1. October 2015 | 13th edition Global Capital Confidence Barometer October 2015 | 13th edition 36 respondents Chile

2. October 2015 | 13th edition Global Capital Confidence Barometer October 2015 | 13th edition Global 36 respondents Chile

3. Page 313th Capital Confidence Barometer About the Barometer EY’s Capital Confidence Barometer is a regular survey of senior executives from large companies around the world conducted by the Economist Intelligence Unit (EIU). The respondent community is comprised of an independent EIU panel of senior executives and select EY clients and contacts. Our 13th Barometer provides a snapshot of our findings, gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their Capital Agenda. EIU panel of more than 1600 executives surveyed in August and September 2015 | 36 executives from Chile | Companies from 53 countries | Respondents from 19 industry sectors | 863 CEO, CFO and other C-level executives |

4. Macroeconomic environment

5. Page 513th Capital Confidence Barometer What is your perspective on the state of the global economy today? Global respondents ► Globally, executives show resilience about the macro economy even in the face of short-term macro volatility. ► While downside risks to the global economy still exist, executives express overwhelming confidence that conditions are improving. Chilean executives are significantly less positive than their global counterparts. Executives show resilience in the face of short- term macro volatility Chile respondents Oct-15 Apr-15 Oct-14

6. Page 613th Capital Confidence Barometer What is your perspective on the state of the local economy today? Chilean respondents see the domestic economy as stable to modestly declining ► Strong optimism has disappeared. Chile respondents

7. Page 713th Capital Confidence Barometer Please indicate your level of confidence in the following at the global level: Global respondents Globally, corporate earnings and other leading market indicators remain positive ► For most companies, 2015 earnings have exceeded analyst expectations, corroborating executive sentiment— given recent currency fluctuations, stability in earnings sentiment is positive overall. ► Looking beyond recent short-term market volatility, executives are taking a more robust view of capital markets. ► Chilean executives have significantly decreased their confidence in equity valuations and corporate earnings. % of positive attitude Chile respondents

8. Page 813th Capital Confidence Barometer Please indicate your level of confidence in the following at the local level: Chile respondents Chilean executives see domestic market indicators as stable to declining ► The percentage of respondents seeing the domestic indicators as declining has increased significantly. Corporate earningsShort-term market stability Equity valuations Credit availability

9. Page 913th Capital Confidence Barometer What do you believe to be the greatest economic risk to your business over the next 6–12 months? Global respondents Chile respondents Currency and commodity volatility concerns persist as major economic risks ► Continuing geopolitical issues in Eastern Europe, the Middle East and Southeast Asia cause the greatest concern around economic risk. Concerns around the stability of the eurozone are becoming more prominent. ► Ongoing high volatility in commodities and currencies continues to challenge companies’ long-term planning. ► In Chile, this volatility in commodities and currencies is a concern given the significant effect the price of copper has in the local economy.

10. Corporate strategy

11. Page 1113th Capital Confidence Barometer Which of the following will impact your core business and your acquisition strategy most in the next 12 months? Chile respondents Global respondents Globalization having greater impact on core and acquisition strategies ► Globally, technology—including the convergence of social, mobile, cloud and big data, and growing demand for anytime–anywhere access—is disrupting all areas of the enterprise, across industries and geographies ► In the near term, the growth in economic influence of China, India and the wider Asian economy is expected to have the greatest impact on core business and acquisition strategies, both Globally and for Chilean respondents.

12. Page 1213th Capital Confidence Barometer Which of the following has been elevated on your boardroom agenda during the past six months? Global respondents Chile respondents Low-growth environment compelling executives to maintain rigorous cost discipline ► Globally and in Chile, short-term focus on costs is exacerbated by greater currency volatility and fluctuations in commodity pricing induced by the oncoming expectations on economy and regulatory changes. ► Strategic divestment and other portfolio strategies moving higher on the boardroom agenda thanks to ongoing focus on shareholder activism as well as redeployment of capital in a fast-changing world.

