly than Profit
4,440 - - - - -100%
share/commission
origination volumes as the percentage of direct sales increases
Broker commission (2,272) (3,234) (4,326) (5,360) (6,159) 28.3%
► Other income increases at a consistent percentage of average loan balances
Net Earnings 11,157 11,466 16,712 20,299 25,172 21%
► The bad debt ratio increases in the early years due to the front ended shape of
Other Income 835 1,396 2,070 2,726 3,296 41%
the “frozen” curve and the strong growth in originations
Bad Debt Provisions (1,288) (2,164) (3,373) (4,235) (5,053) 41%
► Admin expenses increase as originations and the size of the loan book
Gross Profit 10,705 10,698 15,410 18,790 23,415 20%
increases.
Admin expenses (4,083) (5,189) (5,943) (6,477) (7,176) 15%
► Tax reflects the planned government reduction of corporation tax from 20% to
18% over the forecast period Profit before tax 6,622 5,509 9,466 12,313 16,240 22%
Tax (1,270) (1,047) (1,799) (2,261) (2,923) 22%
► Overall there is a reduction in profit after tax during 2018 as a consequence of
losing access to profit share and admin costs increasing ahead of income from Profit after tax 5,352 4,462 7,668 10,052 13,317 22%
new originations. This is an ‘investment period’ as the business transitions to KPIs
100% ‘own book’ lending ultimately delivering significantly increased, and
New originations 99,918 170,000 215,000 260,000 300,000 32%
higher quality earnings (£’000)
Net Yield (on
average 10.4% 10.1% 9.4% 9.1% 9.0%
receivables)
Cost of funds -5.3% -4.4% -3.7% -4.0% -3.8%
Bad Debt ratio 1.1% 1.1% 1.2% 1.1% 1.1%
Cost: income ratio -36.6% -45.3% -35.6% -31.9% -28.5%
Adj. RoE1 25.8% 20.2% 26.6% 25.8% 25.3%
Source: Forecast financial model
Note: 1 RoE has been calculated by dividing the PAT by the average net asset balance plus the excess cash balance

Ref. EY-000029125-01 Project Jupiter 48

Growth Strategy
Haydock will grow its own book significantly, transitioning away from its JV and increasing its
profit significantly over the forecast period
► The movement in fixed assets & goodwill primarily relates to the goodwill on Balance Sheet
the acquisition of HAFL being amortised over 10 years
Forecast
► Net receivables expect strong growth of 36% CAGR between FY2017-21 as CAGR (2017-
the lower cost of funding enables expansion into lower tiered business (£’000s) FY17 FY18 FY19 FY20 FY21 2021)
► Other assets primarily relate to other debtors and deferred commissions. Other Fixed assets and
1,853 1,776 1,593 1,458 1,359 -7%
debtors move in line with the book and deferred commissions move in line with goodwill
broker originations, clawbacks etc. Net receivables 142,401 234,496 328,792 415,765 491,322 36%
► Mezzanine funding is assumed up to a 92% advance rate, however, as the Other assets 4,874 7,185 9,098 10,861 12,375 26%
business becomes more cash generate the cash is used to reduce the Cash 6,414 4,233 5,040 1,878 1,085 -36%
utilisation in the later years of the forecasts
Total current
155,542 247,689 344,523 429,961 506,142 34%
► Other creditors are comprised of volume bonus, other liabilities, VAT payable assets
and tax liability. The volume bonus based on a constant percentage of broker Mezzanine funding 1,947 10,185 17,787 18,165 15,428 68%
originations, as other liabilities. VAT and tax is based on the performance of Block funding 80,655 69,288 64,319 62,799 69,391 -4%
the business
Senior funding 46,441 136,283 221,776 297,255 355,378 66%
► Shareholder/Director loans are retained within these forecasts, but it is
Total other creditors 1,302 2,273 3,312 4,362 5,248 42%
assumed that these loans will be repaid at completion of the transaction
Total current
130,344 218,029 307,195 382,581 445,446 36%
liabilities
Net assets 25,198 29,660 37,328 47,379 60,696 25%
Share Capital 2,066 2,066 2,066 2,066 2,066 0%
Equity funding
- - - - - n/a
drawdown
Retained
20,282 24,744 32,412 42,463 55,780 29%
(loss)/profit
Shareholder Funds 22,348 26,810 34,478 44,529 57,846 27%
Directors loans 698 698 698 698 698 0%
Shareholder Loans
2,153 2,153 2,153 2,153 2,153 0%
& Loan Notes
Adjusted
25,198 29,660 37,328 47,379 60,696 25%
Shareholder funds
Source: Forecast financial model

Ref. EY-000029125-01 Project Jupiter 49

Unquantified Upsides
Further opportunities beyond the core plan could be explored

Potential for Product Development Potential for Diversification Key

► Undisclosed agency ► Invoice Finance/ABL capability Planned Developments

Unquantified opportunities
► Professions funding ► Operating leases
► Renewables (Wind, Solar) ► Short term commercial property finance
New

► Classic cars ► Develop/acquire brokerage capability

► Marine ► Consumer Finance
► Aircraft ► Sales aid leasing
► Oil and Gas

Planned Developments Potential for Market Development

Market Penetration ► Develop Partnership strategy
Existing

► Compete in lower pricing tiers ► Vendor programmes

► Soft Asset funding ► Insolvency Practitioners and turnaround
► Ongoing development of direct sales capability professionals
PRODUCT

► Development of new broker relationships ► Specialist Law Firms

► Portal Development ► Geographic expansion (Northern Ireland)

► Acquisition

MARKET Existing New

Ref. EY-000029125-01 Project Jupiter 50

 [BLANK]

Ref. EY-000029125-01 Project Jupiter 51