Deloitte Belgian CFO Survey Favourable business conditions ......Q1 2010 “Financial ... Q1 2015...

CFO ServicesFirst quarter edition 2015

Deloitte Belgian CFO SurveyFavourable business conditions give confidence for expansion Benchmarking corporate financial attitudes

2

Key points 3

Looking Back: Business confidence through the financial and economic cycle (2009-2015) 4

Favourable business conditions give confidence for expansion 6

Q1 2015 Summary: Better outlook for growth: higher appetite for expansion 8

Promising first quarter financial performance 11

Shortage of skilled labour starts to worry CFOs 12

Higher growth projects drive expansion 14

Money is cheap and available 17

Difficult to keep up with all the promises 18

Profile Q1 survey participants 21

Content

Deloitte Belgian CFO Survey Fourth quarter 2014 3

Key points from the 2015 Q1 Belgian CFO survey

• CFOs remain optimistic about the financial prospects of their organisations, although growth projections for Belgium and the eurozone are weak.

• First quarter financials are good. Performance to budget has not been better since 2010.

• The perceived levels of financial and economic risk have decreased significantly this quarter. Risk appetite is on the rise. The growth mindset is accentuated by shortage of skilled labour entering the top 5 CFO concerns.

• Corporates see growth opportunities mainly outside the EU. Internationally oriented companies plan to increase capital expenditure more than companies with a local market focus.

• CFOs remain positive about Belgian financial and economic policy setting, but the extreme enthusiasm reported last quarter has tempered significantly.

Keypoints

Macro-economic backdrop to the first quarter CFO surveyGlobal equity markets rose 4.5% in the firt quarter and yields on developed economy sovereign bonds fell. The price of oil stabilised somewhat although at a significant lower level than at its 2014 peak. Lower oil prices provided a boost to consumers across the globe through lower inflation and a rise in disposable incomes. Financial markets reactive positively to the launch of the Euripean Central Bank’s quantitative easing programme, with risk assets rallying in Europe and equities hitting a record high in Germay. European bond yields also fell and Spanish and Italian yields hit record lows. Despite renewed concerns over a euro area break up following the election of anti-austerity party Syriza in Greece, a number of euro area economic indicators show signs of improvement. The ECB upgraded its Euro area growth forecast for 2015 to 1.5% from 1%.

Ian Stuart, Chief Economist Deloitte UK

4

Looking Back: Business confidence through the financial and economic cycle (2009-2015)

Mor

e O

ptim

istic

Less

Opt

imis

tic

Q2 2009 “Preparing for a slow recovery”

Q1 2009“First signs of optimism in

uncertain times”

Q3 2009 “Financial

conservatism is back”

Q4 2009“Diverging fortunes

going into 2010”

Q1 2010“Financial

repair, economical uncertainty”

Q2 2010“Confidence

grows”

Q3 2010“Higher confidence,

good results”

Q4 2010“Planning for

growth”

Q1 2011“Call for caution” Q2 2011

“At a turning point”

Q3 2011“Results under

pressure”

Q4 2011“Outlook 2012:

a very difficult year”

Q1 2012“Anxiety has eased,

but plenty ofrisks remain”

Q4 2012“Outlook 2013:

how CFOs are preparing for 2014”

Q1 2013“Concerns dominate”

Q2 2013“Call for action”

Q3 2012“The New Normal

is here to stay“

Q2 2012“Corporates

are defensive“

Q3 2013“A new mood”

Q4 2013“Growth ambitions”

Q4 2014“Reasonable year, prudent growth”

Q1 2015“Favourable business

conditions give confidence

for expansion”

Q1 2014“More appetite

for risk”

Q3 2014 “Amid more uncertainty,

declining optimism”

Q2 2014“Concern over

government policies clouds current optimism”

Optimism


Deloitte Belgian CFO Survey First quarter 2015 5


Mor

e O

ptim

istic

Less

Opt

imis

tic

Q2 2009 “Preparing for a slow recovery”

Q1 2009“First signs of optimism in

uncertain times”

Q3 2009 “Financial

conservatism is back”

Q4 2009“Diverging fortunes

going into 2010”

Q1 2010“Financial

repair, economical uncertainty”

Q2 2010“Confidence

grows”

Q3 2010“Higher confidence,

good results”

Q4 2010“Planning for

growth”

Q1 2011“Call for caution” Q2 2011

“At a turning point”

