#EOAConference

Welcome to

Employee Ownership Association

Annual Conference 2018

Where employee ownership meets

#EOAConference

EO Lens - Growth and acquisition

for an employee owned business

Facilitated by Adam Campbell, Telos Partners

Presented by: Russell Brown, Shaw Healthcare &

Zoe Burgess, Bridges Fund Management

3 ǀ Strictly Private and Confidential

What we will cover today

• Shaw healthcare – EO, growth and Bridges

• Bridges – why EO and Shaw?

• Key learnings

• Q&A

4 ǀ Strictly Private and Confidential

Shaw healthcare – A business overview

• Turnover: £95M

• EBITDA: £11M

• Care Beds: 2,098

• Employees: 3,490

71.5%

16.2%

10.0%2.3%

Ownership Distribution

Employees and EBT

Ex Employees

Shaw Foundation

Bridges

8 ǀ Strictly Private and Confidential

Finance

Turnover

CompanyS.H.A.W. Registered

Secondary

Housing

Association

Shaw

HomesCharity

Financial

Crisis

NHS Grants

(Charitable

status)

Debt

Finance

(Public

Sector

Contract)

Equity

Finance(Bridges)

Shaw

healthcare

Group (MBO)

£10M £21M £73M £95M

Minority

Interest(Bridges)

Employee

Ownership

Founders

/ EBTSIPs

CSOPs

Maiden

Dividend

Scale Services

Employees

6

348241027

51

3490

49

2907

Shaw healthcare – A History

9 ǀ Strictly Private and Confidential

• Care is a people business. In 2006 the Founder’s vision was to create an EOB

• Benefits:

• A sense of belonging – Family feel

• Shared ownership of company mission

• A unique relationship between the company and its employees

Why did we set up an EOB?

10 ǀ Strictly Private and Confidential

• Initially a small number of employee founder shareholders

• 2010 onwards – employee ownership widened through offers of free shares (SIP) and executive options (CSOP) for senior managers

• Lessons learnt from introducing EO

• Communication – legal jargon vs lay-person terms

• Bringing share ownership “alive”

• First dividend (12 years after EOB set up)• Internal share market not yet introduced

• Next Steps – Internal market, Roadshow, Repatriate ex-employee shares

How did EO evolve at Shaw

11 ǀ Strictly Private and Confidential

• In 2017 the Shaw board agrees to allow up to 20% of its equity to be offered to external

parties to raise funds to support the business development of the Group.

• Bridges share our ethos and values and were prepared to provide long-term finance through

both preference share and ordinary share capital. Both organisations have a strong moral

ethic and strive to make a long term and a sustainable difference in society.

• Not just long term finance, but also a network of business, commercial and advisor

relationships that Shaw can utilise to support its strategic objectives. They also have

considerable investment expertise and can assist us in the evaluation of new projects.

Partnership with Bridges

12 ǀ Strictly Private and Confidential

Bridges is a 16-year-old specialist sustainable and impact investor in the UK and USInvesting to address the Sustainable Development Goals. Over £950m raised and >125 investments made since 2002

13 ǀ Strictly Private and Confidential

Industry Leadership

How we think about

impact

Does impact and commercial value go hand-in-hand?

What quantity and quality of outcomes are we seeking, and for whom?

How can we add value?

Is this organisation a leader in it’s field?

Target Outcomes

Impact Scorecard

Alignment

Bridges approach to ImpactWe have a systemic approach to analysing impact across all our platform

Bridges’ Value-Added

14 ǀ Strictly Private and Confidential

Our interest in EOB and Why?Employee-Owned Businesses have characteristics of ‘better’ and more sustainable business

• Long-term vision and business strategy

• Ambition to share value with employees and other stakeholders

• Overlap with Bridges thematic areas

• In-built accountability

• Transparency of data and decision-making

• More engaged and motivated employees

• Improved performance and productivity

• Lower absenteeism and improved well-being

• Improved levels of service to customers and clients

• More resilient to market shocks

• A greater propensity to innovate

Source: The Ownership Dividend 2018 (EOA)

15 ǀ Strictly Private and Confidential

A top 10 employee-owned business in the UK providing residential and nursing care for the elderly

Challenge: undersupply of quality, affordable care

2,000 beds, 3,200 staff, £94m sales, £11m EBITDA

Ethos of “care you would want for your loved ones”

Growth capital including material investment in front-line staff and activation of EO model

Structured primarily as convertible and non-convertible preference shares. Minority stake

£10m

16 ǀ Strictly Private and Confidential

Focus on operations, growth and activation of the EO model

Talent recruitment and retention, voids and quality

We have introduced a NED to the Board

Reviewing share ownership structure

Payment of maiden dividend this year

2 new contracts won – Poole and Liverpool

Refinanced expensive sub-debt

£10m

17 ǀ Strictly Private and Confidential

What makes an EOB investment ready?

• ‘EO’ drives social and commercial value proposition

• Income diversification

• Quality and sustainability of earnings

• Appetite for step change in growth

• Buy-in from Board and senior management team

• Openness to external scrutiny, support and challenge

• Manageable debt levels

• Absence of material DB pensions

• Quality of management information

#EOAConference

Thank you.

Questions?

#EOAConference

Thank you. Please make your way to the

Sovereign Suite for our final key note speech.