All tied up

report 2012

Working capital management

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Contents

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Study methodology of All tied up report

Key working capital results

WC performance in Belgium compared to other European countries

Cash opportunity for improvement

Main factors that can explain the reported year-on-year WC variations

Contacts

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Study methodology of All tied up report

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►The report contains the findings of a review of the working capital performance of the largest

2.000 companies (by sales) headquartered in the US and Europe

►The analysis draws on the companies’ latest fiscal 2011 reports. Performance comparisons

have been made with 2010 and with the previous nine years

►The review on which the report is based is segmented by region, country, industry and

company. It uses metrics to provide a clear picture of overall WC management and to identify

the resulting levels of cash opportunity

►Reported global, regional and country numbers are sales-weighted

►The WC performance metrics are calculated. In order to make the figures as comparable and

consistent as possible, adjustments have been made to the data to reflect the impact of

acquisitions and disposals and off-balance sheet arrangements.

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In 2011, the working capital performance of companies in the US has improved, but stalled in Europe

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►Total reduction in C2C achieved since 2002 is 16% for both

US and Europe

►Relative to 2010, WC performance has improved in the US,

with C2C dropping by 3% but stalled in Europe where C2C

has remained unchanged

► For the US, the overall improvement in C2C in 2011 arose

from a combined reduction in receivables and inventories

which was partly offset by lower payables

►In Europe, receivables and payables were marginally down

while inventory was slightly up

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The study includes 20 companies headquartered in Belgium from 13 industries with total turnover of more than €120 billion

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►Cash to cash cycle in Belgium has been decreased by 8% to 20 days in 2011

►The improvement in the cash to cash cycle is mainly driven by the increase in days of receivables outstanding

►Both days of payables outstanding and days of inventory outstanding have been deteriorated in 2011.

Belgian Companies included in the report

Industry # Companies Turnover 2011 (€M)

Building Materials 1 536

Chemicals 3 16.220

Distillers & Brewers 1 28.090

Electric Utilities 1 1.188

Food Retailers & Wholesalers 2 28.987

Gas Utilities 1 4.126

Industrial Technology 2 4.064

Metals 2 17.969

Paper & Forest Products 1 697

Pharmaceuticals 1 3.246

Specialty Retailers 1 5.977

Steel 1 3.340

Telecoms 3 9.440

Total 20 123.880

Belgium 2011 Change from 2010

DSO 36 -10%

DIO 33 5%

DPO 49 -1%

C2C 20 -8%

Belgium Europe

DSO Reduction 50% 56%

DIO Reduction 40% 42%

DPO Enhancement 35% 50%

C2C Reduction 55% 48%

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Cash to cash cycle in Belgium has been improved by 8% in 2011 compared to the previous year

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NETHERLANDS

BELGIUM GREECE

DENMARK ITALY

UNITED KINGDOM

IRELAND

PORTUGAL

GERMANY FINLAND NORWAY

LUXEMBOURG FRANCE

AUSTRIA SWITZERLAND SWEDEN

SPAIN

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Year on year change in cash-to-cash cycle from 2010 to 2011

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The Belgian companies still have up to €10 billion of cash unnecessarily tied in working capital

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►The wide variations in WC performance among different companies in each regional industry

point to significant potential for improvement

►Up to €10 billion cash is unnecessarily tied up in the WC of the leading Belgian companies.

This figure is €460 billion in Europe and $590 billion in he US

►The range of cash opportunity has been defined as the sum of the WC cash opportunity

derived for each company. This has been calculated by comparing the 2011 performance of

each company’s WC components with the average (low estimate) and upper quartile (high

estimate) achieved by its industry peer group

Cash opportunity

Country/Region

Value % WC scope % sales

Average Upper quartile Average Upper quartile Average Upper quartile

Belgium €7b €10b 18% 25% 6% 8%

Europe €270b €460b 11% 19% 4% 7%

United States $330b $590b 12% 21% 3% 6%

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Several factors may explain the reported year-on-year WC variations

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► Unusual quarterly sales patterns

►Continued focus on working capital management

► Inventory adjustments in response to deteriorating market conditions

►Stronger receivables performance

► Weaker payables performance

►Volatility in commodity prices

► Currency movement effect

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Glossary

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Deniz Ates

Senior Manager

Tel +32 (0)2 774 9052

Mobile +32 (0)472 89 71 44

E-mail deniz.ates@be.ey.com

Christophe Ballegeer

PR & Communications Manager

Tel +32 (0)2 774 9007

Mobile +32 (0)475 98 33 10

E-mail christophe.ballegeer@be.ey.com

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Assurance | Tax | Transactions | Advisory 2012 Ernst & Young Transaction Advisory Services All rights reserved.

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