EY-european-mid-market-barometer-2015

Sample detailsCountryNumber of interviewsGermany 650France 600United Kingdom 500Spain 350Italy 330Netherlands 300Turkey 300Austria 250Belgium 250Norway 250Poland 250Sweden 250Switzerland 250Russia 200Czech Republic 200Denmark 200Finland 200Ireland 200Portugal 200Greece 170Luxembourg 100Total 6,000Sectoral distributionIndustry and manufacturing 42%Service 29%Retail 17%Construction and energy 12%Turnover distribution< €30m 40%€30m to €100m 36%> €100m 24%RespondentsC-suite executives and business ownersEuropean Mid-Market Barometer 2015Page 5

Key findingsBusinessclimateThe large majority of medium-sized companies in Europe view their current state of businessas positive. The outlook for the coming months is also seen as quite positive: turnover isexpected to increase by an average of 1.7%. Business conditions are currently best in Turkey,Ireland and the UK and, by far, worst in Greece.EconomicexpectationsNear-term economic expectations on the domestic economies are cautiously optimistic:in 14 out of 21 countries, the domestic economy is expected to improve, whereas aneconomic downturn is anticipated in only 6 countries.Investment andemploymentRisksIn line with the positive economic predictions, medium-sized companies in Europe plan toincrease their investments. In the labor market, too, positive trends are expected:employment looks set to rise in all 21 countries, with Ireland and the UK being the frontrunners.In Greece, however, employment is likely to increase only modestly.According to Europe’s medium-sized companies, the biggest risk to their own development ishigh prices for raw materials, followed by the weak domestic economy and a poor economictrend abroad. Geopolitical tensions also present a significant threat, with more than one infive companies affected by the Ukraine crisis.PolicyrecommendationsThe majority of medium-sized companies in Europe seek growth promotion by means ofincreasing public investment. In only 4 out of 21 countries (Switzerland, Luxembourg,Germany and Austria), budget consolidation/debt reduction are seen as the key priorities.European Mid-Market Barometer 2015Page 6

Business climate in the mid-marketEuropean Mid-Market Barometer 2015Page 7

Current state of business mainly seen positivelyHow would you assess your current state of business?EuropeProportion selected“good”8551SectorService 52Industry andmanufacturing51Construction and energy 50Retail 4936Turnover< €30m 50€30m to €100m 52Good Quite good Fairly bad Bad> €100m 51The large majority of medium-sized companies in Europe (87%) assess the current state of businessfavorably; half of all respondents are even thoroughly satisfied. Only one in eight companies ratethe current state of business as fairly bad or bad.Figures in %European Mid-Market Barometer 2015Page 8

Country overview: current state of business ratedbest in Ireland and UKHow would you assess your current state of business?IrelandUnited KingdomDenmarkNetherlandsBelgiumTurkeyLuxembourgSwedenNorwaySwitzerlandPortugalCzech RepublicFinlandFranceRussiaSpainAustriaGermanyItalyPolandGreece92315544850445654534151495346483966626364257541373135433347182943493436374837383339361428511 22 12 13 14 14 36 15 25 28 26 49 16 57 510 38 613 214 2108Figures in %Good Quite good Fairly bad BadEuropean Mid-Market Barometer 2015Page 9

Business outlook: almost one in two expect theircompany’s performance to improveHow will your company's performance develop over the next six months?EuropeProportion selected“improve”476 1640SectorService 47Industry andmanufacturingTurnover47Retail 45Construction and energy 38< €30m 45€30m to €100m 46Improve significantly Improve slightly Remain the same Deteriorate slightly Deteriorate significantly> €100m 45Almost half of all medium-sized companies in Europe (46%) expect their performance to improve overthe next six months, whereas only 7% anticipate a deterioration. Optimism is highest in the service andmanufacturing sector.Figures in %European Mid-Market Barometer 2015Page 10

Entrepreneurs in Turkey, Ireland and the UKare the most optimisticHow will your company's performance develop over the next six months?TurkeyIrelandUnited KingdomDenmarkPortugalSpainFranceNetherlandsItalySwedenRussiaNorwayLuxembourgBelgiumFinlandAustriaSwitzerlandGreeceGermanyCzech RepublicPoland13910510964727121353852122285347464643394135413937353132272855535457412935364141414251475445535559575456556218183 1101010204 06 0206 13 013 14 14 02 15 09 19 0611 18 02Figures in %Improve significantly Improve slightly Remain the same Deteriorate slightly Deteriorate significantlyEuropean Mid-Market Barometer 2015Page 11

