1. CFO Global Insights
What CFOs around the world are
thinking and doing
Third Quarter 2010 Deloitte CFO Surveys:
North America, United Kingdom, Ireland, Spain,
Belgium, Netherlands, Switzerland, Middle East,
Australia, South Korea
Deloitte’s CFO Global Insights
December 2010

2. About Deloitte’s Global CFO Program Contacts
The Global CFO Program aims to position Deloitte to be the
preeminent advisor to the CFO. Recognizing that the CFO's role Paul Robinson
has evolved rapidly over the last few years, the Program focuses Managing Director,
on building relationships and eminence and has successfully Global CFO Program
captured the attention of the CFO community through surveys, 416-874-3317
forums and executive development programs. The Program has
also produced a rich library of intellectual property, newsletters probinson@deloitte.ca
and podcasts used to deliver key insights to CFOs in many
different countries. Dave Walker
Program Manager,
About Deloitte’s CFO Surveys Global CFO Program
Seventeen Deloitte member firms have launched CFO Surveys in 514-390-1732
recent years. The objective of the surveys is to collect CFOs’
opinions on a range of areas including economic outlook, financial davewalker@deloitte.ca
markets, business trends, their organizations, and CFO careers.
The focus of each member firm’s survey may vary.
The composition of the respondent group may vary between For additional copies of this
surveys. For example, more than 70% of respondents for the
North American CFO Survey are from companies with more than
report, please email
US$1 billion in annual revenue and 75% are listed companies. GlobalCFOProgram@deloitte.com
The respondent group from other surveys may have a different
composition. Please refer to the reports from individual CFO
surveys for details on their participants.
About Deloitte’s CFO Global Insights
The goal of the Deloitte CFO Global Insights report is to provide
highlights of recent CFO survey results from Deloitte member
firms. This issue includes the results of the third quarter 2010
CFO Surveys from the following Deloitte member firms:
• North America: The tide is turning toward pessimism, but
not for everyone
• United Kingdom: Cost control is still king
• Ireland: Uncertainty rises
• Belgium: Optimism confirmed by good results
• Netherlands: Change in funding preferences
• Switzerland: More appetite for risk
• Spain: Insufficient measures to combat stagnation
• Middle East: Resilience for growth
• Australia: The long haul to recovery
• South Korea: Optimism in a time of ambiguity
Contents
Summary 1
North America 2
United Kingdom 3
Ireland 4
Belgium 5
Netherlands 6
Switzerland 7
Spain 8
Middle East 9
Australia 10
South Korea 11
Deloitte CFO Surveys 12
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights i

3. CFO Global Insights
Summary for Third Quarter 2010
CFO sentiments in the third quarter generally reflect the current Gauge of CFO Sentiment*
state of their countries’ economies and opinions about the pace
of recovery. The uncertainty in the global economy has
contributed to the tide turning toward pessimism in North
Optimistic
America and the UK, while other countries in the Eurozone and Switzerland
Australia have a generally positive financial outlook. Netherlands
Belgium
CFOs surveyed in Ireland and South Korea appeared more Middle East
cautious in the outlook for their companies. However, recent Australia
developments around the financial bailout for Ireland and the
tense political situation in the Korean peninsula may portend
increasing pessimism for both these countries.
Cautious
In North America, the UK, and other areas where optimism
Ireland
persists, CFOs report improved access to capital and reduced South Korea
concerns about debt and liquidity. There is an increased
appetite for risk; increased gearing is anticipated in the next year
by UK and Australian CFOs due to positive views on arranging
new credit or issuing debt. The ability to service debt has also
improved for many. Not surprisingly, CFOs in Ireland and Spain
raise concerns about the availability of new credit and difficulty in
obtaining funding.
Pessimistic
North America
Despite a continued focus on cost control, many CFOs are United Kingdom
considering strategies to grow revenues. There is also a desire
to increase their involvement in the strategic decisions of their
companies.
*At the time of respective CFO Surveys in the period
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 1

4. North America
The tide is turning toward pessimism, but not for everyone
One clear message from our second quarter survey was that, Highlights from the 3rd Quarter North
despite considerable uncertainty, CFOs were predominantly
optimistic about their companies’ prospects. Although still
. American CFO Survey:
present, that sentiment is not as strong as it was in our previous
• Nearly half of CFOs are more optimistic this quarter
survey. The primary reason: much more somber assessments of
about their company’s prospects, but pessimism is
what’s happening in companies’ external business
growing.
environments.
• Unemployment concerns rose sharply, topping the list of
Sobering global economic conditions economic concerns.
Since the last survey, sluggish consumer spending, declining • Sales and earnings expectations are even more
effects of government stimulus, and stagnant job markets in the optimistic than last quarter, but variability is rising.
ability
U.S. and across most of North America, have contri
contributed to a • Costs are still a heavy focus, but revenue
slowing economic recovery and volatile equities markets
markets. growth/protection is gaining focus.
Sovereign debt crises and a weakening euro have changed the • Competition appears to be heating up with increased
economic landscape in Europe, and China’s tightening of challenges around pricing trends, new competitive tactics
monetary policy has raised further fears that global economic and M&A.
growth will slow.
• Government is still a major focus with changing
regulatory requirements topping career and industry
Coming to grips with slowdown implications concerns.
CFOs are clearly concerned about these developments
developments.
• CFOs are not very concerned about debt and liquidity.
