You are on page 1of 12

The Deloitte CFO Survey

Confidence dips

2010 Quarter 2 results


July 2010
Contents

The Deloitte CFO Survey 1

CFOs less confident 2

Fiscal squeeze dampens sentiment 3

Credit conditions improve 4

Credit, cash, risk 5

Financial strategies 6

Market outlook 7

CFO survey: economic and financial context 9

This is the twelfth quarterly survey of Chief Financial Officers and Group Finance
Directors of major companies in the UK. The 2010 second quarter survey took
place between 11th and 25th of June. 125 CFOs participated, including the
CFOs of 32 FTSE 100 and 44 FTSE 250 companies. The rest were CFOs of other
UK listed companies, large private companies and UK subsidiaries of major
companies listed overseas. The combined market value of the 93 UK listed
companies surveyed is £446 billion, or approximately 28% of the UK quoted
equity market. The Deloitte CFO Survey is the only survey of major corporate
users of capital that gauges attitudes to valuations, risk and financing.

For copies of earlier CFO Surveys, see www.deloitte.co.uk/cfosurvey


The Deloitte CFO Survey
Confidence dips
The clearly stated view of CFOs in our previous survey, Contacts
Key points
just before the General Election, is that fiscal
consolidation is essential. In that Survey 85% of Margaret Ewing
• Financial optimism has dropped to a one year Partner and Vice
respondents said that deficit reduction should be the
low in the second quarter and CFOs see a Chairman
new government’s top priority. Second, a substantial 020 7303 3323
growing risk of a “double dip”.
minority of CFOs, about a third, expect few negative mewing@deloitte.co.uk
• Two thirds of CFOs expect tighter fiscal policy effects from fiscal tightening.
Ian Stewart
to have negative effects on their company in Chief Economist
the short term. 31% foresee long term benefits But while the external environment is looking less 020 7007 9386
positive, the second quarter 2010 CFO Survey shows istewart@deloitte.co.uk
for their companies from the coming fiscal
squeeze. that some pressures on corporates’ balance sheets are
easing. The cash crisis in the corporate sector has
• Credit conditions are improving. CFO sentiment abated significantly and corporates are more bullish
For additional copies
about credit availability is now at the highest about prospects for their own cash flow than at any
of this report, please
level since the CFO survey started in the third time in the last two years. Financial risk appetite among contact Matt Gentle on
quarter of 2007. CFOs has not, so far, been dented by doubts about the 020 7303 0294 or email
recovery. Crucially, credit conditions are getting better. mgentle@deloitte.co.uk
• Cost control remains, as it has been in the last CFO sentiment about credit availability is now at the
two years, CFOs’ top priority. highest level since the CFO Survey started in the third
quarter of 2007. In a process that partially unwinds the
• Cash flow has receded as a major priority for effects of the credit crunch, bank borrowing has
CFOs. Expansionary policies to raise revenue regained its pre-recession appeal to CFOs as a source of
and capitalise on growth have climbed up funding. CFOs see a more attractive and available
CFOs’ priority list. supply of bank credit driving growing demand for bank
borrowing over the next year.