13. Page 1313th Capital Confidence Barometer With regards to employment, which of the following does your organization expect to do in the next 12 months? Global respondents ► Positive global economic outlook is driving most global companies to retain or grow their workforce. ► Strong US and UK employment growth, and an improving eurozone, validate companies’ drive for talent. ► This Barometer shows corporate emphasis on digital evolution can coexist with positive sentiment on job creation. ► In Chile, employers’ expectation to retain their workforce most likely driven by the lack of human resources. Chilean companies look to retain workforce Oct-15 Oct-14 Oct-15 Oct-14 Chile respondents

14. Page 1413th Capital Confidence Barometer Which statement best describes your organization’s focus over the next 12 months? Chile respondents Global respondents Chilean executives focus on operational efficiency ► Focus on cost is exacerbated by short-term pressure from commodities and currency fluctuations. ► Globally, clear shift over last two years—from growth to cost reduction and operational efficiency—is likely influenced by companies consolidating prior revenue growth, especially from acquisition.

15. Page 1513th Capital Confidence Barometer What is the primary focus of your company’s organic growth over the next 12 months? Global respondents Chile respondents Increased R&D and innovative technologies seen as key routes to organic growth ► The focus on core operations is still a key driver—but after several years of emphasis, companies may find the core can no longer deliver growth and just supports earnings. ► In the Chilean environment, interest has clearly shifted from conventional growth to innovative, probably driven by the decrease of margins in the conventional businesses.

16. Page 1613th Capital Confidence Barometer What percentage of available capital will you allocate to each of the following? Global respondentsChile respondents Companies considering the full range of opportunities for allocating available capital ► Companies take a balanced approach to capital allocation, with Chilean companies slightly more focused on improving balance sheets and reducing debt. ► Companies with the most active capital allocation processes are consistently shown to outperform those with more passive or infrequent allocation approaches.

17. Page 1713th Capital Confidence Barometer What percentage of available resources do you plan to spend on each aspect of organic growth over the next 12 months? Time resources Capital resources Global respondents Executives consider both core and new elements as they commit resources to organic growth ► By combining the results for evolution in the core and entirely new products and services, we see a balance between resources committed to maintaining core resources (56.5%) and pursuing change (43.5%). ► While new products and services are, as expected, the smallest emphasis, the breakdown here is more tilted toward innovation than the typical “70–20–10” organic growth split—evidence of executives becoming bolder.

18. Page 1813th Capital Confidence Barometer What percentage of available resources do you plan to spend on each aspect of organic growth over the next 12 months? Chile respondents Executives consider both core and new elements as they commit resources to organic growth ► The majority of Chilean executives are focused on core products and existing markets. Time resources Capital resources

19. M&A outlook

20. Page 20 Long-term global M&A shows value returns to pre- crisis high, but volume subdued 13th Capital Confidence Barometer Source: Dealogic *2015 M&A extrapolated from January – September 2015 run-rate; 2015 GDP is an estimate US$m Eurozone Debt Crisis Global Financial Crisis ► The vast majority of executives predict the global M&A market will thrive in the next 12 months. ► This sentiment is driven by executives’ positive outlook regarding the global economy and their resilience in the face of a persistently low-growth environment. ► Global M&A is expected to remain firm in the face of short-term market volatility. SUPPLEMENTAL MARKET DATA ANALYSIS

21. Page 2113th Capital Confidence Barometer Strong relationship between M&A and GDP, but current ration shows ample headroom for more deals Eurozone Debt Crisis Global Financial Crisis Source: Dealogic, Oxford Economics 7 EY analysis 2015 M&A extrapolated from January – September 2015 run-rate ► EY analysis shows a strong relationship between M&A values and gross domestic product and finds that there is headroom in this current cycle. ► That is particularly true if the eurozone returns to previous levels of dealmaking and China fulfils its potential. ► Executives are able to see beyond near-term volatility, and this deal market still has some way to run. SUPPLEMENTAL MARKET DATA ANALYSIS

22. Page 2213th Capital Confidence Barometer What is your expectation for the M&A market in the next 12 months? - Global Global respondentsChile respondents Continued strength of global M&A underpins increasingly positive deal market sentiment ► The vast majority of executives see the global M&A market remaining strong in 2015–16, with increased positive dealmaking sentiment supported by 2015’s heightened M&A activity. ► Globally, positive market sentiment is accelerating, with a prominent shift from stable to improving in the past six months. Chilean respondents view the global M&A market as stable.