FOs
Unemployment, which wasn’t at the top of many lists of concerns
last quarter, jumped to the top of this quarter’s concerns
concerns.
Contributing to this sentiment is increasing unemployment
nt
approaching double digits and a decline in housing prices. Still optimistic, but for how much longer?
Despite rising worries about the economy, companies in this
Worries about the impact of unemployment and housing prices
survey are still projecting growth on the whole. Year-over-year
whole
on consumer spending are reflected in companies’ increasing
sales are expected to increase roughly 11% on average, with
focus on revenues. Companies’ concerns about ra raising and
earnings increasing almost 20%. But there is increasing
maintaining demand jumped this quarter, with revenue growth
variability across companies. While these numbers are fairly
getting a larger share of their strategic focus. Competition for
.
optimistic even when adjusted for volatility, they mask the fact
r
revenues also seems to be heating up, with growing concerns
that many companies still have a long way to go before
about pricing trends, new competitive tactics, M&A, and the
returning to their pre-recession trends.
success of new initiatives.
With the slowdown of global economies has come increased The blurry road ahead
fear of a volatile or prolonged recovery. The good news is that Variability in companies’ outlooks obscures the picture of what
CFOs don’t consider a W or “double-dip” recovery a likely
dip” to expect next. Whom should we believe – those whose
scenario in their business planning (only 9% do) The “less-
do). optimism is still rising, or those who are becoming more
good” news is that they don’t generally expect the faster pessimistic?
recoveries associated with a “V” or a “U,” either More than half
either.
expect a “bathtub” shaped recovery (a “U” with a wider bottom)
bottom). As employment and economic recovery sputter, pessimism
One in ten expects an “L” recovery. seems to be gaining more momentum than optimism does. Are does
these just the first people to reach the top of the rollercoaster
rollerco
All eyes are still on government, both because of the effects and see the decline ahead?
policy will ultimately have on the broader economy, but also
because of the effects it will have on competitive environments An equally strong argument might be made for why a
within and across industries. substantial portion of companies will not only survive but thrive
during a period of cheap capital, effective austerity measures
Little concern about debt and liquidity and substantial long-term growth opportunities (both organic
term opportunit
and inorganic). Could this be a retrenchment and
CFOs – at least those of very large companies – are not overly
se
strengthening period that leads to bigger and better things for
concerned about debt and liquidity. Fewer than one one-third place
some companies?
capital availability and cost in their top three economic concerns
concerns.
Only one in ten CFOs names sourcing capital a top three Based on this survey, we could well be seeing a bifurcation of
company challenge. Fewer than half of CFOs indicate they have the business environment, where large, healthy companies
debt-reduction strategies that rely most heavily on cash reserves
reduction (like the majority of those involved in this survey) have superior
and operating cash flows (rather than asset sales and equity capital access and costs that provide substantial competitive
offerings). advantage.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 2

5. United Kingdom
Cost control is still king
The 2010 third quarter Deloitte CFO Survey, published on 11th Highlights from the 3rd Quarter UK CFO
ighlights
October 2010, shows that CFOs believe their businesses are
facing elevated levels of economic uncertainty. Their optimism Survey
about the financial outlook for their own business dropped in the
• Optimism has declined for the third consecutive quarter.
quarter
third quarter to the lowest level since 2009 spring.
CFOs believe their business face elevated levels of
While the economic outlook is uncertain, credit conditions have economic uncertainty.
continued to improve. CFOs now see the cost of new credit as • The credit and financial crisis for the larger UK
being lower than at any time since the CFO Survey started in the corporates seems to be over. Corporate credit
third quarter of 2007. Perceptions of credit availability rose availability rose at the fastest pace since the Survey
he
sharply in the third quarter. For the first time, more CFOs have
e started in the third quarter of 2007.
rated credit as being “available” than “hard to obtain”.
• Debt capital is seen as cheap and increasingly attractive.
attractive
CFOs think that excessive leverage in the corporate sector as a CFOs are increasingly willing to contemplate raising
whole has been largely eliminated. With interest rates seen as gearing.
being at very low levels and credit increasingly available, CFOs
vels • CFOs are positive about revenues, margins and cash
expect to increase their demand for credit over the next year. flow, but are cautious about hiring and discretionary
e
spending.
Over the last year, the UK has seen an economic recovery,
which, by historical standards, has been fairly robust. • For a majority of CFOs, cost control remains the top
or
Nonetheless, CFOs have remained cautious about the
utious priority.
sustainability of the recovery. As a result, CFOs have maintained
a strong focus on controlling costs. This remained CFOs’ top
priority in the third quarter. Cash flow is a lesser concern than a
year ago, a change which reflects improved c credit availability
and stronger corporate cash flow. Expansionary strategies,
including introducing new services and expanding by acquisition,
feature as prominent priorities and testify to a continued search
by the corporate sector for growth opportunitie
opportunities.
Despite all the uncertainties, CFOs are positive on the outlook
for corporate revenues and profit margins over the next 12
months. CFOs also see capital expenditure rising over the next
year. But, with cost control at the fore, the balance of opinion is
that hiring and discretionary spending will shrink over the next
year.
So, overall, the good news from this quarter’s CFO Survey is
that large UK corporates are finding it easier to raise capital.