So the latest CFO Survey paints a picture of concern


The first quarter 2010 CFO Survey concluded with the about growth despite improvements in the corporate
words, “CFOs sees risks ahead”. Our second quarter credit and liquidity environment. Examining how CFOs
2010 survey suggests that at least some of those risks intend to finance their companies enables us to see how
have started to materialise. Financial optimism has corporates plan, in practice, to reconcile these pressures.
dipped for the second consecutive quarter, taking it to
the lowest level in a year. Meanwhile CFOs have edged What is most striking is that cost control remains, as it has
up the probability they assign to a “double dip” from been for the last two years, the top priority for UK CFOs.
33% in the first quarter to 38% today. Recent volatility in With fears of a double dip increasing, CFOs are
financial markets and concerns about fiscal tightening at maintaining a strong focus on costs. Yet cash flow is no
home and abroad are clearly weighing on CFO sentiment. longer the central pre-occupation that it was, dropping
from second to fourth position in the list of CFOs’
One example of this process can be seen in CFOs’ attitudes priorities. Crucially, expansionary strategies including capital
to financing. Recent financial market turbulence has made spending, expanding into new markets and launching new
CFOs much more cautious about financing their products and services, have shifted up the priority list.
companies using equity. Enthusiasm for corporate bonds A majority of CFOs expect M&A activity to rise over the
as a source of finance has also dimmed. These shifts in next year. 35% of CFOs included growth by acquisition
among their top 3 priorities for the next 12 months.
preferences underscore the close relationship between
financial market activity and corporate attitudes.
A recurring theme from the CFO Survey in the last year
has been uncertainty about growth prospects.
Two of this quarter’s special questions set out to gauge
Uncertainties have mounted, yet, at the same time
the likely effects of fiscal tightening on UK corporates
some important factors are looking up. Shortages of
and reveals that CFOs see more direct risks than
liquidity and credit are much less of a problem.
benefits from the coming squeeze. Two thirds of CFOs CFOs are focussing more on how to capitalise on
expect tighter fiscal policy to have negative effects on growth, no matter how unsure and patchy.
their company in the short term while 69% foresee few
or no direct long term benefits. The last three years have been a period of exceptional
volatility. CFOs are not convinced the problems are over.
There are, however, two caveats to this finding. First, in What emerges from this survey is that CFOs are alive to
answering this question CFOs focussed on direct risks the risks and looking for opportunities in what lies ahead.
and benefits.

The Deloitte CFO Survey 1


CFOs less confident

The latest CFO Survey shows a decline in financial Chart 1. Financial prospects
optimism with the balance of respondents reporting Net % of CFOs who are more optimistic about financial prospects for their company now than
greater optimism dropping from 40% to 24%, the three months ago
lowest reading in a year and the second consecutive
60%

More optimistic
quarterly decline.
40%
The average CFO now attaches a 38% probability to
20%
there being a “double dip”, up from 33% in the first
quarter 2010 survey. This decline in confidence is 0%
consistent with a more cautious mood in financial Less optimistic
-20%
markets and growing concerns about renewed
economic weakness. -40%

-60%

-80%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

The readings from the CFO Survey often show a close Chart 2. Deloitte Financial Stress Index
relationship between financial market conditions and
300
corporate sentiment. The decline in CFO optimism in 280
our latest Survey has occurred against a backdrop of 260
rising stress in the financial markets. 240
220
Within financial markets, investors have been moving 200
from equities to less risky assets, such as US Treasuries, 180
Lehman bankruptcy
in response to the Euro Area debt crisis and concerns 160
Euro area
140 crisis
about the region’s banks.
120
100
80
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
07 07 07 07 08 08 08 08 09 09 09 09 10 10 10

The Deloitte Financial Stress index is an arithmetic average of the ratio of 3 month LIBOR to base
rates, the ratio of yield on high yield bonds to yield on government bonds, the VIX index, the
ratio of total market return to banking stocks return and the ratio of yield on long term
government bonds to yield on short term bonds.

Our tracking of UK newspaper stories confirms a more Chart 3. Deloitte corporate newsflow index
negative tone to corporate news stories in June. Stories
More good news

about the effects of public sector spending cuts have 200


contributed to the recent decline in our corporate news 100
flow index.
0

-100
Less good news

-200

-300

-400

-500

-600
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Corporate news flow index tracks major UK broadsheets for positive and negative news stories
from the UK corporate sector.

2
Fiscal squeeze dampens sentiment

One example of the linkage between financial market Chart 4. Is it a good time to tap the capital markets?
performance and corporate behaviour can be seen in
Net % of CFOs who think now is a good time to issue equity or corporate bonds
CFOs’ changing attitudes to funding.
60%
Bonds
CFOs have become markedly less enthusiastic about

Good time
40%
issuing equity. The balance of CFOs who believe that
this is a good time to issue equity has dropped at the 20%

fastest rate since the Survey started in 2007. 0%

Not a good time


-20%
CFOs still think, on balance, that this is a good time to
issue bonds but they have become somewhat more -40%
Equity
cautious here too. -60%

-80%

-100%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

CFOs see more risks than benefits to their companies Chart 5. Impact of fiscal squeeze
from the coming squeeze on UK public spending.
% of CFOs who anticipate significant/some or % of CFOs who think their company will see
no negative effects in the short term on their significant/some or no benefits in the long
Two thirds of CFOs expect tighter fiscal policy to have company as a result of the fiscal squeeze. term from the fiscal squeeze.
negative effects on their companies particularly relating
10% 5%
to concerns about reduced consumer spending and job
losses in the public sector.
34% 26%
However, 31% foresee benefits in the long term for
their companies. Long term benefits cited by a number
of CFOs include a reduction in business red tape and
56% 69%
lower taxes.