23. Page 2313th Capital Confidence Barometer What is your expectation for the M&A market in the next 12 months? - local Chile respondents Chilean executives see domestic M&A as stable ► Chilean executives shift local M&A market expectations from improving to stable in the past six months..

24. Page 2413th Capital Confidence Barometer Do you expect your company to actively pursue acquisitions in the next 12 months? % of positive attitude Chile respondents Global respondents Global deal intentions continue to increase, driven by strong improvement in deal fundamentals ► 44% of Chilean executives expect to pursue an acquisition in the next year. ► Globally, plans to pursue acquisitions continue their uptick after a strong increase six months ago and remain well above the Barometer’s long-term average backed by increasingly positive deal fundamentals.

25. Page 25 13th Capital Confidence Barometer Please indicate your level of confidence in the following at the local level: Chile respondents Confidence in deal fundamentals hold steady ► Chilean executives have increased confidence in the likelihood of closing deals. % respondents positive

26. Page 2613th Capital Confidence Barometer What is your largest planned deal size in the next 12 months? Oct-15 Oct-14 Apr-15 *Based on Dealogic data January to September vs. January to September 14 Global respondentsChile respondents Oct-15 Apr-15 Oct-14 Globally, upper–middle market deal plans increase ► While the majority of investments are expected in the lower middle market, the global trend since 2014 has been toward more substantial deal sizes. ► Upper-middle-market deals—between US$250m and US$1b—now make up more than a quarter of planned M&A. ► While the majority of Chilean dealmakers are focused on lower-middle market deals, the percentage of respondents that expect to close larger deals is very significant.

27. Page 2713th Capital Confidence Barometer Your planned M&A activity will mostly be: Global respondents Chile respondents Executives swing toward bolt-on acquisitions as companies consolidate to secure market share ► Companies are using bolt-on acquisitions to control costs and improve efficiencies amid a low-growth environment. ► Highly active M&A markets are not necessarily dominated by innovative or transformative deals—positive M&A sentiment can ultimately generate more sector-consolidating deals.

28. Page 2813th Capital Confidence Barometer How many deals of all sizes do you have in your pipeline today? Global respondents Chile respondents Growth in deal pipeline size corresponds with improved dealmaking sentiment ► Globally, there has been a movement to larger deal pipeline sizes: Upper categories are all up from six months ago, and three- and four-deal pipelines are up strongly from a year ago, driven by positive M&A fundamentals. ► In Chile more than 50% of the respondents have 3 or more deals in their pipeline today. ► Two- and three-deal pipelines show the strongest growth among Chilean respondents.

29. Page 2913th Capital Confidence Barometer How do you expect your deal pipeline to change over the next 12 months? Global respondents Chile respondents ► The majority of Chilean executives expect deal pipeline to remain the same. ► Globally, a majority of companies expect no change in deal pipelines, likely due to already-robust pipeline activity— but nearly all respondents expect either growth or stability in the number of assets being assessed. Growth in deal pipeline size corresponds with improved dealmaking sentiment

30. Page 30 Companies expect to complete a similar amount or more deals than a year ago 13th Capital Confidence Barometer How many acquisitions do you expect to complete in the next 12 months? Global respondents Chile respondents ► The majority of Chilean dealmakers plan to complete one or two deals in the next year. ► There is a majority of executives who expect M&A will continue at similar level for most dealmakers.

31. Page 31 Companies expect to complete a similar amount or more deals than a year ago 13th Capital Confidence Barometer Is this more or less than the number of acquisitions you completed in the prior 12 months? Apr-15 Oct-15 Apr-15 Global respondents Chile respondents ► There is a majority of executives who expect M&A will continue at similar level for most dealmakers.