Q3 2011“Results under

pressure”

Q4 2011“Outlook 2012:

a very difficult year”

Q1 2012“Anxiety has eased,

but plenty ofrisks remain”

Q4 2012“Outlook 2013:

how CFOs are preparing for 2014”

Q1 2013“Concerns dominate”

Q2 2013“Call for action”

Q3 2012“The New Normal

is here to stay“

Q2 2012“Corporates

are defensive“

Q3 2013“A new mood”

Q4 2013“Growth ambitions”

Q4 2014“Reasonable year, prudent growth”

Q1 2015“Favourable business

conditions give confidence

for expansion”

Q1 2014“More appetite

for risk”

Q3 2014 “Amid more uncertainty,

declining optimism”

Q2 2014“Concern over

government policies clouds current optimism”

Optimism


6

Reduced financial and economic uncertainty, cheap money, upwardly revised economic outlooks for the Eurozone and a new political climate drive CFOs’ positive mood in the first quarter. Overall growth expectations for Belgium and the Eurozone remain modest - and are unlikely to return to pre-crisis levels anytime soon - but CFOs are optimistic about the financial prospects of their own organisations. Capital expenditure slowly moves up the CFOs priority list as expansionary business strategies gain ground. At the same time, a shortage of skilled labour enters the top 5 of CFOs’ concerns.

A positive moodCFOs entered 2015 in an optimistic mood, and corporates’ financial results for the first quarter did not disappoint. The survey’s “performance to budget” ratio has not been better since the end of 2010. The year started well, and optimism about the future prevails. 70% of our survey respondents have budgeted growth for 2015, both in terms of top-line and bottom-line.

Favourable business conditionsThe European Central Bank’s policy of quantitative easing led to record low interest rates, and a weaker euro. And although the European Central Bank’s formal objective is to keep inflation to a little under 2% – not boost the economy – the European economy clearly benefits. Following the publication of disappointing economic indicators in the US, the US Federal Reserve is unlikely to raise interest rates in the short run.

Money has never been cheaper. Funding is available and all major forms of funding are attractive. Bank borrowing has never been more attractive since the launch of the CFO Survey in the beginning of 2009. The cost of bank borrowing has further dropped, while it is available to most. Following the deleveraging process that took place over the past years, balance sheets are healthy and debt ratios have decreased, lowering the risks for banks to grant corporate loans. Many organisations are cash rich and have internal financing means available as well.

Belgium-based CFOs continue to positively evaluate the financial and economic priorities as set by the government, although the extreme enthusiasm we reported when the government came into office has faded. It seems difficult to manage the high expectations that have been created.

Favourable business conditions give confidence for expansion


The pace of the economic recovery, the ability of their companies to compete in the market and the impact of regulatory changes continue to top the list of CFOs’ key concerns – as it has over the past five years. Almost 40% of survey respondents report sanctions against Russia are having a negative impact on their businesses. Few CFOs seem to worry about the stability of the Eurozone, notwithstanding difficult negotiations with Greece and the fact that a Grexit is no longer politically impossible.

ExpansionOngoing cost control and efficiency improvement remain important, but focus on growth strategies gained some ground in the first quarter. Risk appetite is high. The proportion of corporates that plan to decrease capital expenditure continues the steady decline that we have witnessed in the past six quarters. Merger and acquisition activity is in general expected to increase, but the vast majority of corporates focus on organic growth. 40% of CFOs have expansion through mergers and acquisitions on their list of business priorities.

Corporates see investment potential outside of the euro area, little within. This limits opportunities for companies that are mainly conducting their business within Europe. As a consequence, we observe that more internationally- oriented companies plan to increase capital expenditure compared to local firms (48% vs. 24% expecting CAPEX growth in the next year). Also their revenue expectations are slightly higher.

Structural reforms?Financial and economic policy making in Belgium remains for CFOs an important inhibitor to investment. Recent research with CFOs in 12 European countries indicated CFOs see national structural reforms as the most effective way to facilitate growth. Uncertainty will impact corporate behaviour and might weaken today’s risk appetite and investment intentions. Business-hostile policy poses a threat to recovery. The significant decrease in CFOs’ appreciation of taxation and labour market policies over the last quarter will hopefully not continue.

Thierry Van Schoubroeck, Partner,

8

Q1 2015 Summary: Better outlook for growth: higher appetite for expansion

CFOs entered the year in an optimistic mood:CFOs are positive about the financial prospects for their own companies, although to a lesser extent than a year ago.