Significant negative effects Significant benefits


Some negative effects Some benefits
Little or no negative effects Few or no benefits

Fiscal tightening is likely to slow the pace of the UK’s Chart 6. Factors supporting growth during fiscal consolidations
recovery, although evidence from other countries,
including Sweden and Canada, suggests it is possible
to shrink the public sector and sustain growth.
Microeconomic Global
flexibility demand
Such episodes have generally taken place in flexible
economies with governments that seek to bolster the
private sector, often with tax cuts. A weak currency and
strong overseas demand are also important in helping
offset shrinking public expenditure.

The UK scores reasonably well on these criteria and, Weak Support for
perhaps for this reason, the independent Office of currency the private sector
Budget Responsibility (the “OBR”) sees the Emergency
Budget slowing, not derailing, growth. In the light of
the Budget, the OBR trimmed its 2010 GDP forecast
from 1.3% to 1.2% and its 2011 forecast from 2.6%
Source: Economics & Markets, Deloitte Research
to 2.3%.

The Deloitte CFO Survey 3


Credit conditions improve

Despite recent uncertainties bank borrowing has Chart 7. Favoured source of corporate funding
continued to gain popularity with CFOs. Bank borrowing
Net % of CFOs reporting the following sources of funding as attractive
is now seen as being as attractive as it was in early
2008, before the financial crisis took grip. 60% Bond
issuance

40%
Meanwhile the two other major sources of external

Attractive
finance for corporates, equity and corporate bonds,
20%
have dipped in popularity with CFOs.
0% Bank
borrowing
Unatractive Equity
-20% issuance

-40%

-60%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

The growing attractiveness of bank borrowing to Chart 8. Cost and availability of credit
corporates partly reflects an improvement in credit
Net % of CFOs reporting credit is costly and credit is easily available
conditions. CFOs now perceive credit as being more
available and the cost of new credit lower than at any 100% 100%
Cost of credit (lhs)
time since the third quarter of 2007.

Credit is available
80% 80%
Credit is costly

60% 60%
The CFO Survey covers larger UK corporates and the 40% 40%
experience of smaller companies may be different.
20% 20%
Nonetheless, our results suggest that the process of
0% 0%
balance sheet repair in banks has generated a
Credit is cheap

Credit is hard to get


-20% -20%
significant improvement in corporate credit conditions.
-40% -40%
-60% -60%
Availability of
-80% -80%
credit (rhs)
-100% -100%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

CFOs think the degree of excess leverage in the Chart 9. Leverage


corporate sector has declined markedly in the last
Net % of CFOs who think UK corporate balance sheets are overleveraged
18 months. This fits with the idea that corporates have
focussed on strengthening balance sheets during the 60%
Over leveraged

downturn, partly by cutting leverage. This process


probably has further to run. Far more CFOs say they 40%
plan to reduce leverage in the next 12 months than
to raise it. 20%
Under leveraged

0%

-20%

-40%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

4
Credit, cash, risk

This quarter’s CFO Survey includes two new questions Chart 10. Corporate demand for credit
on the demand for credit.
25% 23%

A balance of CFOs say that their demand for credit has 20%
fallen in the last 12 months, a finding which fits with
the sharp decline seen in the official credit data. 15%

But looking ahead CFOs are more positive. Over the 10%
next 12 months CFOs think their demand for credit is
5%
going to increase
-2%
0%

-5% Net % of CFOs who said their Net % of CFOs who said
company’s demand for their company’s demand
new credit has increased for new credit is likely to
in the last 12 months increase in the next 12 months

Chart 11. Operating cash flow


Despite a dip in optimism CFOs are increasingly positive
about the outlook for their own company’s operating Net % of CFOs who expect their company’s operating cash flow to increase over the next
cash flow. Expectations for an increase in cash flow are 12 months
now at the highest level in two years.
60%

50%

40%
Increase

30%

20%

10%

0%
2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Chart 12. Is it a good time to take greater risk?


