Find out more at http://www.deloitte.co.uk/cfosurvey A new mood of confidence pervades the third quarter CFO Survey. Chief Financial Officers see fewer risks in the global economy and greater opportunities for expansion. Key findings: - CFOs' perceptions of external macro and financial risk have hit three-year lows. - The financing environment for corporates has improved still further. Cost of credit is at its lowest and availability at its highest since the survey began in 2007. - 54% of CFOs say now is a good time to take greater risk onto their balance sheet, a six-year high. - Austerity is out and expansion is coming in. Cost control and cash conservation are moving out of favour. Expansion is, once again, the top priority for corporates. About the Deloitte CFO Survey: The Deloitte CFO Survey, launched in 2007, is a quarterly survey of Chief Financial Officers and Group Finance Directors of major UK companies. Over 300 CFOs, mainly from FTSE 350 companies, have joined the CFO Survey panel. The Survey captures shifts in UK CFOs' opinions on valuations, risks and financing and has become a benchmark for gauging financial attitudes of major corporate users of capital. The Deloitte CFO Survey has been widely quoted in the media and is firmly established with policymakers. The Bank of England has cited the CFO Survey several times in its publications such as the quarterly Inflation Report and the monthly Trends in Lending report. The findings have also been quoted in the minutes of the Bank's Monetary Policy Committee meetings.

1. A new mood of confidence pervades the third quarter
CFO Survey. Chief Financial Officers see fewer risks in the
global economy and greater opportunities for expansion.
The defensive strategies of cost-cutting and cash
accumulation that saw corporates through the global
financial crisis are increasingly out of favour. The priority
now is expansion. The balance‑sheet cycle has turned
decisively towards growth.
CFOs have become markedly more positive on prospects
for growth in the developed world. There is greater
confidence too, that the euro area will hold together.
Emerging markets are a vital source of demand but CFOs
are also looking to Europe for expansion.
In a reversal of the situation six months ago, CFOs believe
that UK growth will have a more positive effect on
their investment plans in the next year than growth in
emerging markets or in the US, Japan and Asia-Pacific.
It is symptomatic of the changed attitude that a record
54% of CFOs say that now is a good time to take risk
onto their balance sheet. High levels of corporate cash
and favourable credit conditions suggest that major
corporates have the firepower to invest.
Q3 2013
Priority: Expansion
The Deloitte CFO Survey
September 2013

2. 20%
25%
30%
35%
40%
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
Defensive strategies
Expansionary strategies
Chart 1. CFO priorities: Expansionary vs. defensive strategies
Arithmetic average of the % of CFOs who rated expansionary and defensive strategies as a strong priority for their business 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 reducing costs, reducing leverage and increasing
cash flow.
The Deloitte CFO Survey

3. The pressure on companies from institutional investors
to do so is also mounting. Bank of America Merrill
Lynch’s September fund managers’ survey found
that 54% of investors want companies to cut cash
levels and boost capital spending, an eight-year high.
As BofA/ML notes, for institutional investors, “austerity
is out, expansion is in”.
The mood among corporates has been transformed
in the last year. This quarter’s survey reveals a
broad‑based optimism and a new focus on growth
among the UK’s largest businesses.
Authors
Ian Stewart
Chief Economist
020 7007 9386
istewart@deloitte.co.uk
Debapratim De
Senior Economic Analyst
020 7303 0888
dde@deloitte.co.uk
Alex Cole
Economic Analyst
020 7007 2947
alecole@deloitte.co.uk
Contacts
Ian Stewart
Chief Economist
020 7007 9386
istewart@deloitte.co.uk
Mark FitzPatrick
Vice Chairman and
CFO Programme Leader
020 7303 5167
mfitzpatrick@deloitte.co.uk
To access current and past copies
of the survey, historical data and
media coverage, please visit:
www.deloitte.co.uk/cfosurvey
The Deloitte CFO Survey

4. CFO optimism has risen for the fifth consecutive quarter
and is now running close to a three‑year high.
-60%
-50%
-40%
-30%
-20%
-10%
10%
20%
30%
40%
50%
13
Q3
12
Q4
12
Q1
11
Q2
10
Q3
09
Q4
09
Q1
08
Q2
07
Q3
LessoptimisticMoreoptimistic
Chart 2. Business confidence
Net % of CFOs who are more optimistic about the financial prospects for their company now than three months ago
Greater optimism

5. CFOs’ perceptions of economic uncertainty have
continued to fall.
62% of CFOs report the level of financial and economic
uncertainty facing their businesses is above normal, high
or very high, down from 97% two years ago.
60%
70%
80%
90%
100%
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
Chart 3. Uncertainty
% of CFOs who rate the level of external financial and economic uncertainty facing their business as above normal, high or
very high
Greater optimism

6. Fears of a euro break‑up have also subsided. CFOs now assign an 8% probability to the euro area
breaking up in the next 12 months, the lowest reading
in two years.
0%
5%
10%
15%
20%
25%
30%
35%
40%
13
Q3
13
Q2
13
Q1
12
Q4
12
Q3
12
Q2
12
Q1
11
Q4
37%
26%
36%
27%
22%
18%
9%
8%
Chart 4. Average probability of euro break-up
Probability assigned by UK CFOs to the likelihood of any of the existing members of the euro area not being in the single
currency in the next 12 months
Greater optimism