Mid-market companies expect solid growthin revenueHow do you expect your company's turnover to develop in 2015 compared with 2014?EuropeExpected turnover growth(average)Sector6 1 49Industry andmanufacturing1.8Service 1.742Average+1.7%37Retail 1.7Construction and energy 1.5Turnover< €30m 1.7€30m to €100m 1.8Increase strongly (>5%) Increase significantly (3-5%) Increase slightly (up to 3%)Remain the same Decrease slightly (up to 3%) Decrease significantly (>3%)> €100m 1.7Half of all medium-sized companies in Europe expect their turnover to increase in 2015 compared with2014; only a small fraction (8%) anticipate a decrease. On average, mid-market companies expectturnover to increase by 1.7% over the coming year.Figures in %European Mid-Market Barometer 2015Page 12

Revenue forecast: country overviewHow do you expect your company's turnover to develop in 2015 compared with 2014?TurkeyPortugalUnited KingdomIrelandSpainNorwayPolandItalyDenmarkRussiaNetherlandsFranceAustriaSwedenFinlandGermanyBelgiumLuxembourgCzech RepublicSwitzerlandGreeceChange in %2.12.12.02.01.81.81.71.61.61.61.61.51.51.51.41.41.41.21.02.42.4European Mid-Market Barometer 2015Page 13

Large majority of companies in stable conditionHow would you describe your company's current status?EuropeProportion “somewhatcritical” or “very critical”6 133SectorConstruction and energy 8Service 7Retail 7Industry andmanufacturing760Very stable Fairly stable Somewhat critical Very criticalTurnover< €30m 10€30m to €100m 5> €100m 5The large majority of medium-sized companies in Europe (93%) rate their company’s current status asstable, one in three companies even as “very” stable. Only one in a hundred companies views itscurrent state as very critical.Figures in %European Mid-Market Barometer 2015Page 14

Highest concentration of companies in criticalcondition in Greece: Danish companies particularlystableHow would you describe your company's current status?DenmarkLuxembourgUnited KingdomSwitzerlandAustriaIrelandBelgiumFinlandPortugalSpainFranceGermanyNorwayTurkeyNetherlandsCzech RepublicSwedenPolandItalyRussiaGreece13494440403737373737353430282726252020195858697254526059575755575664657069697643544022207 1205 18 03 036577966101111013 04 15 14 010 19 07Figures in %Very stable Fairly stable Somewhat critical Very criticalEuropean Mid-Market Barometer 2015Page 15

Current business climate best in Turkey,Ireland and UK; worst in GreeceTurkeyIrelandUnited KingdomDenmarkNetherlandsPortugalSpainSwedenLuxembourgBelgiumNorwayFranceSwitzerlandCzech RepublicFinlandAustriaRussiaGermanyItalyPolandGreece -5* +2* -5*-211965636358565551505049494845454443434037Figures in points on a scale of -100 to +100; * change in points compared with business climate in July 2014 (where available)European Mid-Market Barometer 2015Page 17

Economic climate and policyEuropean Mid-Market Barometer 2015Page 18

Economic expectations of mid-market companiescautiously optimisticHow do you think the general economic climate will develop in your home country in the nextsix months?EuropeProportion selected“improve”Sector152230Service 33Industry andmanufacturing32Retail 29Construction and energy 29Turnover51Improve significantly Improve slightly Remain the same Deteriorate slightly Deteriorate significantly< €30m 31€30m to €100m 32> €100m 31One in three medium-sized companies in Europe (32%) expects the general economic climate in itshome country to improve in the next six months, whereas one in six companies (17%) anticipates adownturn.Figures in %European Mid-Market Barometer 2015Page 19

Optimism on domestic economy greatest amongIrish companiesHow do you think the general economic climate will develop in your country in the nextsix months?IrelandUnited KingdomSpainNetherlandsCzech RepublicPortugalDenmarkTurkeyRussiaPolandFranceLuxembourgBelgiumSwitzerlandItalyFinlandSwedenGermanyNorwayAustriaGreece433102041120030011119242726252424212019181714134645464438393039643548565259623752546067626147435045575929322930327112018161281013211925182 13 123 002 1204523113200311Figures in %Improve significantly Improve slightly Remain the same Deteriorate slightly Deteriorate significantlyEuropean Mid-Market Barometer 2015Page 20

Mixed expectations on the European economyHow do you think the general economic climate will develop in Europe in the next six months?EuropeProportion selected“improve”Sector172127Industry andmanufacturing31Service 28Retail 27Construction and energy 24Turnover53Improve significantly Improve slightly Remain the same Deteriorate slightly Deteriorate significantly< €30m 29€30m to €100m 28> €100m 29The near-term prospects for the general economic climate in Europe are seen even more cautiouslythan the prospects for the local economies, with the optimists (28%) outweighing the pessimists (19%)by only a small fraction.Figures in %European Mid-Market Barometer 2015Page 21