CFOs are positive on the outlook for corporate revenues an and
profits; many are looking for growth opportunities. Yet one of the
dominant features of this Survey during the recession persists a
year into the recovery - in an environment of uncertainty cost
control is king.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 3

6. Ireland
Uncertainty rises
Dark clouds Highlights from the 3rd Quarter Ireland CFO
The key challenges to the Irish economy are well documented at Survey:
this stage – the budget deficit and the cost of bailing out banks.
Some clarity is being brought to the scale of these challenges • Market risk is the biggest concern: 58% of respondents
and, over the coming months, the measures that will be put in identify market risk as their most worrying risk.
worr
place to redress them will be revealed by Government. The most • Expectations of revenue and turnover still broadly
significant event in the coming quarter will be the announcement positive: almost 60% of CFOs are anticipating increases
of the Budget 2011, in addition to a four year austerity plan to in turnover over the next six months, while 30% are
bring the country’s finances back into order. The budget, which projecting no change.
is being signaled as one of the toughest in years, will now seek
to exceed its initial €3bn deficit reduction target with figures of • Cost and availability of credit: the cost of credit remains
€4bn to €5bn being quoted. on an upward trend, with 50% of CFOs expecting market
interest rates to increase over the next 6 months.
months
Competitiveness is also a key challenge but also one of the • Selective recruitment and high skills availability: over half
elective
enablers of a return to growth. The Annual Competitiveness of respondents indicated that their companies are
Report 2010, prepared by the National Competitiveness Council currently recruiting; however, in many cases this is for
man
in July had some positive messages but gains have to be very specific roles, rather than large scale increases in
maintained and interest and exchange rates pose additional staff numbers.
threats.
As for profit, a significant proportion (61%) of CFOs surveyed
While the Government has been able to raise bonds on the
anticipates some continuing improvements in profitability,
international market, these have been at substantially higher
again continuing the positive trends of previous quarters. Only
costs with ratings agencies again downgrading Ireland’s ratings
ngs
9% of respondents are anticipating a decrease in profitability.
status. With the Government not needing to return to the bond
market until Spring 2011, budget measures over the next few
months are critical to ensure a stable supply of funds. Cost and availability of credit continues to
clog up the system
... with a silver lining? We have consistently highlighted in our surveys that the high
It’s not all doom and gloom out there though. Our topical
s cost and lack of availability of credit is hindering business in
questions this month show that in terms of competitiveness, the the Irish market, particularly smaller companies, and this
Irish labour market is at last starting to readjust to expected quarter is no exception. While the Deloitte UK CFO Survey for
norms with 88% of CFOs stating that salary expectations are Quarter 3 has shown a dramatic rise in credit availability and a
average or low. The survey results also indicate that CFOs
ow. reduction in cost in the UK, our survey reports that Irish
rep
believe that the quality of available resources is also high. companies continue to be challenged by the availability of new
Standard and Poor’s have further highlighted this perception by credit and that there is widespread difficulty in obtaining
stating that Ireland’s economy will recover more quickly than funding, be it from banks, equity release or bonds.
several other European countries as our competitiveness
an Respondents rated domestic banks as the most challenging
improves due to the flexible labour market. Also, the agency source of credit with 54% of CFOs considering that it is still
does not detect ‘reform fatigue’ in Ireland’s politicians, and very hard or somewhat hard to obtain credit domestically.
believes that concerns about fiscal and political risks to the
country are exaggerated. Market risk is the key worry
Alongside this, 24% of CFOs are now looking to reverse some of
side Market risk has emerged as the key concern facing CFOs with
the cost reduction measures implemented during the initial 58% ranking it as their highest concern. Respondents cited
Responden
stages of this recession. CFOs are also still confident in their fears of a double dip, deterioration in customer confidence,
own company’s ability to return to growth in the short term with lack of credit, the impact of Budget 2011, and confidence in the
over 40% stating that their company has already done so. Irish economy as just some of the key market risks companies
are currently managing. Strategic, operational and financial
risks were significantly less of a priority for CFOs.
Expectations of revenue and turnover still
broadly positive What to expect from next quarter will be a key milestone in our
country’s economic landscape. The budget that will be
Almost 60% of CFOs are anticipating increases in turnover over
announced in December 2010 will have significant implications
the next six months, while 30% are projecting no change.
for all of our economic futures. Our survey will have a budget
ic
Another positive finding is a fall in the number of CFOs
focus with topical questions covering some of the key issues
predicting a decrease in turnover. These figures continue the
surrounding Budget 2011 and will contain key insights from
trend in previous quarters with a broadly positive outlook for
CFOs on the impact of the budget on their companies and the
growth in turnover, perhaps reflecting the high percentage of the
economy.
respondents whose businesses trade internationally. However,
e
analysis of the underlying data indicates that no CFO expects
significant turnover growth in the next six months, demonstrating
that optimism is being tempered by continuing uncertain
economic conditions and the expectation tha Budget 2011 could
that
have a negative impact on consumer confidence and spending
power in the domestic market.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 4

7. Spain
Insufficient measures to combat stagnation
Fragile economic recovery Highlights from the CFO survey for the
CFOs have not changed their views on Spain’s economic period March 2010 - September 2010:
situation, since 84% of them continue to believe that it is poor or
very poor. In addition, macroeconomic indicators point to a delay • 84% of CFOs consider Spain’s economic situation to be
in economic recovery. The survey conducted in March 2010 bad or very bad, while 61% expect recovery to begin in
showed that 84% of CFOs expected recovery to take place 2012.
before 2012 (during second half 2010 and 2011), but now, 61%
nd • Three quarters of the respondents believe that the
believe that Spain’s recovery will occur in 2012 or later. Spanish economy will remain in a stage of stagnation or
recession for the next 12 months despite a recovery in
Moreover, from a global perspective, 76% of CFOs expect the the global economy.