Most CFOs remain cautious about taking risk.
Nonetheless, renewed concerns about the economic Net % of CFOs who think now is a good time to take greater risk onto their balance sheets
outlook have not, so far, affected CFOs’ risk appetite.
-40%
Not a good time to take greater risk

-50%

-60%

-70%

-80%

-90%

-100%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

The Deloitte CFO Survey 5


Financial strategies

Chart 13. Priorities for the next 12 months

% of CFOs who have selected the following factors among their top 3 priorities

Reducing costs 47%

Expanding into new markets 45%

Introducing new products or services 45%

Increasing cashflow 37%

Growing by acquisition 35%

Increasing capital expenditure 26%

Renegotiating current financing facilities 18%

Reducing debt levels 17%

Disposing of assets 11%

Raising dividends or share buy backs 8%

Raising new capital 3%

0% 10% 20% 30% 40% 50% 60%

2010 Q2 survey 2009 Q4 survey

This quarter’s Survey sheds light on the strategies CFOs are adopting for their business in what is generally expected to be an uncertain and
challenging environment.

Cost control, remains, as it was six months ago, the top priority for CFOs. This strategy has served CFOs well during the downturn and they
continue to see it as being vital for their companies over the next year.

But we can also detect a shift to more expansionary policies. CFOs responded to the credit crunch and the ensuing recession with a strong focus
on building cash flow. That was CFOs’ top priority in December 2008, at the low point of the cycle, and a year later, in December 2009, with the
recovery underway, increasing cash flow was still the number one priority. But in the second quarter 2010 boosting cash flow has dropped to
fourth position, below expanding into new markets and introducing new products or services. A reduced emphasis on cash is consistent with the
strengthening of cash flow expectations and improving credit conditions seen elsewhere in the Survey.

Increasing capital expenditure has also jumped up the league table, with the proportion of CFOs rating this as a priority almost doubling since the
start of the year.

This changed set of rankings paints a mixed picture. On the one hand doubts about the recovery mean that cost control is still king for most
CFOs. Yet cash flow is no longer the central preoccupation it was. Crucially, corporates are increasingly focused on growth strategies, such as
expanding into new markets, bringing in new products or services, growing by acquisition and raising capital spending.

6
Market outlook

CFOs have become more optimistic about the outlook Chart 14. Outlook for UK equities
for UK equities even as the market has fallen.
Net % of CFOs who expect FTSE 100 to be higher in a year’s time

Expectations for a strengthening of the FTSE100 index 70%


are now at the highest level in a year.
60%

50%

40%

30%

20%

10%

0%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

CFOs’ views on asset valuations have shifted Chart 15. Valuations


significantly this year.
Net % of CFOs who think the following asset classes are overvalued

Government bonds are seen as being less overvalued, 100%


a change which perhaps reflects the greater confidence UK commercial
80%
real estate Government
in UK fiscal policy and doubts about the outlook for bonds
60%
Overvalued

growth. In the last 3 months equities have gone from


40%
being seen as overvalued to undervalued. Commercial
real estate is now seen as modestly overvalued, a 20%

change which may be due to the rise in values seen 0%


so far this year.
Undervalued

-20%

-40%
UK equities
-60%

-80%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

CFOs remain positive on the outlook for corporate Chart 16. M&A and PE outlook
activity. Most expect activity in the M&A and private Net % of CFOs who expect M&A and PE activity to increase in the next 12 months
equity sectors to rise over the next year. As chart 13 on
Activity will increase

the previous page shows, 35% of CFOs included 100%


growth by acquisition among their top 3 priorities. 80%
60%
40%
20%
0%
Activity will decrease

-20%
-40%
-60%
-80%
2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

M&A activity PE activity

The Deloitte CFO Survey 7


CFO Survey: Economic and financial
context
UK public expenditure/receipts as a % of GDP Evolution of 2010 consensus GDP growth forecasts

49% 4
UK government Optimism on US, Japan: United States
47% total managed
The coming Treasury 3 pessimism on Europe
expenditure Japan
fiscal squeeze forecasts
45% Northern
2 Europe
43%
1 UK
41%
UK government
total receipts 0
39%
Peripheral
37% -1 Europe