Greek companies most pessimistic onthe European economyHow do you think the general economic climate will develop in Europe in the next six months?IrelandUnited KingdomSpainNetherlandsPortugalDenmarkItalyFranceCzech RepublicBelgiumTurkeyFinlandSwedenNorwayPolandLuxembourgGermanySwitzerlandAustriaRussiaGreece323010221010011100002472121211919171515141040394139383530281756444147474855515751686672636543535155555935383734353221233 06 114 14 04 191019812615146113 01110401121443Figures in %Improve significantly Improve slightly Remain the same Deteriorate slightly Deteriorate significantlyEuropean Mid-Market Barometer 2015Page 22

Expectations for the world economy cautiouslyoptimisticHow do you think the general economic climate will develop worldwide in the next six months?EuropeProportion selected“improve”Sector1422Industry andmanufacturing3328Service 29Retail 26Construction and energy 25Turnover54Improve significantly Improve slightly Remain the same Deteriorate slightly Deteriorate significantly< €30m 28€30m to €100m 29> €100m 34The near-term prospects for the world economy are seen more positively than for Europe: 30% of allrespondents expect the world economy to improve in the next six months; only 16% anticipate adownturn. Optimism is greatest in the manufacturing sector and among large companies.Figures in %European Mid-Market Barometer 2015Page 23

Irish entrepreneurs especially optimisticon world economyHow do you think the general economic climate will develop worldwide in the next six months?IrelandSpainUnited KingdomNetherlandsPortugalItalySwedenDenmarkFranceFinlandCzech RepublicBelgiumLuxembourgPolandAustriaTurkeyGermanyNorwaySwitzerlandRussiaGreece32321300201011142011142403737343535303027262320201717171514125550554853455258694962665861465055585660593923242923322824293 09 16 16 04 06 14 16 089812138200020234143Figures in %Improve significantly Improve slightly Remain the sameEuropean Mid-Market Barometer 2015Page 24

One in five European companies affectedby Ukraine crisisIs your business feeling any negative effects from the current tensions between Russia andthe EU and US?EuropeProportion selected “yes”517SectorIndustry andmanufacturing25Retail 23Service 19Construction and energy 1978Yes, major effects Yes, minor effects NoTurnover< €30m 19€30m to €100m 22> €100m 27One in five medium-sized companies in Europe (21%) indicates that it is feeling negative effects fromthe current tensions between Russia and the EU and US. The proportion of companies stating they arebeing affected is highest in the manufacturing sector and among large companies.Figures in %European Mid-Market Barometer 2015Page 25

Turkish companies particularly affectedby Ukraine crisisIs your business feeling any negative effects from the current tensions between Russia andthe EU and US?TurkeyGreeceRussiaFinlandPolandCzech RepublicGermanyAustriaSpainItalyUnited KingdomBelgiumPortugalFranceLuxembourgSwedenNorwayDenmarkNetherlandsSwitzerlandIreland12159612568862182182174143142150 155 92 121 132 1126201413151817171514141413281924271926222121202019343333313140Figures in %Yes, major effectsYes, minor effectsEuropean Mid-Market Barometer 2015Page 26

Mid-market favors more public investmentWhich of the following policy approaches should European governments pursue in the nextfew months?EuropeProportion selected“growth promotion”SectorIndustry andmanufacturing6437Service 63Construction and energy 62Retail 6063TurnoverGrowth promotion by increasing public investmentBudget consolidation and debt reduction< €30m 64€30m to €100m 62> €100m 62The majority of medium-sized companies in Europe recommend growth promotion to the Europeangovernments by increasing public investment. Only a minority of companies advocate further budgetconsolidation and debt reduction.Figures in %European Mid-Market Barometer 2015Page 27

Call for growth promotion strongest among Irish,Greek, Norwegian and Dutch companiesWhich of the following policy approaches should European governments pursue in the nextfew months?IrelandGreeceNorwayNetherlandsRussiaDenmarkPolandItalySpainPortugalFinlandSwedenFranceTurkeyUnited KingdomBelgiumCzech RepublicAustriaGermanyLuxembourgSwitzerland524944413981807978757472717068676562605958485156596119202122252628293032333538404142Figures in %Growth promotion by increasing state investmentBudget consolidation and debt reductionEuropean Mid-Market Barometer 2015Page 28