Spanish economy to be in a stage of stagnation or recession for
the next 12 months, while almost all respondents anticipate that • 40% of respondents indicated that the yields on
yield
the global economy will begin to recover. sovereign bonds are at high or very high levels.
ry
• CFOs considered government reform in the labor market
Inadequate or inappropriate measures to be "adequate but insufficient", and would like to see
Almost half of all respondents consider measures taken by the more market flexibility.
government in response to the Spanish economic situation as • Most respondents feel that the fiscal policy measures are
"appropriate but not sufficient”, while 45% believe that they “are
ficient”, inadequate and call for reducing the tax burden.
burd
not appropriate." • In the area of public expenditure, it is necessary to
CFOs believe it is necessary to have greater labor market deepen the cut in current operating expenses and to
flexibility, increased training, and reform in the education system. increase investment in productivity.
They also propose reducing the tax burden, increasing control of • With respect to the financial system, initiatives to
current expenditure at all levels of government, and increasing
urrent enhance liquidity and access to finance are considered
investment in infrastructure. necessary to complete the process of sector reform.
Regarding the financial system, Financial Directors propose • Default risk is perceived to be the greatest risk to
measures to facilitate access to financing and improved flow of operations of companies in the coming months. The
ies T
liquidity, to increase control and transparency, and to complete
nsparency, financial position of the public sector is one of the
the process of financial sector reform. greatest concerns.
• Expectations of the ability to repay debt in the next three
pay
The Public Sector financial position increases years have improved.
the risk of default • The demands on the CFO and the challenges that
he
financial departments face are mainly related to business
Most respondents did not see signs of decline in major risk
strategy and operational priorities, as well as liquidity and
factors affecting the operations of their companies
companies.
obtaining funding.
Specific risks are still concentrated in the areas of access to
capital, economic recovery, falling demand, and consumer
,
confidence and default. This last factor is the main concern in Challenges of the Finance Function
enges
financial management, with many respondents citing the difficult As operations and results become stabilized, financial
financial situation in the Public Sector as one of the reasons for
ial departments must confront the challenge of participating in the
the risk. decision-making process.
Confidence in debt repayment ability Thus, according to respondents and in line with the risks
identified, the main challenges facing Financial Directors are
allenges
Most respondents felt that their ability to repay debt will increase
encouraging and influencing decisions on business strategy
in the next three years. This will be driven by anticipated cash
and operational priorities, and seeking financing while
flow generated from disposal of assets, companies and
maintaining an acceptable cost of capital.
businesses.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 5

8. Belgium
Optimism confirmed by good results
Higher confidence and good actuals Highlights from the 3rd Quarter Belgium
om
Financial optimism decreased somewhat as compared to the CFO Survey:
previous survey, but remains strong. Belgian CFOs almost
unanimously expect sluggish but albeit sustained recovery of the • The growing optimism the survey has reported since the
economy. More than 80% of CFOs report the actual financial
he first quarter of 2010 remains strong and has translated
results of their organizations are on budget. As in the previous into good financial results. More than 80% of CFOs
quarter, 40% of CFOs report having outperformed their company report the actual financial results of their organizations
organizati
budgets. The proportion of CFOs expecting declining cash flows are on budget. 40% have exceeded expectations.
continues to shrink quarter by quarter. • The demand for product and services started to
accelerate last quarter for a third of the surveyed
The growing optimism the survey has reported since the first
rowing organizations. For the first time since the launch of the
quarter of 2010 has translated in good company results
results. survey, expectations related to the timing of demand
de
Demand for products and services have started to accelerate in acceleration have not been pushed backwards in time.
the third quarter for 1/3 of the surveyed organisations For the
organisations.
first time since the launch of the survey the expectations on the
ce • The financial repair which started slowly in the beginning
timing of accelerated demand for products and services did not of this year has further strengthened. Contrary to what
move backwards. At present, the majority of CFO’s expect the CFOs expected in the 2009 editions of the CFO survey,
acceleration in demand before or in the second half of 2011. credit is widely available and bank borrowing is a very
d
attractive source of financing.
Financial repair accelerates • The outlook for corporate financing in the coming years is
Contrary to CFO expectations as reported in the 2009 editions of positive, with a majority of CFOs expecting a stable and
this study, the financial repair that had started slowly in the relatively low cost of capital, and an increasing availability
beginning of this year is further strengthening Credit conditions
strengthening. of equity capital.
have continued to improve faster than initially anticipated. • Expansion and growth are high on the agenda of the
surveyed CFOs, with 35% of CFO’s considering an
CFOs now see the cost of new credit as being lower than at any acquisition or merger. Although expectations on M&A
time since the CFO survey started. For the first time since the activity have been bullish for 18 months already, cheap
launch of the survey, more CFOs have rated bank borrowing as financing and strong cash positions might finally boost
fina
being “cheap” rather than “costly”. transactions.