32. Page 3213th Capital Confidence Barometer How do you think that buyers’ expectations currently compare to seller’s (valuation gap)? Apr-15 Oct-15 Global respondents Chile respondents Oct-15 Apr-15 Manageable valuation gap supports continued dealmaking ► Globally, executives see current high valuations and may deter some dealmaking, overall view of stability should offset downside risk. ► Recent equity correction seen as temporary by most executives—asset prices will likely revert to previous levels. ► The majority of Chilean executives believe the valuation gap is small or non-existent.

33. Page 3313th Capital Confidence Barometer Do you expect the valuation gap between buyers and sellers in the next 12 months to: Apr-15 Oct-15 Global respondentsChile respondents Oct-15 Apr-15 Manageable valuation gap supports continued dealmaking ► Well over half of the global and 70% of Chilean dealmakers expect valuations to remain the same – continuing the very small valuation gap.

34. Page 3413th Capital Confidence Barometer What do you expect the price/valuation of assets to do over the next 12 months? Apr-15 Oct-15 Global respondents Chile respondents Oct-15 Apr-15 Manageable valuation gap supports continued dealmaking ► The majority of Chilean dealmakers expect pricing to remain at current levels or even decrease, which should drive excellent buying opportunities during the next 12 months.

35. Page 3513th Capital Confidence Barometer What are the main drivers affecting your M&A strategy over the next 12 months? Global respondentsChile respondents Strengthening market position driving M&A strategy in the near term ► Low economic growth is driving consolidation across many sectors and geographies. ► Combination of new products/services and new geographical markets accounts for 30% of planned M&A in Chile.

36. Page 3613th Capital Confidence Barometer What are the main challenges to your M&A strategy over the next 12 months? A wide range of factors challenging companies’ M&A strategy ► Buyer competition, as more companies have returned to dealmaking, has become the primary challenge to M&A strategy. ► Adverse political or economic conditions are also proving troublesome, which reflects the earlier findings that geopolitical issues are an increasing concern. ► In the Chilean marketplace, the regulatory environment appears to challenge the M&A strategies of Chilean respondents more than global.

37. Page 3713th Capital Confidence Barometer If you have either failed to complete or canceled a planned acquisition in the past 12 months, what was the primary reason? Executives’ willingness to walk away from deals underscores overall health of M&A market ► The high number of failed or pulled deals, coupled with fuller pipelines, is evidence of an M&A market in which companies evaluate deals carefully and are willing to walk away. ► Chilean executives see buyer competition and the gap between buyers and sellers as the top causes of failed or pulled M&A.

38. Page 3813th Capital Confidence Barometer If you are planning an acquisition in a sector other than your own, please indicate which sector? I am not planning an acquisition outside of my own sector, 50% I am planning to do an acquisition outside of my own sector, 50% Chile respondents Convergence and blurring of sectors spurring companies to consider cross-sector M&A ► Companies considering an acquisition outside of their sector may also be evaluating deals within their sector. ► Disruptive megatrends are blurring traditional boundaries between sectors, particularly around technology and industrial processes. Technology, 19% Government & public sector, 13% Logistics & distribution, 6% Medical technology (eg, devices, diagnostics), 6% Other, 6%

39. Page 39 Purchase price is major roadblock to deal success in Chile 13th Capital Confidence Barometer For acquisitions completed recently, what was the most significant issue that contributed to deals not meeting expectations? Global respondentsChile respondents ► Globally, companies are increasingly buying businesses outside of their core competencies in response to shifting consumer preferences, technological advances and blurring of sector lines. As a result they are often acquiring assets that may be difficult to fit into their current operations. ► From a Chilean perspective, companies will need to work more to determine the value of the purchased asset.

40. Page 40 Top five sectors With highest intention to pursue acquisitions 13th Capital Confidence Barometer All sectors with at least 5 respondents Global respondents Chile respondents ► Locally, the apparent need of more and new sources of power is moving investors to expect to close deals in the power business. Huge interest in renewable and clean sources of power is seen in the Chilean marketplace.

41. Page 4113th Capital Confidence Barometer What is the main strategic driver for pursuing an acquisition outside your own sector? Global respondents Chile respondents Range of drivers influencing companies to purse acquisitions outside of their own sector ► Half of Chilean respondents pursue deals outside of their own sector to access new material or new product innovation. ► Changes in customer behavior and similar moves by competition are changing competitive dynamics within sectors, forcing companies to use M&A as a mechanism to protect market share.