7. Rising risk appetite
Greater optimism and lower uncertainty have
contributed to an increased willingness among
corporates to take risk.
A record 54% of CFOs say that now is a good time to
take greater risk onto their balance sheets.
0%
10%
20%
30%
40%
50%
60%
07
Q3
08
Q1
08
Q3
09
Q1
09
Q3
10
Q1
10
Q3
11
Q1
11
Q3
12
Q1
12
Q3
13
Q1
13
Q3
Chart 5. Risk appetite
% of CFOs who think this is a good time to taker greater risk onto their balance sheets

8. 0
1
2
3
4
5
6
7
8
9
10
Uncertainty about the economic and financial environment
Actual or expected
levels of economic
activity/GDP growth
in the euro area
Fiscal consolidation
in the UK
(tax rises, cuts in
public spending)
Actual or expected
levels of economic
activity/GDP growth
in the UK
Availability of
internal finance
Cost and availability
of external finance
Actual or expected
levels of economic
activity/GDP growth
in emerging markets
Actual or expected
levels of economic
activity/GDP growth
in the rest of the
world (including
the US, Japan
and Asia-Pacific)
Secular or long-term growth
for your products or services
2013 Q3 – Effect over last 12 months
2013 Q3 – Effect over next 12 months
Chart 6. Factors affecting corporate investment plans
CFOs’ assessment of the effect of each of the following factors on
their investment plans:
On a 10-point scale where 0 implies the most negative effect and
10 the most positive
Rising risk appetite
Chart 6 shows CFOs’ assessment of how nine
key factors have affected their investment plans
in the last 12 months and how they are likely to
do so in the next year.
CFOs think all these factors will offer greater
support to investment over the next year.
Uncertainty has been the greatest constraint
on investment but CFOs expect its influence to
weaken. CFOs also believe that growth in the
UK and the euro area will exert a significantly
more positive effect on investment over the
next year. Indeed, in a striking change, UK
growth is now seen as being more supportive of
investment than growth in emerging markets.
CFOs remain most optimistic about prospects
for long‑term growth in demand for their own
products and services.

9. Corporates turn expansionary
Disposing of assets
Reducing leverage
Raising dividends or
share buybacks
Increasing capital expenditure
Expanding by acquisition
Reducing costs
Increasing cash flow
Introducing new products/services
or expanding into new markets
2013 Q3 2013 Q2
40%
40%
29%
34%
20%
15%
14%
11%
13%
9%
9%
8%
12%
21%
38%
35%
Chart 7. Corporate priorities in the next 12 months
% of CFOs who rated each of the following as a strong priority for their business in the next 12 months
For the first time in a year and a half CFOs have chosen
an expansionary strategy – introducing new products
and services or expanding into new markets – as their
top priority.
They are also placing greater emphasis on increasing
capital expenditure and have softened their focus
on defensive strategies such as increasing cash flow,
reducing costs and reducing leverage.

10. Expectations for capital expenditure, hiring and
discretionary spending over the next 12 months, have hit
three‑year highs.
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
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
DecreaseIncrease
Capital expenditure
Hiring
Discretionary spending
Chart 8. Outlook for capital expenditure, hiring and discretionary spending
Net % of CFOs who expect UK corporates’ capital expenditure, hiring and discretionary spending to increase over the next
12 months
Corporates turn expansionary

11. CFOs are coming under growing pressure from
institutional investors to increase investment.
Bank of America Merrill Lynch’s September fund
managers’ survey found that 54% of investors
want companies to cut cash levels and boost
capital spending, an eight‑year high. This is
a dramatic change from five years ago when
investors wanted companies to repair their
balance sheets.
0%
10%
20%
30%
40%
50%
60%
70%
80%
Repair balance
sheet
Return cash to
shareholders
Increase capex
28%
54%
Source: Bank of America Merril Lynch
2009
11%10%11%
70%
September 2013
Chart 9. What fund managers want companies to do with cash
% of fund managers who would like companies to increase capital
expenditure, return cash to their shareholders and repair their balance
sheets
Investors seek capex

12. In the last six months CFOs have become more
positive on the prospects for economic activity
throughout the industrialised world. There has
been a particularly strong improvement in
sentiment about the UK and US economies.
Expectations for emerging economies have, by
contrast, deteriorated in the last six months.
91%
83%
52% 48%
-42%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Emerging
markets and
developing
economies
JapanEuro areaUSUK
Chart 10. Prospects for economic activity
Net % of CFOs reporting an improvement in prospects for economic
activity over the last six months in the UK, US, euro area, Japan and
emerging markets
Investors seek capex

13. Under its new policy of forward guidance, the
Bank of England has indicated that interest rates
are likely to stay on hold until late 2016.
CFOs seem sceptical; most expect UK interest
rates to rise by 2015.
0% 20% 40% 60% 80% 100%
After 2016
2016
By 2015
4%
15%
82%
Chart 11. Rate rise expectations
% of CFOs who expect the Bank of England’s Bank Rate to rise by
2015, in 2016 and after 2016
Investors seek capex