The credit crunch seems to have come to an end as well: • CFO confidence in domestic politics has plummeted in
perceptions of credit availability rose sharply in the third quarter
quarter. the last quarter, with the political standstill seen as a
With interest seen as being at very low levels and credit missed opportunity. 80% see room for government to
increasingly available, corporate demand for credit is starting to stimulate the economy. Two third of surveyed CFOs
rise. The attractiveness of bank borrowing is still at its highest
s report the political uncertainty will impact their business
level since the start of the survey. negatively.
• Coming out of the recession, the role of the CFOs shifts
Optimization of corporate financing from operator and steward (guiding their organisations
The downturn period witnessed significant changes in the through the turbulence) towards strategist and catalyst
balance sheets with corporates running higher levels of cash roles, influencing the company’s overall direction and
ove
and liquid reserves and relying more on equity and corporate
nd instilling a financial mindset to execution and risk-taking
risk
bonds finance. As a consequence of better credit conditions, the throughout the business.
attractiveness of bank borrowings as a source for corporate
financing augmented. That might change. More than half of the CFOs expect their
organization to be engaged in corporate activity in the next 12
The general outlook for the future cost of capital stays is months. Expansion and growth are high on the agenda of the
owth
optimistic. Half of the CFO’s expect a limited increase in surveyed CFOs: 40% are considering an acquisition or merger,
the Cost of capital (WACC) over the next 5 years, due to while 10% are looking into strategic alliances.
an augmentation of the long term interest rates Both debt
rates. Debt is cheap and with better than expected company results,
and equity are expected to be available in the future. many organisations are building up strong cash positions.
posi
CFOs that are considering corporate activity report they plan to
finance their transactions by means of existing debt facility,
M&A new bank loans or existing cash or operating cash flow.
M&A expectations have been bullish for the past 18 months, and
llish
remain strong. In the third quarter, also expectations on private Going forward
equity activity marked a significant increase. Until now, these
.
bullish expectations have not yet translated into a very active So overall, the good news from this quarter’s survey is that
surve
M&A market. CFO confidence remains strong and that actual results are
overall in line – or even better – than expected. Many CFO’s
expected
are looking for growth opportunities, and the necessary
financing is again available and attractive.
attractive
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 6

9. Netherlands
Change in funding preferences
Financial outlook Highlights from the 3rd Quarter Switzerland
Financial optimism among CFOs recovered this third quarter, CFO Survey:
returning to the level of 2010 Q1. The cash flow outlook of CFOs
for the next 12 months increased, although the expected • CFO optimism about their financial prospects has
increase is relatively modest. recovered from a dip in Q2.
• 80% of the CFOs expect their company’s cash flow to
pect
Optimism of CFO’s, about the financial prospects for their increase over the next 12 months.
company, has recovered this quarter since the level dropped
significantly in Q2. Remarkable is the break between the Dutch • Corporate debt is perceived as the most attractive source
and the UK figures. Dutch CFO’s are far more optimistic about of funding.
their prospects. • For the first time, since this survey started, bank
borrowing is favoured over equity as a funding source.
CFO optimism about their free cash flow expectations has also
recovered in comparison to last quarter. 80% of CFOs expect • 60% of the CFOs expect to arrange new funding over the
their free cash flow to increase over the next 12 months. 55% next 12 months.
expect an increase of 1% - 10%. • Three-quarters of the CFOs will refinance (parts of)
quarters
current debt positions over the next three years.
Risk • The level of risk appetite remains unchanged for the
The risk appetite remains at the same level for the fourth fourth consecutive quarter; one-quarter of CFOs consider
quarter
consecutive quarter. Given the current market circumstances,
. now a good time to take more risk on the balance sheet.
CFOs have no interest in taking more risk on their balance sheet • The outlook for M&A remains high over the next 12
he
than one year ago. About one-quarter of CFOs consider now to
quarter months, but expectations slightly dropped since the last
be a good time for more risk taking on the balance sheet The
n sheet. quarter.
others appear to be awaiting better times.
Almost half of the CFOs continued to reduce their balance sheet
risks over the last twelve months. The number of CFOs who
raised their balance sheet risk over the past year has decreased
substantially. Risk control remains a priority.
Funding
According to the CFOs, funding has become less costly in
comparison to the last quarter. Almost half of the CFOs
consider funding to be easily available. This is due in part to
interest rates remaining low and some banks lowering their
ing
surcharge.
The attractiveness of equity as a favourable source of funding
dropped below bank borrowing for the first time since this survey
started. Corporate debt remains the favoured source of funding.
60% of the CFOs are likely to issue debt over the next twelve
FOs
months. Refinancing of current debt positions does contribute to
this, because three-quarters of CFOs expect to refinance (parts
quarters
of) current debt positions over the next three years.
M&A
The outlook of CFOs for mergers and acquisitions is still very
s
positive, but expectations about its growth are slightly down in
comparison to the last quarters. The CFOs’ expectations for
Private Equity activity also decreased slightly
slightly.
CFOs’ valuations of equity in general and of their own company
ral
have also not changed much since last quarter Most CFOs rate
quarter.
equity in general and equity of their own company as
undervalued.
Dutch corporate activity is still low with a moderate number of
deals and low transaction values on average However, private
average.
equity activity increased since last quarter according to market
figures.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 7

10. Switzerland
More appetite for risk
Stable economic outlook and cautious Highlights from the 3rd Quarter Switzerland
om
financial prospects CFO Survey:
The last survey, conducted in June 2010, reported a decline in
• Economic optimism among CFOs is broadly unchanged
confidence amongst CFOs. Various macroeconomic events
in the third quarter. 65% judge the economic outlook for
influenced the mood of the CFOs and led to deterioration in
Switzerland over the next 12 months to be positive.
positive
levels of optimism.