35% -2
1990- 1993- 1996- 1999- 2000- 2005- 2008- 2011- 2014- Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10
1991 1994 1997 2000 2003 2006 2009 2012 2015
Source: The Economist poll and Deloitte calculations
Source: Emergency Budget forecasts, HM Treasury

Financial market rankings of major UK risks Spanish and German 10 year bond yields

1. Sovereign risk and/or public debt 5


2. Economic downturn Flight from peripheral to core
3. Regulation, taxes on banks European bonds

4. Funding and liquidity problems Spanish bond yields


4
5. Financial market disruption
6. Property price falls
7. Tight credit conditions
3
8. Household and corporate defaults
German bond yields
9. Election uncertainty
10. Financial institution failure/distress
2
Key risks to the UK financial system as ranked by financial market participants Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
in the Bank of England’s Systemic Risk survey, May 2010 2009 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010

UK corporate capital gearing UK year on year GDP growth

40 1.5 Forecasts
UK corporate gearing declines 1.0
35 0.5

0
30
-0.5

-1.0 OBR forecasts continuing


25 UK recovery
-1.5

20 -2.0

-2.5

15 -3.0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
Debt net of liquid assets relative to the market value of capital
Source: Bank of England Financial Stability Report, June 2010 Source: ONS, Office for Budget Responsibility and Deloitte calculations

8
Data archive

A note on methodology
Many of the charts in the Deloitte CFO survey show the results in the form of a net balance. This is the percentage of respondents reporting, for
instance, that bank credit is attractive less the percentage saying bank credit is unattractive. This is a standard way of presenting survey data used
by, amongst others, the CBI and the European Commission. To aid interpretation of the results, this table contains a full breakdown of responses
to the questions covered in this report. Net balances have been rounded to the nearest whole number.

Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010
% % % % % % % % % % %
How would you rate the overall availability of new credit for corporates?
Available 26 31 16 5 1 2 13 11 19 24 31
Neutral 19 6 7 6 0 4 15 16 13 21 19
Hard to get 55 63 77 89 99 94 72 73 69 56 50
Net Balance -29 -31 -61 -84 -98 -92 -59 -63 -50 -32 -20
How would you rate the overall cost of new credit for corporates?
Costly 64 72 89 97 95 86 82 76 73 65 55
Neutral 26 25 10 2 4 11 15 18 16 24 31
Cheap 10 3 1 1 1 3 3 7 11 11 15
Net Balance 55 69 88 96 94 83 79 69 62 54 40
Bank borrowing, as a source of funding, is
Attractive 44 59 47 35 29 27 27 26 31 36 44
Neither attractive nor unattractive 28 16 13 14 9 12 22 27 26 32 36
Unattractive 28 25 40 51 62 61 50 48 43 31 20
Net Balance 16 34 7 -16 -33 -34 -23 -22 -12 5 23
Corporate debt raising, as a source of funding, is
Attractive 33 28 40 14 20 22 35 48 58 56 46
Neither attractive nor unattractive 33 19 29 17 14 23 32 33 29 34 35
Unattractive 33 53 31 68 66 55 34 19 13 10 20
Net Balance 0 -25 8 -54 -46 -33 1 28 44 46 26
Equity raising, as a source of funding, is
Attractive 19 19 29 17 21 27 44 50 48 38 30
Neither attractive nor unattractive 33 9 20 24 13 28 26 26 28 36 34
Unattractive 48 72 51 58 66 45 30 24 23 27 37
Net Balance -29 -53 -22 -41 -45 -18 14 26 25 11 -7
UK corporate balance sheets are
Overleveraged 5 13 32 33 38 63 50 39 40 29 26
Appropriately leveraged 73 81 61 61 59 34 44 57 56 64 64
Underleveraged 22 6 7 6 3 3 5 4 5 7 10
Net Balance -17 6 24 27 35 60 45 34 35 22 16
Cash return to shareholder ratios (including share buybacks) are
High 35 32 17 15 25 15 9 6 5 7 10
Normal 60 52 56 39 26 13 22 26 29 26 32
Low 5 16 27 45 49 72 68 68 66 68 58
Net Balance 30 16 -10 -30 -24 -57 -59 -62 -61 -61 -48
In a year’s time, FTSE 100 will be
Higher 30 50 40 49 66 65 61 38 45 48 55
Broadly unchanged 40 25 33 35 26 23 34 49 42 40 35
Lower 30 25 28 16 8 12 4 13 13 12 10
Net Balance 0 25 12 33 58 53 58 26 31 36 45
Levels of M&A in the UK will
Increase 21 31 38 48 40 56 83 92 91 84 79
No change 14 16 26 27 36 29 15 8 9 16 20
Decline 65 53 37 26 24 15 2 0 0 1 1
Net Balance -44 -22 1 22 16 41 81 92 91 83 78
Volume of acquisitions by private equity in the quoted equity market will
Increase 12 22 32 31 20 29 40 50 58 55 56
No change 5 6 23 30 33 37 40 45 36 38 36
Decline 84 72 45 39 47 34 21 6 6 7 7
Net Balance -72 -50 -13 -8 -27 -5 19 44 52 48 49
Compared with three months ago how do you feel about the financial prospects for your company?
More optimistic 17 22 17 3 7 15 37 46 46 48 35
Unchanged 43 47 47 41 27 40 49 46 52 44 52
Less optimistic 40 31 36 56 66 45 15 8 2 8 12
Net Balance -24 -9 -19 -53 -59 -30 22 38 44 40 23