Only 18% of CFOs report high or very high levels of uncertainty facing their businesses – similar to one year ago. Geopolitical concerns that added to the overall financial and economic uncertainty in the second half of last year have to some extent eased.

Mor

e op

timis

ticLe

ss o

ptim

istic

Net % of CFOs who are more/less optimistic about financial prospects for their company

'10 Q4

'11 Q1

'11 Q2

'11 Q3

'11 Q4

'12 Q1

'12 Q2

'12 Q3

'12 Q4

'13 Q1

'13 Q2

'13 Q3

'13 Q4

'14 Q1

'14 Q2

'14 Q3

'14 Q4

'15 Q1

'10 Q3

'10 Q2

'10 Q1

'09 Q4

'09 Q3

'09 Q2

'09 Q1

-100%

-90%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

-18%

0%

22%17%

25%

44%40%

53%

26%

8%

-34%

-75%

-42%

-27%

-11%

-29%

-15%

34%30%

39%35%

8%

24%27%

12%

% of CFOs rating the general level of external financial and economic uncertainty high/very high

0%

10%

20%

30%

40%

50%

60%

2015 Q1

2014 Q4

2014 Q3

2014 Q2

2014 Q1

2013 Q4

2013 Q3

2013 Q2

2013 Q1

2012 Q4

2012 Q3

2012 Q2

2012 Q1

2011 Q4

2011 Q3

2011 Q2

21%

47%

51%

42%

53%

41%

37% 33%

27%26%

17%16%

12%

25%

33%

18%


Optimism about the future, and relatively low levels of uncertainty continue to drive CFOs’ risk appetites. 41% of CFOs say that this is a good time to take additional risk onto their balance sheets.

% of CFOs who think now is a good time to be taking greater risk onto their balance sheets

5%

17%17%

21%23%

28%

31%

35%

41%

35%

30%

21%

22%21%

33%

36%

41%

35%

42%

24%

14%

19%19%

8%

13%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

'15 Q1

'14 Q4

'14 Q3

'14 Q2

'14 Q1

'13 Q4

'13 Q3

'13 Q2

'13 Q1

'12 Q4

'12 Q3

'12 Q2

'12 Q1

'11 Q4

'11 Q3

'11 Q2

'11 Q1

'10 Q4

'10 Q3

'10 Q2

'10 Q1

'09 Q4

'09 Q3

'09 Q2

'09 Q1

CFOs remain prudent about the strategic priorities for the next 12 months, but continued optimism translates into a mild increase in the importance of expansionary strategies.

CFO priorities: defensive vs. expansionary strategies

Arithmetic average of the % of CFOs who rated expansionary and defensive strategies as a strong priority for their businesses in the next 12 months. Expansionary strategies are introducing new products/services or expanding into new markets, expanding by acquisition and increasing capital expenditure. Defensive strategies are increasing productivity/efficiency, reducing costs, reducing leverage, disposing of assets and increasing cash flow.

Expansionary strategies Defensive strategies

20%

30%

40%

50%

2013 Q1

2013 Q2

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q4

2015 Q1

2014 Q3

Revenues

Operating cash flow

Operating margins

Profit before taxes

Operating costs

Capital expenditure

Levels of cash and cash equivalents on balance sheet

Headcount

Discretionary spending, for instance on travel, training and marketing

Inventory levels

Financing costs

10

The CFOs’ budgets for growth, and revenue and operating margin forecasts that we reported in the previous quarter remain unchanged. Around two-thirds of the CFOs expect revenues, operating margins and profits before taxes to go up in the next 12 months. Companies that operate mainly within the Belgian market have somewhat lower growth ambitions than the internationally oriented organisations.

CFOs remain positive about the way the Belgian Federal Government is setting financial and economic priorities. But the government has not been able to meet the high expectations that were created at the time of the formation: as compared to the last quarter, enthusiasm has cooled down.

