LLOYDS CORPORATE BANK

Kim Collins, Head of Recruitment March 2015

ENSURING YOU HAVE SUFFICIENT CASH TO GROW

Head of Recruitment

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Kim Collins – Head of RecruitmentTel: 0207 356 1477 (M) 07515 753476

Kim.collins@lloydsbanking.com

EXISTING ROLE

Kim is a Relationship Director, based in Central London who heads up our Recruitment Team.

With a small portfolio, typically of no more than 25 clients, Kim is able to work closely with your business and work with you across all areas of your business.

BACKGROUND

Kim has a background of debt structuring and corporate finance (M&A) work within the Mid Markets business arena.

She has worked in Business Development, Credit and Relationship Management roles for a number of years.

QUALIFICATIONS

Corporate Finance (ICAEW)

Growth – real or perception?

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Some interesting facts around growth in sector :

London Stock Exchange Report – 1000 companies to inspire Britain. 50 Recruitment companies (double last year)

with 235 from London, and a further 140 from the South East.

Market Recovery: Back to pre-recessionary levels - £28.7bn to 4/2014 (from £19.7bn in 3/2010). Turnover growth 8.2%

2013/14. The 4th consecutive year of growth

Labour supply: £26.03bn temps – 12.4% above pre-recessionary levels as job market dynamics change.

1,155,932 – Average number of total daily placements in 2013/14

Within certain sectors growth is even faster, and margins are being maintained or increased.

If you aren’t growing by at least 8.2% pa, you are falling behind your peers

Cash – why needed?

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EBITDA or Cash? What’s the right measure?

EBITDA will help with valuations, but............

Cash is needed for capital investment

If you are growing, you are probably also spending.......

Working capital

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Confidential Invoice Discounting. Funding instrument of choice.

Cash generation only comes when service provided, invoices raised and money received (in advance from CID or

direct from client). Cannot extend creditor terms (payday is payday), and no inventory.

Can fund in Sterling, Euro, USD and most other major currencies

Lloyds has a relationship with 1 in 5 recruitment companies in the UK with over 1,300 clients.

Primary use is to fund against receivables assigned to the bank. Up to 90% advance rate, for 120 days from invoice.

Can also be used to release cash from business for capital purposes, including M&A, but is often currently used

for shareholder benefit!

Within certain sectors growth is even faster, and margins are being maintained or increased. If you don’t focus on the cash, no one else will..........

Building a business plan to support growth

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Identifywhereto grow

Reviewmarket

IdentifyRiskProfile

Model Forecasts

Analyse business strategy, balance sheet and establish whether:

A Need is identified

Experience is held

Gaps need to be addressed

Using modelling and research establish the future market dynamics

Take into account historical and market implied relationships

Review competition in market

Identify appropriate risk metrics for:

Sales Growth

Operating Profit Margin

Return on Capital Employed (bank or equity)

For each relevant risk metric establish the levels which should not be breached, and provide mitigants where possible

Justify and verify assumptions based on market research, competition, risks and mitigants

EXISTING PRODUCTS & EXISTING MARKET

MARKET PENETRATIONIncrease sales to the existing market

Penetrate more deeply into the existing market

ANSOFF MODEL

NEW PRODUCTS & EXISTING MARKET

PRODUCT DEVELOPMENT

New product developed for existing markets

NEW MARKETS & NEW PRODUCTS

DIVERSIFICATIONNew products sold in new markets

NEW MARKETS & EXISTING PRODUCTS

MARKET DEVELOPMENTExisting products sold to new markets

Investment and capital. Debt or equity?

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Investments such as M&A, international expansion and new markets would normally be funded via

equity, at least initially.

Mature and established businesses can leverage existing value to “blend” the equity/debt split

Debt offered, even from start-up stage, for working capital.

Debt funding – key financial requirements

Strong management team, including 2nd tier management and good FD and finance team.

Robust financial monitoring and profit and cashflow projections.

Sustainable revenues, profit and cash generation

Reliable business model

Compliance and regulatory metrics achieved

Would I invest in you if it were my money??????

Are you worth investing in .......

LLOYDS BANK COMMERCIAL FINANCE

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Adding value to your business: -

We offer clients seamless access to locally based decision making teams, including credit

Dedicated Client Managers covering sector

Peer group knowledge and aligned with relevant sector bodies

Accounting support on financial products

UK based, but supporting international businesses, through combination of export debtor funding as well as local in country

Debtor protection insurances

Ensuring you retain the cash within the business

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Review of international capabilities and protecting your profit margin from foreign exchange risk movements that

could eradicate profits.

Time spent in your business – are your debtor collection practices and policies as good as they could be??

Operational efficiencies/synergies from scale. Is there a tangible benefit or is it simply bigger?

Minimise cash drains eg non working shareholders. Consider buy-out to align management KPI’s and focus. Potential

bank support available.

Lloyds is able to assist in this process to ensure any policy is appropriate and relevant

STERLING CAUGHT IN THE CROSSFIRE OF STRONG DOLLAR & WEAK EURO

15Source: Bloomberg

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.45

1.50

1.55

1.60

1.65

1.70

1.75

GBP/USD

GBP/EUR (RHS)

Jan 14

Mar 14

Feb 14

Apr 14

Jun 14

May 14

Jul 1

4Sep 14

Aug 14

Oct 14

Dec 14

Nov 14

Jan 15

Mar 15

Feb 15

KEY FORECASTS

16Source: LBCB

Key policy rates % Current Jun 15 Dec 15 Jun 16 Dec 16

Federal funds rate 0.25 0.50 1.00 1.50 2.00

UK Bank Rate 0.50 0.50 0.75 1.00 1.25

Euro refinancing rate 0.05 0.05 0.05 0.05 0.05

10-yr swap rates %

US 1.90 2.80 3.00 3.40 3.60

UK 1.60 2.40 2.70 3.20 3.50

Euro 0.70 1.10 1.40 1.60 1.80

FX

EUR/USD 1.06 1.10 1.17 1.22 1.25

GBP/USD 1.51 1.47 1.55 1.55 1.54

GBP/EUR 1.42 1.34 1.32 1.27 1.23

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