Less than one in three entrepreneurs positive aboutdomestic economic policyHow would you assess your home country’s current economic policy? How would you assesscurrent policies affecting medium-sized businesses in your home country?Europe Local economic policy Policies on the mid-marketVery positiveQuite positive164424185322AverageQuite negativeVery negative5252Only a minority of medium-sized companies in Europe (28%) is positive about domestic economicpolicy, while 20% are dissatisfied. Even more ambiguous is the vote on domestic policies on themid-market.Figures in %European Mid-Market Barometer 2015Page 29

Local economic policy: satisfaction highest amongTurkish entrepreneursHow would you assess your home country’s economic policy?TurkeyIrelandNetherlandsNorwaySwitzerlandUnited KingdomDenmarkRussiaFranceGermanyLuxembourgBelgiumCzech RepublicFinlandPortugalSpainPolandItalySwedenAustriaGreece55463523330124412222 420262524232422211817181615133636343133313235475153465756606457535056512548515155596033192235273710 28 08 06 114 15 04 015424214 215 314 29 419120510214917Figures in %Very positive Quite positive Average Quite negative Very negativeEuropean Mid-Market Barometer 2015Page 30

Domestic policies on the mid-market: Irish, Dutchand Turkish entrepreneurs most satisfiedHow would you assess current policies affecting medium-sized businesses in your home country?IrelandNetherlandsTurkeyNorwayDenmarkUnited KingdomLuxembourgFranceBelgiumSwitzerlandPortugalRussiaFinlandGermanyCzech RepublicSpainItalyPolandSwedenAustriaGreece44243230342210420111 281525232521192120211914151715202930353638244422424949485453495954627155584149515764613826552429211913241419201822168 18 115 13 05 15233471231410512 19Figures in %Very positive Quite positive Average Quite negative Very negativeEuropean Mid-Market Barometer 2015Page 31

Investment and employmentEuropean Mid-Market Barometer 2015Page 32

Increase in investment plannedOver the next six months, what plans do you have for your company's total investment(e.g., in equipment, machines or construction)?EuropeProportion selected“to increase”729SectorIndustry andmanufacturingTurnover31Service 28Retail 25Construction and energy 2464To increase To keep to the same level To reduce< €30m 28€30m to €100m 29> €100m 30Almost 3 in 10 medium-sized companies in Europe plan to increase their total investment over thenext six months, while only 7% plan to reduce investment. The proportion of companies planning toincrease investment is highest in the manufacturing sector and lowest in construction and energy.Figures in %European Mid-Market Barometer 2015Page 33

Strongest increase in investment planned byTurkish companiesOver the next six months, what plans do you have for your company'stotal investment (e.g., in equipment, machines or construction)?Balance of “increase”and “reduce”TurkeyPortugalIrelandPolandSpainCzech RepublicDenmarkUnited KingdomFranceNetherlandsItalyNorwayLuxembourgGermanyFinlandAustriaSwedenBelgiumRussiaSwitzerlandGreeceFigures in %383335333227302926292825272325191721231950436064586161706464706264676368647477696571To increase To keep to the same level To reduce7237673674988109117610121043363028272524242222202017171414121111119European Mid-Market Barometer 2015Page 34

Companies plan to increase workforceOver the next six months, what expectations do you have about the number of employees inyour company?EuropeProportion selected“increase”8 1323SectorIndustry andmanufacturingTurnover27Service 27Retail 24Construction and energy 2465Increase strongly (by more than 3%) Increase slightly (by up to 3%) Remain the sameDecrease slightly (by up to 3%) Decrease strongly (by more than 3%)< €30m 24€30m to €100m 27> €100m 28One in four medium-sized companies in Europe (26%) plan to increase their workforce over the next sixmonths, while only 9% plan to reduce it. The proportion of companies planning to increase theirworkforce is highest in the manufacturing and service sector and among large companies.Figures in %European Mid-Market Barometer 2015Page 35

Highest increase in workforce planned byIrish and British companiesIrelandUnited…DenmarkTurkeyPortugalLuxembourgFranceNetherlandsBelgiumSwedenAustriaSpainCzech RepublicRussiaFinlandSwitzerlandPolandNorwayItalyGermanyGreeceFigures in %Over the next six months, what expectations do you have about thenumber of employees in your company?022211222213433334337242118182319222020192324242321222938352815Increase strongly (by more than 3%)71Increase slightly (by up to 3%) Remain the sameDecrease slightly (by up to 3%) Decrease strongly (by more than 3%)7171686065655862686471707370696653635958Balance of “increase”and “decrease”13131011111211118710694452 134520222231111111111200038352923222120191817141412111110109993European Mid-Market Barometer 2015Page 36