CFOs' expectations on the evolution of the following metrics in the next twelve months

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

72% 16% 12%

64% 15% 21%

63% 22% 15%

62%

42%

37%

36%

36%

20%

16%

12%

22%

20%

40%

51%

33%

56%

63%

54%

16%

38%

23%

15%

31%

25%

20%

33%

Increase Same level Decrease

Revenues

Operating cash flow

Operating margins

Profit before taxes

Operating costs

Capital expenditure

Levels of cash and cash equivalents on balance sheet

Headcount

Discretionary spending, for instance on travel, training and marketing

Inventory levels

Financing costs

-33%

-25%

-29%

-20%

-52%-44%

-27%

19%

64%

31%

-34%

-46%

-63%

2012 Q1

2012 Q2

2012 Q3

2012 Q4

2013 Q1

2013Q2

2013 Q3

2014 Q1

2014 Q3

2014 Q4

2015 Q1

2014 Q2

2013 Q4

Perception by a net % of CFOs of the way the Belgian government is setting the right priorities for financial and economic policy making

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%


Most companies have budgeted growth for 2015, and at the end of the first quarter most survey respondents report that financials are on or above budgets. Performance to budget has not been better since 2010.

About 70% of our survey panel report their companies today meet both turnover and operating margin targets.

Promising first quarter financial performance

Comparison of the surveyed organisations' actual performance versus budget over time

Worse than expectedAs expectedBetter than expected

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

‘13Q4

‘14Q1

‘14Q2

‘14Q3

‘14Q4

‘15Q1

‘13Q3

‘10Q3

‘10Q4

‘11Q2

‘11Q3

‘11Q4

‘12Q1

‘12Q2

‘13Q1

‘13Q2

‘12Q3

‘12Q4

18%

41%

41%

‘10Q2

20%

38%

42%

12%

35%

53%

29%

37%

34%

50%

23%

27%

49%

22%

29%

37%

39%

24%

57%

23%

20%

45%

30%

25%

43%

22%

35%

57%

8%

35%

47%

35%

18%

54%

52%

32%

24% 32%

28%

40%

35%44%

35%

24%

30%31%

30%

40%

29%

32%

42%

27%22%

15%

As expected0%

10%

20%

30%

40%

50%

60%

24%28%

43%45%

33%

27%

Turnover

Operating margins

Comparison of the surveyed organisations' actual turnover & operating margins versus budget

Better than expected Worse than expected

12

The economic outlook and the competitiveness of their organisations remain on top of the list of key concerns – as they have in the past years. Shortage of skilled labour has moved up the list, coinciding with the increased focus an expansion.

European economic sanctions against Russia have a negative impact on the businesses of around 38% of CFOs, similar to the previous quarter.

Shortage of skilled labour starts to worry CFOs

CFOs' perceptions of the greatest concern for their businesses in the next 12 months

Economic outlook/growth

Competitive position in the market

Changes in regulation

Current geopolitical risks (Ukraine, Gaza, ISIS, Western Africa)

Shortage of (skilled) labour

Impact of Belgian financial & economic policy making

Deflation risk

Increasing sovereign risk

Access to capital/funding

Eurozone stability (Greece, UK)

Slow-down in China

Interest rates

Commodity prices

30%

22%12%

10%

8%

8%

4%2% 2%

2%

0%

0%

0%

Impact of current sanctions against Russia on CFO's company/business

1%2%

59%27%

11%

Positive impact

Slightly positive impact

No impact

Slightly negative impact

Negative impact


CFOs are less upbeat about the growth of the Belgian economy: Only 45 % of CFOs expect Belgian GDP to grow by 0,6% or more.

CFOs' expectations for Belgian economic growth in 2015

16%

5%

40%

0%39%

Greater than 1%

0,6% to 1%

0,2% to 0,5%

-0,1% to 0,1%

-0,5% to -0,2%

-1% to -0,6%

Less than -1%

0%

0%

The Q1 predictions of real GDP growth by NBB and international institutions confirm less than 1% for Belgium and revise growth to 1.3% for the Eurozone in 2015.

Shortage of skilled labour starts to worry CFOs

Real GDP evolution: Belgium vs. the Eurozone

-1,0%

-0,5%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

Belgium Eurozone

2010 2011 2012 2014* 2015*2013

*Source of data: Economic Indicators for Belgium N° 2015-13, National Bank of Belgium2014 & 2015 data are forecasts, the Belgian forecast is based on NBB estimates fromDecember 2014, Eurozone forecast on OECD data from November 2014

2,3%

1,6%

0,1%0,3%

1%1,3%

0,9%0,8%

-0,4%-0,7%

1,7%

14

While focusing on the priorities such as ongoing cost control and increasing productivity and efficiency, most growth business strategies have gained in significance in the first quarter of 2015.

