Recruitment Benchmarking Survey TEAM Profit plus meeting Thursday 8 December 2016 Simon Kite Survey carried out August / September 2016 Approx 60 companies took part Approx half of those 60 completed the various questions in the financial section Average net fee income of respondents was just over £1.6million

Business confidence How confident are you that you will be able to achieve your business objectives over the next 12 months? 21% very confident - (2015: 27%) 57% quite confident - (2015: 59%) 86% 78% 2016 78% 2015 % of respondents that are either very or quite confident

How does this compare to your level of confidence 12 months ago? 41% 25% 34% More About the Less confident same confident

Income from temporary workers 58% 26% 16% Increase No change Decrease

Temporary margins Change in temporary placement staff margins

Temporary margins How do you compare? First quartile 26% and above Second quartile 20% to 25% Third quartile 17% to 20% Fourth quartile 17% and less Margins reported in the survey ranged from 7% to 41%

Income from permanent placements of respondents saw a growth in permanent placement fees 56% increase is similar to 58% growth in temp workers 15% no change 30% decrease (26% for temporary workers) This growth is not as impressive as the 74% that reported growth in perm fee income in our 2015 survey

Is your business more or less profitable than the previous year? 13% above the same

How has the size of your staff headcount changed over the last 12 months? 38.9% of respondents saw a growth in headcount 24.1% saw a decrease in headcount 39% saw a growth in headcount (2015: 64%) Is this because recruiters are more cautious or is it because they are not able to find staff of the right calibre to hire? 30% have apprentices working in the business Of those using apprentices, 43% report that their use of this type of labour has increased. It will be interesting to see how this trend develops the apprentice levy coming in next April.

Total staff costs / total staff numbers First quartile £36,000 and above Second quartile £30,000 to £36,000 Third quartile £21,000 to £30,000 Fourth quartile £21,000 or lower Average staff costs increased for 53% of respondents and decreased for 23%. Inflation is forecast to increase – which will put further pressure on staff costs. Commissions as a % of net fee income ranges from 3% to 20% with the average being 10% - broadly the same as reports in our 2014 and 2015 surveys. 47% of respondents either already have a share incentive scheme in place or plan to introduce one in the future. (Similar to 2015 findings).

Staff productivity Net fee income / staff costs First quartile 2.2 and above Second quartile 1.9 to 2.2 Third quartile 1.6 to 1.9 Fourth quartile 1.1 to 1.6 Staff productivity is a more important KPI It doesn’t matter if you pay your staff more than other agencies – as long as they produce additional net fee income The average is around 2 to 1 These figures are very similar to the findings from our 2014 and 2015 surveys

Debtor days First quartile 32 or lower Second quartile 32 to 42 Third quartile 42 to 51 Fourth quartile 51 or higher The results of this year’s findings tells a familiar story, with average debtor days remaining at 42 – unchanged from the previous three surveys.

Use of non-executive directors 15% At what stage in the life cycle of a business does it make sense to an agency to appoint a non-exec director?

The UK’s relationship with Europe 59% said the UK’s relationship with Europe was important Even though only 26% of respondents do business in overseas markets, 59% see the UK’s relationship with Europe as being important (2015: 42%) - 26% had no opinion on the matter last year (which reduced to 11% in this year’s survey) - 2015 survey asked how you would vote in a referendum - 57% said remain - 25% said they would vote to leave This year we asked how they voted: - 70% voted to remain in the EU - 20% voted to leave - (10% either did not vote or chose not to divulge the information) Remain voters: - Fear of impact on their business and the economy was the main factor Brexiteers: - Rules, regulations and bureaucracy was the main reason followed by sovereignty - Only 12% said that immigration was a significant factor

Top 10 challenges facing the sector Availability of candidates 83% Economic conditions/uncertainty 63% Margin pressure from clients 56% Availability of consultants 50% Reliance on a small number of key clients 37% Increased competition in chosen sectors 28% Lack of government support and resources 20% Quality of management team 19% Staff retention 17% Availability of external finance 13% Economic uncertainty jumped up the list from being the seventh most important challenge in 2015 to being the second most important challenge this year. Margin pressure appears to have become less of a challenge with the number of respondents ranking it in their top five reducing from 72% last year to 56% this year.

Top 10 growth strategies Recruiting more sales staff 65% Reducing unnecessary administrative expenditure 52% Diversifying into new sectors 50% New services to customers in existing sectors 46% Investing in technology 41% Resigning from unprofitable client relationships 37% Opening new locations (virtual or otherwise) 33% Renegotiating margins with clients 22% Closing unprofitable sectors 20% Acquiring to increase market share 17%

Questions?