Shortage of skilled labor: two in five companiesexperience difficulties recruitingHow easy or difficult is it for your company to recruit suitably skilled and qualified employees?EuropeProportion selected “fairlydifficult” or “very difficult”Sector31934Construction and energy 44Service 41Industry andmanufacturing40Retail 38TurnoverEasy Fairly easy Fairly difficult Very difficult26< €30m 43€30m to €100m 40> €100m 36Two in five medium-sized companies in Europe experience difficulties in recruiting suitably skilled andqualified labor. The proportion of companies experiencing difficulties is highest in the construction andenergy sector and among small companies with a turnover of less than €30m.Figures in %European Mid-Market Barometer 2015Page 37

Shortage of skilled labor most severe inCzech Republic, Greece and GermanyHow easy or difficult is it for your company to recruit suitably skilled and qualified employees?Czech RepublicGreeceGermanyAustriaPolandSwitzerlandRussiaTurkeyUnited KingdomLuxembourgFranceItalyPortugalSwedenFinlandNetherlandsNorwayIrelandSpainDenmarkBelgium23161561025174126846223222417018314116116373328222522181717172425242151495046303637363430292857315656555364676880Figures in %Very difficultFairly difficultEuropean Mid-Market Barometer 2015Page 38

Shortage of skilled labor lowers revenuesDoes a lack of suitable skilled personnel cause a loss of turnover or unrealized turnover potentialfor your company?EuropeProportion selected “yes”823SectorService 33Retail 32Construction and energy 32Industry andmanufacturing3069Yes, significant losses (greater than 5%) Yes, slight losses (up to 5%) No, no lossesTurnover< €30m 34€30m to €100m 31> €100m 27Three in ten medium-sized companies in Europe (31%) indicate that they suffer from a loss of turnoveror unrealized turnover potential due to a lack of suitable skilled personnel. Small companies with aturnover of less than €30m are particularly affected.Figures in %European Mid-Market Barometer 2015Page 39

More than two in five companies focus on growthWhat will your company focus on in the next few months?EuropeProportion selected“growth”844SectorIndustry andmanufacturing48Service 43Retail 42Construction and energy 3648Turnover< €30m 39€30m to €100m 45Growth Stability Surviving> €100m 51More than two in five medium-sized companies in Europe plan to focus on growth in the near term.The proportion of those planning to focus on growth is by far highest among large companies andlowest among small companies. However, 8% of all companies will put survival on top of their agenda.Figures in %European Mid-Market Barometer 2015Page 42

Irish, Danish and Turkish companiesmost bullish on growthWhat will your company focus on in the next few months?IrelandDenmarkTurkeyLuxembourgUnited KingdomPolandNorwaySwedenNetherlandsBelgiumCzech RepublicSpainPortugalGermanyGreeceFranceFinlandAustriaSwitzerlandRussiaItaly625957545352515047474341403938373635333333504757544155525962555231394339434650493339215212749643471237812651215Figures in %Growth Stability SurvivingEuropean Mid-Market Barometer 2015Page 43

European mid-market fears high raw material pricesand weak economic trend domesticallyWhat are the biggest risks to your company's development?EuropeHigh raw material pricesWeak economic trend domesticallyWeak economic trend abroadHigh energy pricesShortage of skilled professionalsCurrency fluctuationsInflationGeopolitical tensions and warsDeflationIT security (e.g., hacker attacks)Difficult access to financial resourcesHigh unemployment in home countryKnowledge theft (industry spies and theft of IP)Unresolved company succession2828109257 32218 2921 7 2821 7 2821 6 2716 7 2317 5 2216 6 2215 6 2115 5 2015 4 199 2 113837Figures in %Significant riskMajor riskEuropean Mid-Market Barometer 2015Page 44