The proportion of CFOs planning to increase capital expenditure remains well above 30%, while those planning a decrease further decline. Drilling into the details, it are mainly organisations with a broad international coverage that plan capex increases.

Higher growth projects drive expansion

% of CFOs who report that their capital expenditure is likely `to increase/decrease in the next 12 months

Incr

ease

Dec

reas

e

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-8%

14%

-4%

5% 3% 3%

20%

19%

2013 Q1

2013 Q2

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

Capital expenditure (net % line)

7%

0% 20% 40% 60% 80% 100%

62%

57%

54%

52%

40%

39%

32%

19%

18%

13%

13%

10%

5%

2% 10% 88%

14% 81%

30%

19% 71%

57%

33%

40%

39% 7%

35% 13%

36%

46%

36%

20%

47%

18%

33%

69%

14%

31%

60%

23%

4%

5%Ongoing cost control

Increasing productivity/efficiency

Introducing new products/services

Expanding organically

Cost cutting

Increasing cashflow

Expanding into new markets

Expanding by acquisition abroad

Increasing focus on sustainability programmes

Expanding by acquisition in Belgium

Reducing leverage

Increasing capital expenditure

Disposing of assets

Raising dividends or share buy backs

Business strategies likely to be a priority for the CFOs’ businesses over the next 12 months (2015 Q1)

Strong priority Somewhat of a priority Not a priority


Following last year’s gradual decline, and in line with corporates’ growth ambitions and the availability of financing, expectations for merger and acquisition activity has gone up again.

Net % of CFOs who expect M&A activity to increase over the next 12 months

0

20

40

60

80

100

'15 Q1

'14 Q4

'14 Q3

'14 Q2

'14 Q1

'13 Q4

'13 Q3

'13 Q2

'13 Q1

'12 Q4

'12 Q3

'12 Q2

'12 Q1

'11 Q4

'11 Q3

'11 Q2

'11 Q1

'10 Q4

'10 Q3

'10 Q2

'10 Q1

'09 Q4

'09 Q3

'09 Q2

'09 Q1

36%

69%

76%

89%

76%

90%84%

88%

74%70%

5%

55%

66%

59%53%

60%

73%

59%

50%

57%

36%30%

12%

24%

48%

Concerns about financial and economic policy making in Belgium inhibit new investments as do modest growth rates, both in Belgium and in the Eurozone. Secular and long-term growth for products or services continues to be seen as the most stimulating factor for investment decisions.

Net % of CFOs who perceive the following factors to have a positive/negative impact on their investment plans (current impact)

-80% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60%

51%39%

30%34%

-27%

33%30%

28%28%

19%22%

-12%

30%

-5%-22%

-18%

-23%-26%

30%33%

39%51%

34%

2014 Q4

Inhibiting Stimulating

2015 Q1

Secular or long-term growth for your products or services

Actual or expected growth in emerging markets

Availability of internal finance

Actual or expected growth in US, Japan, Asia-Pacific

Cost and availability of external finance

Actual or expected growth in the euro area

Actual or expected growth in Belgium

Financial and economic policy making in Belgium

16

Companies with lower share of turnover derived from abroad ('local companies') are significantly discouraged from investment by financial and economic policy making in Belgium, while the long-term growth for their products and services and availability of internal finance are the key stimuli for new investment. International organisations look for growth outside Belgium and the euro area.

Only small local companies see the actual or expected economic growth in Belgium as a positive factor contributing to new investment decisions.

-40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%

35%34%

58%

8%

65%29%

29%58%

6%

53%38%

22%

32%35%

-6%

0%

0%

-12%

-8%

-19%

-31%

-19%-24%

3%

70 - 100% of turnover derived from abroad



Stimulating/Inhibiting factors to investment plans (current impact) - local vs. international companies









-50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%

36%43%44%

26%39%

50%36%

16%

8%36%

39%

36%

22%25%

-3%

-12%

53%38%

-21%

58%-28%

-50%

-8%-11%

-33%

-22%

Large companies (turnover > €1bn)

Medium companies (turnover €100mn - €999mn)

Small companies (turnover < €100mn)

12%

12%

Stimulating/Inhibiting factors to investment plans (current impact) - small vs. large companies










Bank borrowing is available to most, and is cheap.