• Financial optimism regarding their own business has
Increasing concern about growth across the industrial world has risen slightly.
led to a new wave of pessimism during the last three months
months.
• Growth is currently CFOs’ top priority but some defensive
Despite this increasingly negative sentiment Swiss CFOs are
strategies such as cost, cash flow and risk management
optimistic about their future prospects.
are still considered to be very important.
important
After a drop in optimism in Q2, the CFOs’ opinion of the Swiss
2, • Exchange rate risk is seen as a high-impact
high
economy has stabilised and a majority is positive about macroeconomic risk.
economic development in the next 12 months Asked about the
months.
• Credit conditions continue to be seen as very attractive.
attractive
probability of a “double dip”, an average of only 20% believes
CFO sentiment about credit availability is at its highest
this to be a realistic scenario.
level since the CFO survey began. 62% describe credit
Financial confidence rebounded after the steep decline last as cheap.
quarter. The level of confidence amongst CFOs is consistent • The process of deleveraging seems to be over. Risk
he over
with the cautious mood in financial markets and the concerns appetite has risen and CFOs on balance plan to raise
about renewed global economic weakness that would also affect leverage for the first time this year.
Switzerland.
One of this quarter’s special questions concerned the most
his
important issues on CFOs’ agendas for the next 12 months It is
months. Raising credit demand
interesting that “growth” was voted top, showing that many CFOs are becoming much less “anti” debt. 38% expect their
debt
believe in a continued recovery. However, the fact that more demand for new credit to increase over the next year. Only
year
defensive priorities (cost, cash flow and risk control) are also
s 18% anticipate a decrease in demand. 98% expect their ability
abil
considered crucial shows that CFOs are hedging their strategies to service their debt-levels to increase or stay the same over
levels
against a potential downside. the next three years.
Responses to the question about current high
high-impact risks The last three quarters have been a period of volatility. CFOs
volatility
showed that macro – not financial – risks dominate the min of
minds have now found new optimism after the decline in confidence
CFOs. In particular, a strong Swiss Franc is still seen as a big last quarter. What emerges from this quarter’s survey is that
quart
threat to their own businesses. they are looking for opportunities such as growth and at the
same time hedging against a possible setback because of
Attractive credit conditions and increasing continued uncertainties on a macroeconomic level
appetite for risk
Enthusiasm for bank borrowing and corporate bonds as a source
of finance is at a high, stable level. Credit conditions are further
improving and a majority rate credit as available and cheap.
The corporate sector in Switzerland is seen as correctly
leveraged by 86% of CFOs. Corporates have further de de-risked
their balance sheets but to a much lesser extent than in the last
three quarters. The process of deleveraging seems to be over over.
Instead, an increased appetite to risk can be observed and a
shift in attitude towards higher gearing which is a clear sign of
rising optimism.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 8

11. The Middle East
Resilience for growth
The results of the third quarter survey indicate that despite the Highlights from the 3rd Quarter Middle East
rising geopolitical tensions, the region is moving forward with
plans for growth and optimism remains high. GDP growth is CFO Survey:
expected to continue and increase into 2011 supported by
• Optimism among Middle East CFOs edged down
strong spending from the regions’ governments in terms of
slightly; however, this is considerably higher than the
infrastructure development, underpinned by resilient oil prices
sentiments of CFOs in western countries.
which have increased over the past year into the $80 range.
• 78% of CFOs expect demand for their companies’
CFO optimism remains high products to accelerate by the end of 2011.
• CFOs are now significantly less risk averse than any
Middle East CFOs are very optimistic compared to CFOs in the time in the past year. A net balance of 43% think now is
West. Optimism among Middle East CFOs edged down a good time to take greater risk onto their balance
slightly, with respondents reporting greater optimism dropping sheets, compared to 36% in Q1 2010 and 27% in Q3
from 55% in Q1 2010 to 52% in Q3 2010. However, this is 2009
quite high compared to the general level of optimism among
CFOs of western countries such as the UK and North America. • Companies are not planning to reduce spending and
investment as aggressively as they did in the previous
More than three quarters of CFOs expect demand for their quarters.
companies’ products to accelerate by the end of 2011. • CFOs have become much more positive about current
debt levels and their debt repayment ability.
Strategies aimed at cost control have
• Despite a slight fall, Bank borrowing continues to be the
reduced in importance most attractive source of financing for CFOs.
CFOs have become markedly less risk averse over the last • A majority of the CFOs are planning to take on more
year. A net balance of 43% think now is a good time to take debt. Two thirds of CFOs plan to raise financial leverage
greater risk onto their balance sheets, compared to 36% in Q1 over the next 12 months and are likely to issue debt or
2010 and 27% in Q3 2009. arrange new facilities over the next 12 months.
Companies are not planning to reduce spending and • The majority of CFOs are positive on M&A and private
investment as aggressively as they did in the previous quarters. equity activity in the next 12 months, but this majority
73% of the respondents plan to reduce discretionary spending has shrunk since last year.
in the latest survey, compared to 90% in the Q1 survey. Only • Market risk and operational risks are of the highest
58% now plan to reduce capital spending, compared to 67% in concern for CFOs. These risks are largely managed by
the Q1 survey. Chief Risk Officers who report to CEOs.