Risks: country overviewWhat are the biggest risks to your company's development?Country Greatest risk % Second-largest risk % Third-largest risk %Austria Weak economic trend abroad 59 Weak economic trend domestically 59 High raw material prices 40Belgium Weak economic trend domestically 49 Weak economic trend abroad 38 High raw material prices 32Czech Republic Shortage of skilled professionals 51 Currency fluctuations 48 High raw material prices 42Denmark Weak economic trend abroad 31 High raw material prices 29 Weak economic trend domestically 26Finland High raw material prices 19 Currency fluctuations 18 Weak economic trend abroad 17France Weak economic trend domestically 46 High raw material prices 39 Weak economic trend abroad 35Germany Shortage of skilled professionals 52 High raw material prices 43 Weak economic trend domestically 38GreeceDifficult access to financialresources69 High raw material prices 66High unemployment in homecountryIreland Weak economic trend domestically 79 Weak economic trend abroad 53 High raw material prices 34Italy High raw material prices 27High unemployment in homecountry26 Deflation 24Luxembourg Weak economic trend domestically 38 Weak economic trend abroad 33 High raw material prices 27Netherlands Weak economic trend domestically 48 Weak economic trend abroad 43 High raw material prices 31Norway Weak economic trend domestically 29 High raw material prices 29 Weak economic trend abroad 27Poland High raw material prices 56 Geopolitical tensions and wars 44 High energy prices 43Portugal Weak economic trend domestically 36 High raw material prices 34 Inflation 33Russia Inflation 58 High raw material prices 51 Currency fluctuations 49Spain High raw material prices 54 High energy prices 54 Inflation 44Sweden Weak economic trend domestically 51 Weak economic trend abroad 37 High raw material prices 30Switzerland Shortage of skilled professionals 37 Weak economic trend abroad 28 Currency fluctuations 28Turkey Geopolitical tensions and wars 64 Currency fluctuations 62 High raw material prices 62United Kingdom Weak economic trend domestically 42 Weak economic trend abroad 35 High raw material prices 2764European Mid-Market Barometer 2015Page 45

Companies demand tax reductionsWhat measures would significantly strengthen the mid-market segment in your home country?EuropeTax reductions69Reduction of bureaucracyIncreased public investmentTax benefits for research and developmentReduction of incidental wage costs42413632Protection against overseas competitorsIncreased immigration of skilled workersRelaxation of employment protection191620Figures in %European Mid-Market Barometer 2015Page 46

Regulatory environment: country overviewWhat measures would significantly strengthen the mid-market segment in your home country?Land Priority 1 % Priority 2 % Priority 3 %Austria Reduction of incidental wage costs 87 Tax reductions 80 Reduction of bureaucracy 70Belgium Tax reductions 82 Increased public investment 34 Tax benefits for R&D 25Czech Republic Reduction of bureaucracy 58 Tax reductions 40 Reduction of incidental wage costs 33Denmark Tax reductions 60 Increased public investment 29 Tax benefits for R&D 23Finland Tax reductions 56 Increased public investment 39 Reduction of bureaucracy 36France Tax reductions 73 Increased public investment 38 Reduction of bureaucracy 32Germany Tax reductions 66 Reduction of incidental wage costs 63 Reduction of bureaucracy 62Greece Reduction of bureaucracy 89 Tax reductions 86 Reduction of incidental wage costs 73Ireland Tax reductions 78 Tax benefits for R&D 43 Increased public investment 38Italy Tax reductions 65 Increased public investment 31 Reduction of bureaucracy 30Luxembourg Tax reductions 58 Increased public investment 38 Reduction of bureaucracy 31Netherlands Tax reductions 63 Increased public investment 49 Tax benefits for R&D 32Norway Tax reductions 82 Reduction of bureaucracy 54 Increased public investment 42Poland Tax reductions 75 Reduction of incidental wage costs 69 Reduction of bureaucracy 68Portugal Tax reductions 84 Increased public investment 44 Reduction of bureaucracy 37Russia Tax reductions 78 Increased public investment 35 Reduction of bureaucracy 34Spain Tax reductions 59 Increased public investment 51 Reduction of bureaucracy 49Sweden Tax reductions 62 Increased public investment 39 Protection (overseas competitors) 22Switzerland Tax reductions 61 Reduction of bureaucracy 40 Reduction of incidental wage costs 37Turkey Tax reductions 81 Increased public investment 58 Tax benefits for R&D 57United Kingdom Tax reductions 69 Tax benefits for R&D 42 Increased public investment 31European Mid-Market Barometer 2015Page 47

Increasing public investment: country overviewWould increasing public investment significantly strengthen the mid-market segment in yourhome country?GreeceTurkeySpainNetherlandsAustriaPortugalPolandGermanyNorwayFinlandSwedenFranceIrelandLuxembourgRussiaBelgiumItalyUnited KingdomDenmarkSwitzerlandCzech Republic252929313134353939383838444342424749515868Figures in %European Mid-Market Barometer 2015Page 48

FinancingEuropean Mid-Market Barometer 2015Page 49

Credit supply: country overviewHow would you assess your company's current accessto financing through outside capital and bank loans?How has your company's access to financing throughoutside capital and bank loans developed in the past12 months?GreeceRussiaPortugalFranceSpainIrelandLuxembourgSwedenBelgiumItalyUnited KingdomTurkeyGermanyFinlandPolandSwitzerlandAustriaNetherlandsCzech RepublicNorwayDenmarkFigures in %1022221143435466810151426211920312120383234313632271716433929383214 152110 11 Spain24Very difficult2726262424232238363535333344Fairly difficult49477069NorwayDenmarkSwedenBelgiumIrelandCzech RepublicNetherlandsPolandLuxembourgSwitzerlandTurkeyPortugalFranceFinlandUnited KingdomGermanyItalyAustriaRussiaGreeceBecome more difficult2 52 23 55 36 78 118 39 1010 910 71111 1011 911 811 812 1213 1114 816992019Become easierEuropean Mid-Market Barometer 2015Page 51