14. For the large companies in the CFO Survey credit
conditions have improved continuously for more than
a year.
CFOs now rate credit as being cheaper and more
available than at any time in the last six years.
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
CreditischeapCreditiscostly
CreditishardtogetCreditisavailable
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
07
Q3
08
Q1
08
Q3
09
Q1
09
Q3
10
Q1
10
Q3
11
Q1
11
Q3
12
Q1
12
Q3
13
Q1
13
Q3
Cost of credit (LHS)
Availability of credit (RHS)
Chart 12. Cost and availability of credit
Net % of CFOs reporting credit is costly and credit is easily available
Easy credit

15. Bank borrowing has become significantly more
attractive to CFOs in the last two years. CFOs rate bank
borrowing and bond issuance as being equally attractive.
Equity issuance has moved back into favour as a source
of funding for the first time in four years.
-60%
-40%
-20%
0%
20%
40%
60%
80%
UnattractiveAttractive
Equity issuance
Bank borrowing
Bond issuance
07
Q3
08
Q1
08
Q3
09
Q1
09
Q3
10
Q1
10
Q3
11
Q1
11
Q3
12
Q1
12
Q3
13
Q1
13
Q3
Chart 13. Favoured source of corporate funding
Net % of CFOs reporting the following sources of funding as attractive
Easy credit

16. CFOs see benefits from UK membership of the European
Union in all but one of the seven areas covered in this
quarter’s special question.
The exception is the EU’s legal, regulatory and
compliance framework where CFOs are, on balance,
fairly negative.
-80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
The legal, regulatory and
compliance framework
The success of UK financial services
UK influence in and connections with
the rest of the world
The free movement of people
Attracting foreign direct investment
Facilitating corrections with other
euro area nations
UK export performance
51%
61%
77%
80%
89%
27%
-64%
Chart 14. Benefits of European Union membership
Net % of CFOs who rate the following as benefits to UK business and the UK economy of European Union membership
Easy credit

17. The macroeconomic backdrop to the
Deloitte CFO Survey Q1 2013
Western equity markets continued to climb in the
third quarter and government bond yields edged
higher. Economists’ forecasts for GDP growth in the
industrialised world rose. The euro area emerged from
recession and the UK posted stronger than expected
growth in the second quarter.
The outlook for emerging market economies softened,
with a number suffering capital outflows and a
weakening of their currencies. Under its new policy of
forward guidance the Bank of England indicated that
UK interest rates are likely to stay on hold until late
2016. The US Federal Reserve surprised markets in mid
September by announcing it is not yet ready to slow the
pace of Quantitative Easing.
CFO Survey: Economic and financial context

18. UK expected to
grow by 1.9% in 2014
Quarter-on-quarter
growth
Year-on-year
growth
20142013201220112010200920082007
-8
-6
-4
-2
0
2
4
6
Forecasts
UK GDP growth: Actual and forecast (%)
Source: ONS, consensus forecasts from The Economist and Deloitte calculations
CFO Survey: Economic and financial context

19. CFO Survey: Economic and financial context
VIX Index – a measure of equity market volatility
Financial stress edged lower in the third quarter
0
10
20
30
40
50
60
70
80
90
2013201220112010200920082007
Greaterfinancialstress

20. UK private and public sector job growth (thousands)
-300
-200
-100
0
100
200
300
400
500
Q1
13
Q2
12
Q3
11
Q4
10
Q1
10
Q2
09
Q3
08
Q4
07
Q1
07
Private sector hiring offsets
public sector job losses
Public sector
Source: ONS
Private sector
CFO Survey: Economic and financial context

21. UK annual CPI inflation (%)
UK inflation steady, remains above 2% target
0
1
2
3
4
5
6
7
8
9
131109070503019997959391
Source: ONS
CFO Survey: Economic and financial context

22. Two-chart summary of key survey messages
60%
70%
80%
90%
100%
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
Uncertainty
% of CFOs who rate the level of external financial and economic uncertainty facing their business as above normal, high or
very high
Uncertainty at
3-year low

23. Two-chart summary of key survey messages
0%
10%
20%
30%
40%
50%
60%
07
Q3
08
Q1
08
Q3
09
Q1
09
Q3
10
Q1
10
Q3
11
Q1
11
Q3
12
Q1
12
Q3
13
Q1
13
Q3
Risk appetite
% of CFOs who think this is a good time to taker greater risk onto their balance sheets
Risk appetite
at 6-year high

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About the survey
This is the 25th quarterly survey of Chief Financial Officers and Group Finance Directors
of major companies in the UK. The 2013 third quarter survey took place between 6th and
23th September. 116 CFOs participated, including the CFOs of 28 FTSE 100 and 42 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 81
UK‑listed companies surveyed is £554 billion, or approximately
27% 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. To join our panel of CFO respondents and for
additional copies of this report, please contact Tulaine Trimble on 020 7007 1684 or email
ttrimble@deloitte.co.uk