Despite the recession, a new study by recruitment industry analysts Plimsoll Publishing has awarded 427 of the UK’s top 1,000 agencies a strong financial rating for their outstanding financial performance.
 

Agencies’ financial performance was designated into one of five categories: strong, good, mediocre, caution and danger.
 
Rating           No of companies  % of companies    Definition

Strong                        427           43%                           Excellent

Good                          165           17%                           Respectable

Mediocre                    172           17%                           Needing improvement

Caution                      106           11%                           Weak financial position

Danger                       130           13%                           Survival in question

David Pattison, senior analyst at Plimsoll, says:  “It was no real surprise to see the high number of companies on the danger list, given the current economic crisis affecting the recruitment agencies industry.
 
“However we were very surprised to see the high number of excellent businesses making it on to the strong list. I think these firms have really upped their game in these difficult times and they are concrete proof that necessity is the mother of invention.”
 
During the latest financial year analysed, the report shows that the strong firms have performed well in a number of ways:
 
• Average sales growth of 9.7%

• Average profit margins of 4.9%

• Most are operating completely free

• Sales per employee of more than £222,000

Pattison continues: “Obviously there are real concerns over the 236 firms rated as Caution and Danger, their futures look extremely uncertain. Their management are now operating under severe financial pressure where even normal trading is proving hazardous.

“Many of these firms seem likely to be sold off; they are at an extremely high risk of failure unless they turn their performance around fast.”