Availability of bank lending in detailHow would you assess your company's current access to financing through outside capital with regard tooperating resources, asset investments and expansion/internationalization? (Proportion answering“fairly difficult” or “very difficult”)Country Operating resources Asset investments Expansion or internationalizationEurope 34% 35% 38%Austria 26% 26% 33%Belgium 36% 39% 41%Czech Republic 14% 19% 30%Denmark 10% 12% 22%Finland 20% 29% 34%France 47% 48% 48%Germany 25% 26% 29%Greece 71% 66% 66%Ireland 33% 38% 37%Italy 28% 30% 36%Luxembourg 32% 34% 38%Netherlands 32% 31% 34%Norway 19% 26% 24%Poland 53% 51% 59%Portugal 45% 48% 48%Russia 72% 63% 61%Spain 44% 45% 45%Sweden 24% 40% 36%Switzerland 26% 22% 27%Turkey 24% 28% 32%United Kingdom 34% 34% 37%European Mid-Market Barometer 2015Page 52

SuccessionEuropean Mid-Market Barometer 2015Page 53

More than one in five companies face changeof ownership over the next decadeIs there likely to be a succession in your company in thenext few years, due to the retirement of the owner?EuropeHas the successor alreadybeen chosen?Preferred solution1012Yes — internal familysolutionYes — internal businesssolutionYes — external solution 354No successor has yet beenchosen6Yes, within the next 5 yearsYes, within the next 10 yearsNo, not within the next 10 years78Do not know 4There will be no successionwithin the next 10 years78More than one in five medium-sized companies in Europe (22%) indicate that there will be a successionwithin the next 10 years. The succession solution most frequently chosen is the internal familysolution, followed by the internal business solution.Figures in %European Mid-Market Barometer 2015Page 54

Succession: country overviewIs there likely to be a succession in your company in the next few years, due to the retirement ofthe owner?Yes, within the next five yearsYes, within the next 10 yearsFigures in %PortugalPolandGermanyGreeceCzech RepublicSwitzerlandItalyFranceLuxembourgSpainIrelandFinlandNetherlandsSwedenUnited KingdomAustriaTurkeyRussiaDenmarkBelgiumNorway181413131313121211111110999885432SwitzerlandUnited KingdomPortugalGermanyPolandFranceItalyFinlandSpainSwedenAustriaIrelandBelgiumNetherlandsLuxembourgGreeceCzech RepublicRussiaTurkeyDenmarkNorway1916151414141111109988777666425European Mid-Market Barometer 2015Page 55

Preferred succession solutions: country overviewHas the successor already been chosen? (Proportion of “yes” answers)CountryInternal family solutionInternal businesssolutionExternal solutionNo solution has yet beenfoundNo succession within thenext 10 yearsAustria 5% 3% 1% 6% 83%Belgium 4% 3% 2% 1% 89%Czech Republic 5% 4% 1% 4% 80%Denmark 1% 0% 3% 3% 91%Finland 3% 2% 1% 8% 79%France 4% 8% 5% 5% 74%Germany 10% 5% 1% 8% 72%Greece 10% 2% 1% 2% 80%Ireland 5% 6% 2% 4% 80%Italy 5% 4% 5% 9% 74%Luxembourg 5% 6% 2% 3% 82%Netherlands 2% 5% 3% 3% 82%Norway 1% 1% 2% 2% 94%Poland 4% 1% 1% 17% 72%Portugal 6% 11% 5% 8% 66%Russia 1% 2% 2% 1% 90%Spain 6% 4% 3% 7% 78%Sweden 1% 1% 2% 11% 82%Switzerland 6% 8% 5% 11% 63%Turkey 6% 2% 2% 1% 87%United Kingdom 3% 6% 6% 8% 73%European Mid-Market Barometer 2015Page 56