Confidence in debt repayment ability
fallen in the last year from 51% to 42%. In contrast, there are
CFOs have become much more positive about debt levels. now more CFOs who think equities and government bonds
Only a net balance of 29% of CFOs now think Middle Eastern are overvalued.
companies are overleveraged compared to 42% in Q1 2010. A
net of 70% of CFOs expect their ability to service their The majority of CFOs are positive on M&A and private equity
companies’ debt to improve over the next three years, with the activity in the next 12 months, but this majority is smaller
same percentage believing the availability of debt capital will compared to one year ago. 61% of CFOs now expect M&A
increase over the next 5 years. activity to increase in the next 12 months, compared to 71%
one year ago. The proportion of CFOs expecting private
Despite a slight fall, Bank borrowing continues to be the most equity activity to increase in the next 12 months fell sharply
attractive source of financing for CFOs. A net balance of 41% from 70% to 49%. Almost a quarter of the respondents are
rate bank borrowing as attractive, compared to 28% for equity considering M&A activity over the next 12 months, with 23%
issuance and 26% for corporate bond issuance. There has also considering a strategic alliance and 21% considering a joint
been a sharp rise in the attractiveness of corporate bond venture.
issuance, from net 10% to net 26%.
Understanding Risk in the Region
A majority of the CFOs are planning to take on more debt. Two
thirds of CFOs plan to raise financial leverage over the next 12 Risk categories which currently concern CFOs the most are
months, and are likely to issue debt or arrange new facilities market risks (39%), followed by operational, strategic, and
over the next 12 months. A net of 35% of CFOs expect an financial risks.
increase in debt on their balance sheets over the next three
years. 52% of the survey respondents indicated that risk
management is led by Chief Risk Officers who report to
Market outlook – Increase in M&A activity CEOs, while 37% report that CFOs have this responsibility.
expected
A large proportion of CFOs consider commercial real estate to
be overvalued. However, the balance taking this view has
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 9

12. Australia
The long haul to recovery?
o
Confidence up but CFOs concerned about Highlights from the 3rd Quarter Australia
ighlights
economic recovery CFO Survey:
The Deloitte CFO Survey has found that CFOs are more
• 55% of CFOs are more optimistic about their financial
c
optimistic about the financial prospects of their companies than
prospects than they were three months ago (40% in Q2).
Q2)
they were three months ago (55% compared to 40% in Q2).
• A slow return to growth is expected by the majority of
While confidence has risen compared to last quarter, CFOs are CFOs (64%). Fewer expect a V-shaped economic
shaped
less optimistic about the overall pace of economic recovery in recovery; more now see a ‘bathtub’ shape.
shape
the medium term. A majority (64%) expect a slow and possibly
• 9 out of the top 10 risks are seen as external and beyond
erratic return to growth. There has also been a significant
CFOs’ control.
downward shift to 16% (from 28% last quarter) in the number of
CFOs who expect a quick or ‘V-shaped’ recovery
shaped’ recovery. • A third of CFOs believe tax reform should be the newly
elected government’s top economic priority.
priority
A key contributing factor to CFOs’ views about the pace of
• 94% of CFOs expect M&A levels to increase over the
economic recovery is the sense that many of the risks to which
next year.
their businesses are exposed are outside their direct control
ide control.
The survey revealed that 9 of the top 10 greatest risks seen by • 43% of CFOs said it is likely they will undertake an
CFOs are external to their business. The highest nominated risk acquisition in the next 6 months.
among CFOs was economic recovery, cited by 25% of • 61% of CFOs expect demand for credit to rise over the
respondents. This risk was followed by performance, regulatory next 12 months and 49% aim to increase their level of
change, the possibility of an economic slow-down in China,
down gearing.
increasing sovereign risk, the impact of a minority government,
and concern over increasing interest rates. • Most CFOs are upbeat about their companies’ cash flow
prospects.
Asked to name what they believed should be the top economic • 60% of CFOs said it was not a good time to be taking
0%
priority for the new government, a third (33%) selected tax
ew greater risk onto their balance sheet.
reform. CFOs identified the Mineral Resource Rent Tax,
corporate tax levels and arrangements to establish a price for The percentage of CFOs who believe credit is costly has
carbon. Other economic priorities identified were managing the almost returned to levels recorded in 2009. Regardless, their
2009
budget by returning to surplus and reducing government debt
d views on arranging new credit or issuing debt continue to be
(15%) and ensuring a stable economic recovery (14%) There
(14%). positive, and this quarter’s survey saw a marked rise in the
was also strong recognition of the need for the government to number of CFOs who said they were likely to do so.
focus on infrastructure spending (15%).
The future of capital: a longer term
M&A on the rise
perspective
The optimism around M&A activity over the next year continues
this quarter with 94% expecting an increase in M&A levels What
levels. In our Australian survey for Q3 2010, the majority of CFOs
is particularly interesting is that 43% of CFOs say that their expect to increase their total balance sheet debt. Growing
debt
company was either ‘extremely likely’ or ‘somewhat likely’ to financial optimism is reflected in the finding that 77% expect
undertake an acquisition in the next 6 months This response
months. their ability to service debt to increase over the next three
indicates the possibility of a strong uplift in the level of M&A years, 38% significantly so. Only 1% said that their capacity to
activity in the new year. service debt would decline. Where CFOs suggested that they
would reduce debt in the future, using cash reserves rather
The lack of suitable targets (41%) is one of the main hindrances than selling assets or raising equity was the preferred option.
to undertaking an acquisition, followed by the pricing
expectations of vendors (32%). When considering acquisitions,
idering
the top three priorities for CFOs were alignment with strategy
(92%), the impact on EPS (64%) and the impact on cash flows
(39%). Revenue (6%) and market share (5%) were the lowest
ranked priorities.