The Deloitte CFO Survey 9


Deloitte CFO Survey now on Datastream

Below are Thomson Reuters Datastream mnemonics for the net balances for all the regular questions from the Deloitte CFO survey.

Deloitte CFO survey question Datastream Mnemonic


How do you currently rate bank borrowing as a source of external funding for UK corporates? UKCFOFBBR
How do you currently rate corporate bonds as a source of external funding for UK corporates? UKCFOFCBR
How do you currently rate equity as a source of external funding for UK corporates? UKCFOFEQR
How do you currently rate UK commercial real estate asset valuations? UKCFOVRER
How do you currently rate UK equity valuations? UKCFOVEQR
In a year’s time do you expect the FTSE 100 to be: UKCFOFTYR
How do you currently rate UK Government bond (Gilt) valuations? UKCFOVGBR
How would you characterise the current level of short term market interest rates in the UK? UKCFOIRSR
How would you rate the overall cost of new credit for corporates? UKCFOCCCR
How would you rate the overall availability of new credit for corporates? UKCFOACCR
Is now a good time for UK corporates to issue equity? UKCFOIEQR
Is now a good time for UK corporates to issue bonds? UKCFOICBR
Generally speaking do you think UK corporate balance sheets are: UKCFOLEVR
Do you think cash return to shareholder ratios (including share buybacks) are, relative to normal levels: UKCFOCRRR
Over the next 12 months how do you expect levels of M&A in the UK to change? UKCFOMAYR
How do you expect the volume of acquisitions by private equity in the quoted equity market to change in the next 12 months? UKCFOPEYR
Compared with three months ago how do you feel about the financial prospects for your company? UKCFOOVQR
What is your aim for your level of gearing over the next 12 months? UKCFOGEYR
How has the level of financial risk on your balance sheet changed over the last 12 months? (Financial risk could include, for UKCFORVYR
instance, levels of gearing, uncertainty about the valuation of assets and interest rate and exchange rate sensitivity)
Is this a good time to be taking greater risk onto your balance sheets? UKCFORTGR
Are you likely to issue bonds or arrange new credit facilities over the next 12 months? UKCFODCYR
Are you likely to issue equity over the next 12 months? UKCFOICYR

For a full breakdown of all the regular data from the Deloitte CFO survey, please search on Datastream under “Deloitte” and “CFO”. A pdf with
the data from the survey is also available each quarter at www.deloitte.co.uk/cfosurvey

Deloitte refers to one or more of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, and its network of member firms, each of
which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal
structure of DTT and its member firms.

Deloitte LLP is the United Kingdom member firm of DTT.

This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the
principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice
before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers
on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or
liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

© 2010 Deloitte LLP. All rights reserved.

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered
office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) 20 7936 3000 Fax: +44 (0) 20 7583 1198.

Designed and produced by The Creative Studio at Deloitte, London. 4893A

Member of Deloitte Touche Tohmatsu