InternationalizationEuropean Mid-Market Barometer 2015Page 57

Dutch companies most strongly internationalized …Does your company engage in any form of activities abroad (production, distribution, jointventure, etc.)?Dutch medium-sized companies are themost internationalized medium-sizedcompanies in Europe: 7 in 10 engage inactivities abroad, and almost 2 in 3engage in activities abroad but withinEurope.A very high degree of internationalizationis also being displayed by Swedish,Spanish, French, Danish and Finnishmedium-sized companies.In only 5 out of the sample of 21 Europeancountries, less than half of all domesticmedium-sized companies engage inactivities abroad.NetherlandsSwedenSpainFranceDenmarkFinlandGermanyItalyTurkeyBelgiumPortugalIrelandCzech RepublicAustriaUnited KingdomLuxembourgGreecePolandRussiaSwitzerlandNorwayEurope70656564646462626060575756555452484443434258Figures in %European Mid-Market Barometer 2015Page 58

… while most Russian companies have no links withWestern or Eastern European countriesDoes your company engage in any form of activities in Western Europe or Eastern Europe(production, distribution, joint venture, etc.)?Western EuropeEastern EuropeNetherlandsSwedenDenmarkBelgiumFranceFinlandSpainIrelandGermanyLuxembourgItalyCzech RepublicTurkeyPortugalAustriaUnited KingdomNorwayGreecePolandSwitzerlandRussiaWestern EuropeFigures in %19645858565251505049484645434242383736363446NetherlandsSwedenDenmarkBelgiumItalyFinlandFranceGermanyIrelandSpainUnited KingdomTurkeyGreeceLuxembourgPortugalAustriaCzech RepublicNorwaySwitzerlandPolandRussiaEurope57575553505049414038383838363636333125231741European Mid-Market Barometer 2015Page 59

Dutch companies with a strong presence in NorthAmerica and AsiaDoes your company engage in any form of activities in North America or Asia (production,distribution, joint venture, etc.)?North AmericaAsiaNetherlandsFranceBelgiumDenmarkSwedenItalySpainGermanyFinlandUnited KingdomIrelandAustriaLuxembourgTurkeySwitzerlandNorwayPortugalCzech RepublicGreecePolandRussiaEuropeFigures in %333333323030292625232220201918151310662540NetherlandsSwedenDenmarkBelgiumFranceGermanyItalyFinlandUnited KingdomTurkeySpainLuxembourgIrelandNorwayAustriaRussiaSwitzerlandPortugalCzech RepublicPolandGreeceEurope35353534333330282424222121211918151311102742European Mid-Market Barometer 2015Page 60

Mid-Market Business Climate: definition andcalculationThe EY Mid-Market Business Climate is a value that is calculated as a (geometric) mean of the two balances for thecurrent state of business and expectations for business. We calculate these balances in the following way: theproportion of those answering negatively (e.g., the current state of business is seen as “bad” or “fairly bad”) issubtracted from the proportion of those answering positively (e.g., the current state of business is seen as “good” or“fairly good”).In order to reflect the development of the business climate as precisely as possible, a weighting factor is applied for thecalculation of the balances: the answers “good” and “bad” (current state of business) and “improve significantly orstrongly” and “deteriorate significantly or strongly” (development of business climate and turnover) are all multiplied bya factor of c = 1.5.Business climate= ( 1c Current state + 200 ) ( 1cExpectations+ 200 ) — 200The following example illustrates the calculation of the EY Mid-Market Business Climate:Of the companies questioned, 56% see their current state of business as good, 32% as quite good, 10% as fairly bad and2% as bad. The weighted percentage terms are now netted: (56×1.5 + 32) — (10 + 2×1.5). The result(i.e., 104.1) is the assessment of the current state of business. Using the same method, we calculate the balance of theexpectations (as the arithmetic mean of the two single balance values).In theory, the EY Mid-Market Business Climate can vary between -100 and +100, with +100 meaning that allquestioned companies assess their current state of business as good and simultaneously expect their performance andturnover to improve significantly. In practice, the EY Mid-Market Business Climate in Germany since 2008 has variedbetween values of 14 (January 2009) and 57 (January 2011).European Mid-Market Barometer 2015Page 61

EY | Assurance | Tax | Transactions | AdvisoryAbout EYEY is a global leader in assurance, tax, transaction and advisoryservices. The insights and quality services we deliver help build trustand confidence in the capital markets and in economies the world over.We develop outstanding leaders who team to deliver our promises to allof our stakeholders. In so doing, we play a critical role in building abetter working world for our people, for our clients and for ourcommunities.EY refers to the global organization, and may refer to one or more,of the member firms of Ernst & Young Global Limited, each of which is aseparate legal entity. Ernst & Young Global Limited, a UK companylimited by guarantee, does not provide services to clients. For moreinformation about our organization, please visit ey.com.© 2015 EYGM Limited.All Rights Reserved.EYG no. AU2877ED NoneThis material has been prepared for general information purposes only and is notintended to be relied upon as accounting, tax or other professional advice. Please referto your advisors for specific advice.www.ey.comPage 62