Financial strategies and views on funding
The expected rise in M&A is further supported with 61% of
respondents forecasting an increased demand for credit in the
next 12 months. CFOs remain upbeat about their companies’
cash flow prospects. 74% were confident that their cash flow will
increase in the coming year, further reinforcing their plans to
ease
raise gearing levels. Since Q4 2009, there has been little change
in the percentage of CFOs who plan to reduce gearing levels
levels.
There is a growing expectation that gearing levels will increase,
potentially to fuel increasing aspirations for growth Despite
growth.
these positive signs, 60% of CFOs said now is not a good time
to take greater risk onto their balance sheets
sheets.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 10

13. South Korea
Optimism in a time of ambiguity
CFOs of top South Korean companies are predominantly Highlights from the 3rd Quarter South Korea
optimistic about their companies’ prospects despite considerable
change and uncertainty on government policies and currency Survey:
exchange rates. This is particularly evident in the impact of
• There is a general consensus of optimism amongst
governmental policy during the economic recession, which
CFOs regarding their companies’ prospects but they are
resulted in more negative than positive opinion. North American
cautious of the potential impact of government policies
CFOs had a similar negative outlook towards the impact of
and changes in currency exchange rates.
governmental policy.
• The outlook for company performance is generally
Across industries, CFOs are projecting substantial growth in optimistic, with both revenues and earnings expected to
both revenues and earnings (16% and 23%, respectively on increase.
average), while costs are expected to be held to a 4-6%
• There is consensus amongst CFOs that their finance
increase. This substantial growth of performance would enable
organizations need to be more involved in strategic
companies to invest more aggressively, resulting in increases in
decisions; but over 40% of them place a larger focus on
dividends, capital spending and domestic employment (6%, 17%
funding and liquidity management.
and 7%, respectively on average). The optimism in South Korea
is similar to North American results, but stands in contrast to • The changing business environment (e.g., M&A) is the
Europe, where sovereign debt turmoil is substantially disrupting top job stress for over 60% of CFOs.
economies and capital markets. • The challenges of CFOs vary by industry; over 50% of
CFOs in the manufacturing and construction industries
Over 50% of CFOs believe that one of their top challenges is
believe that competition with foreign companies is their
ensuring an appropriate level of involvement in strategic
top challenge, while over 50% of CFOs in other industries
decision-making by either participating directly or providing
indicated that it is industry regulation/legislation.
information indirectly to decision makers; however, due to the
economic uncertainty, over 40% of CFOs place a larger
emphasis on ‘ensuring funding, liquidity, and acceptable costs of
capital’. 54% of CFOs believe debt will increase over the next
three years, but 72% also believe that the ability to service debt
will increase, resulting in an overall view that the level of debt will
be manageable.
Over 60% of CFOs believe that ‘major change initiative (e.g.,
M&A)’ is a leading cause of job stress, while about 50% of CFOs
were in agreement that ‘an insufficient support staff (e.g.,
shortage of number)’ is a concern. Additionally, there is
agreement that significant time must be devoted to support
decision-making processes, one of the key capabilities of the
‘strategist’ role.
Some CFOs from varying industries have shown different
opinions regarding their challenges. Over 50% of CFOs in the
manufacturing and construction industries indicated that ‘foreign
competition’ is their top industry challenge, while over 50% of
CFOs from other industries believe it is ‘industry
regulation/legislation’.
Consumer, retail and services industry CFOs have more
pessimistic views about their industry prospects.
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 11

14. Deloitte CFO Surveys
About Deloitte CFO Surveys
Seventeen Deloitte member firms have launched CFO Surveys in the past few years. The objective of the surveys is to collect CFOs’
opinions on a range of areas including economic outlook, financial markets, business trends, their organizations, and CFO careers. The
focus of each member firm’s survey may vary.
Outlined below are the member firms that currently conduct CFO surveys and their frequency. Click on the country name to be directed to
latest survey results where available.
Region Country Frequency
Europe, Middle East Belgium Quarterly
and Africa
Denmark* Bi-annual
Ireland Quarterly
Israel* Quarterly
Middle East Bi-annual
Netherlands Quarterly
South Africa Annual
Spain Bi-annual
Sweden* Bi-annual
Switzerland Quarterly
United Kingdom Quarterly
Americas North America Quarterly
(Canada, Mexico, United States)
Asia Pacific Australia Quarterly
South Korea Annual
Japan (foreign companies only)* Quarterly
*Contact the Global CFO Program for further information, email GlobalCFOProgram@deloitte.com
© 2010 Deloitte Global Services Limited Deloitte CFO Global Insights 12

15. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms,
or their related entities (collectively the “Deloitte Network”) is, by means of this publication, rendering professional
advice or services. Before making any decision or taking any action that may affect your finances or your business,
you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss
whatsoever sustained by any person who relies on this publication.
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© 2010 Deloitte Global Services Limited