Money is cheap and financing is available. All main sources of funding are attractive.The attractiveness of bank borrowing has further increased and remains at the highest levels in the history of the CFO survey.

The dominant view amongst CFOs is that interest rates will remain low. The European Central Bank has only recently started its programme of quantitative easing, while the US Federal Reserve is not expected to raise interest rates in the short term following disappointing news from the US economy.

Money is cheap and available

Cre

dit

is c

ostly

Cre

dit

is c

heap

Cre

dit

is a

vaila

ble

Cre

dit

is u

nava

ilabl

e

Net % of CFOs reporting credit is costly and net % reporting credit is available

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

'15 Q1

'14 Q4

'14 Q3

'14 Q2

'14 Q1

'13 Q4

'13 Q3

'13 Q2

'13 Q1

'12 Q4

'12 Q3

'12 Q2

'12 Q1

'11 Q4

'11 Q3

'11 Q2

'11 Q1

'10 Q4

'10 Q3

'10 Q2

'10 Q1

'09 Q4

'09 Q3

'09 Q2

'09 Q1

Cost of credit Availability of credit

CFOs' expectations about the evolution of long-term interest rates in the next 6 months

Increase significantly

Increase somewhat

No change

Decrease somewhat

Decrease somewhat

20%

51%

28%

1%

0%

Net % of CFOs reporting the following sources of funding as attractive/unattractive

Att

ract

ive

Una

ttra

ctiv

e

Bank borrowings EquityCorporate debt

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

'15 Q1

'14 Q4

'14 Q3

'14 Q2

'14 Q1

'13 Q4

'13 Q3

'13 Q2

'13 Q1

'12 Q4

'12 Q3

'12 Q2

'12 Q1

'11 Q4

'11 Q3

'11 Q2

'11 Q1

'10 Q4

'10 Q3

'10 Q2

'10 Q1

'09 Q4

'09 Q3

'09 Q2

'09 Q1

18

Although CFOs are still positive overall about the financial and economic priorities that the government has set, much of the initial enthusiasm has faded. As compared to last quarter, CFOs have become significantly less appreciative of the policy areas they rated as top priorities: labour market policy and taxation policy. It is up to the government to either manage expectations or take action.

CFOs in 12 European countries shared their opinion on the most effective way in which the current EU/euro area growth crisis could be resolved. They suggest that more national structural reforms should be put in place to increase competitiveness. CFOs remain very much in favor of the euro, and the benefits of supranational authorities. Less alignment is reached on other topics.

The text references the European CFO

survey, a shared initiative between European

countries who have aligned some of their

survey questions. CFOs from the following

12 countries expressed their opinion on the

special EU question: Austria, Belgium, Finland,

Germany, Ireland, Italy, Netherlands, Norway,

Russia, Spain, Switzerland, UK.

Difficult to keep up with all the promises

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

42%38%

5%

-9%-7%

-10%

-10%

-28%-26%

39%

38%-1%

7%

-38%

-27%

-6%-25%

-1%

-27%

-31%

36%

-31%

Net % of CFOs evaluating appropriateness of the current policy settings in the following areas for the long-term success of business in Belgium

Monetary policy, including interest rates, inflation and the availability of credit (Eurozone policy)

Labour market

Education & training

Immigration policy

Public expenditure

Financial regulation

Urban & town planning

Infrastructure

Energy policy

Taxation policy

General levels of regulation affecting business

Inappropriate Appropriate

2015 Q1

2014 Q4

0% 20% 40% 60% 80% 100%

47%

33%

29%

24%

23%

22%

11%

7%

6%

1%1%

1%11% 88%

97%

53% 41%

40%

49%

46% 25%

58%

59%

68%

53%

25%

36%

68%

17%

10%

19%

17%

14%More national structural reforms to increase competitiveness (e.g.

labour market and tax reforms, liberalisation of service market)

Boost EU single market initiatives (e.g. energy union, single digital market)

Deepen European integration towards a fiscal and political union (e.g. issuance of Eurobonds, direct fiscal transfers, EU tax)

Balance government budgets and reduce public debt

Enter into global trade agreements with other regions (e.g. TTIP)

Increase public / pan-European investment spending (e.g. in infrastructure, innovation)

More aggressive monetary easing by the European Central Bank (e.g. buying sovereign and corporate bonds)