42. Page 4213th Capital Confidence Barometer From where do you see the most disruption to your core business in the next 12 months? Global respondents Chile respondents Among disruptive core-business challenges, convergence and regulation pose greatest risk ► Globally, the lack of an outstanding single disruptive force points to the myriad challenges buffeting businesses across sectors and geographies. ► Added together, product innovation and digitalization total 22% for Chilean respondents— a reflection of how technological forces are affecting core business. ► Local stretching of margins strengthens competition at the time when Chilean investors need to deal with new regulations.

43. Page 4313th Capital Confidence Barometer Where is the main focus of your M&A strategy over the next year? Global respondentsChile respondents Chilean companies focused on domestic area for acquisition targets ► Global respondents are pursuing a more even geographic split for M&A. ► The majority of Colombian executives see deals within the immediate region.

44. Page 44 Companies taking advantage of attractive asset pricing in emerging markets 13th Capital Confidence Barometer ► More than half of Chilean respondents plan to allocate at least 10% of their acquisition capital to emerging markets. ► Recent currency swings against emerging markets and lower equity valuations have made assets more attractive. What percentage of your acquisition capital are you going to allocate to the emerging markets in the next 12 months? Global respondentsChile respondents

45. Page 4513th Capital Confidence Barometer Which are the top destinations your company is most likely to invest in the next 12 months? GlobalChile Top destinations Top 5 destination countries Chilean investment destinations concentrated in Americas ► Globally, strong growth in high-quality assets in the US and the UK making them popular destinations for investment. Major Asia Pacific countries are still proving attractive for investments. ► As in the past, Chilean investors are interested in Colombia, US and Chile. New interest appears in Argentina and Canada. Chile US Canada Argentina Colombia

46. Page 4613th Capital Confidence Barometer Has your intention to acquire assets in the Eurozone altered due to recent political events and changes in monetary and economic policy? Global respondents Chile respondents Eurozone investment appetite stable, and in some cases increased ► More than half of Chilean respondents have seen no change in Eurozone investing plans. ► Globally, more than a quarter of executives have increased plans to acquire assets in the Eurozone, fueled in part by pent-up demand and attractive pricing after an extended period of instability.

47. Page 47 Within the deal process, digital technology has had greatest impact on post-merger integration 13th Capital Confidence Barometer What part of your deal process has been most affected by advances in digital technology? Global respondentsChile respondents ► More than ever, digital technology influences what companies acquire, how they integrate, and how they monitor and measure success. ► Digital technology accelerates the integration timeline and therefore the ROI of the acquired business, while newer technologies such as cloud computing significantly reduce integration timelines.

48. Page 4813th Capital Confidence Barometer What is your assessment of the current risk of a potential cyber attack/breach of your deal process? Global respondentsChile respondents The vast majority of executives see measurable deal process risk from cyber-attack… ► More than 80% of Chilean executives view cybersecurity as a significant risk—medium or high—to their deal process. ► Heightened media attention and increased corporate awareness of cyber-risk are contributing to watchfulness at the C-suite/Board level.

49. Page 4913th Capital Confidence Barometer Do you perform cybersecurity due diligence on your transactions? If so, at what time in the process is the due diligence performed? If so, what type of due diligence is performed? Select all that apply …and a majority perform cybersecurity due diligence as a matter of course ► Cybersecurity involves not only the deal process but also the target itself—and corporate vigilance is increasing, end to end. ► Almost half of Chilean companies regard cybersecurity as a core part of the due diligence process.

50. Survey demographics

51. Page 51 Survey demographics 13th Capital Confidence Barometer What are your company’s annual global revenues in US$? What is your position in the organization? What best describes your company ownership? Global respondents

52. Page 52 Survey demographics 13th Capital Confidence Barometer What are your company’s annual global revenues in US$? What is your position in the organization? What best describes your company ownership? Chile respondents

53. Page 53 Proportion of top industries represented 13th Capital Confidence Barometer Global respondents Chile respondents

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