Reduce number of eurozone members

Reduce or stop austerity programmes and boost fiscal spending

Dissolve the euro

Redistribute political powers and responsibilities to national governments

Verry effective Effective Not effective

CFOs’ perceptions on the effectiveness of the following policies on resolving the current EU/euro area growth crisis


Extent to which Brussels government policy will have a positive impact on businesses in Belgium, also in the long-term (2015 Q1)

Very positive

Positive

Neither positive nor negative

Negative

Very negative

72%

11%

2%

15%

0%

Extent to which Brussels government policy will have a positive impacton businesses in Belgium, also in the long-term (2014 Q4)

Very positive

Positive


Negative

Very negative

72%

15%

1%

10%

1%

On the Regional level, CFOs remain most positive about the extent to which Flemish government policy will have a positive impact on businesses in Belgium, also in the long term. Compared to last quarter, we observe that while opinion about the Brussels and Walloon governments is fairly stable, the view of the Federal and Flemish governments became less positive.

Extent to which Federal government policy will have a positive impact on businesses in Belgium, also in the long-term (2015 Q1)

Very positive

Positive


Negative

Very negative38%

46%

14%

1%1%

Extent to which Federal government policy will have a positive impact on businesses in Belgium, also in the long-term (2014 Q4)

Very positive

Positive


Negative

Very negative

66%

25%

4%3% 1%

20

Extent to which Flemish government policy will have a positive impact on businesses in Belgium, also in the long-term (2015 Q1)

Very positive

Positive


Negative

Very negative

44%41%

1%

9% 5%

Extent to which Flemish government policy will have a positive impact on businesses in Belgium, also in the long-term (2014 Q4)

Very positive

Positive


Negative

Very negative

54%39%

1%1%

4%

Extent to which Walloon government policy will have a positive impact on businesses in Belgium , also in the long-term (2015 Q1)

Very positive

Positive


Negative

Very negative

52%

23%

9%

0%

15%

Extent to which Walloon government policy will have a positive impact on businesses in Belgium, also in the long-term (2014 Q4)

Very positive

Positive


Negative

Very negative

55%

22%

11%

0%

12%


Profile Q1 survey participants

A total of 85 CFOs active in a variety of industries completed our 2015 first-quarter survey. 23% of the participating companies have a turnover of over €1 billion, 45% of between €100 million and €1 billion, and 32% of less than €100 million.46% of the participating companies derive up to 30% of their revenues from outside Belgium, 21% between 31% and 69%, and 33% derive more than 69% of their revenues from outside Belgium.

Industry sector

26%

16%

10%9%

9%

8%

8%

5%

4%

3%3% 1%

Manufacturing

Banking/finance/insurance

Retail/wholesale

Construction/mining

Services/consulting

Transport

Technology

Healthcare/pharmaceuticals

Energy/utilities

Real estate

Leisure/entertainment

Communication/media

Turnover

< €100 mn

€100 - €999 mn

> €1 bn32%

46%

23%

% of revenues derived from outside Belgium

0% - 30%

31% - 69%

70% - 100%

46%

21%

33%

22

The Deloitte Belgian CFO Survey is produced by Thierry Van Schoubroeck, Peter Hajnîk, Romana Jelinkova and Maarten Vyncke.

A note on methodologyin response to the current financial economic situation. If you participated in the survey and would like to receive information about non-reported questions, do not hesitate to contact us.

Some of the charts in the Deloitte CFO Survey show the result in the form of a net % balance. This is the percentage of respondents reporting, for instance, that bank credit is attractive minus the percentage saying bank credit is unattractive. This is a standard way of presenting survey data.

The 2015 first quarter survey took place between March 9th and March 23rd, 2015. A total of 85 CFOs completed our survey. The participating CFOs are active in variety of industries. 23% of the participating companies have a turnover of over €1 billion, 46% of between €100 million and €1 billion and 32% of less than €100 million.

We would like to thank all participating CFOs for their efforts in completing our survey. We hope the report makes an interesting read, clearly highlighting the challenges facing CFOs, and providing an important benchmark to understand how your organisation rates among peers.

Delivering the voice of the CFO community

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's more than 195,000 professionals are committed to becoming the standard of excellence.

© May 2015, Deloitte ConsultingDesigned and produced by the Creative Studio at Deloitte, Belgium.

Joël Brehmen Finance Lead, [email protected]+ 32 2 800 22 32

ContactThierry Van SchoubroeckPartner, CFO [email protected]+ 32 2 749 56 04

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