1. EY CONFIDENTIAL 8 th Capital Confidence Barometer April 2013 Romania Results

2. Page 2 EY CONFIDENTIAL About the Barometer Ernst & Young’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 selected Ernst & Young clients and contacts. Our 8th 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. Respondent profile: ► EIU panel of almost 1,600 executives surveyed in February and March 2013 ► 43 respondents from Romania ► Companies from 50 countries ► Respondents from more than 20 industry sectors ► 794 CEO, CFO and other C-level respondents ► More than 912 companies would qualify for the Fortune 1,000 based on revenues

3. Page 3 EY CONFIDENTIAL Economic outlook

4. Page 4 EY CONFIDENTIAL Confidence in the global economy has rebounded dramatically What is your perspective on the state of the global economy today? ► Significant increase in those seeing improvement in the global economy, either modest or strongly from six months ago—up to 51% from 22% in Oct 2012 ► Respondents who see economy declining, either modestly or strongly, is 13%, the lowest total in two years Global Romania

5. Page 5 EY CONFIDENTIAL Confidence spans leading economic indicators Please indicate your level of confidence in the following at the global level Global Romania ► Highest level of positive sentiment for global economic growth – at 63% – also strongest result in two years ► More than half of respondents are positive on corporate earnings and employment growth – which has doubled since Oct 2012 ► Significant increase in confidence about credit availability ► Marked improvement in short -term market stability – more than doubled in the last six months

6. Page 6 EY CONFIDENTIAL Please indicate your level of confidence in the following at the home/local level: Romania Local confidence in economic indicators

7. Page 7 EY CONFIDENTIAL Do you think the current regulatory environment is supportive of business growth initiatives, at the global and domestic/local market level? Today’s regulatory environment viewed as pro-growth Romania Global Romania ► Respondents are overwhelmingly positive about the regulatory environment supporting business growth at the global level

8. Page 8 EY CONFIDENTIAL By how much do you think/expect the global and your local economy to grow in the next 12 months? Economic growth expected to improve – but not to the peaks of 2005-2008 Global Romania ► Globally, 84% of respondents anticipate economic growth ► Mining & Metals, Consumer Products, Power & Utilities and Oil & Gas sectors are the most confident that the global economy will grow by 3% or more ► France, Germany and Japan are the most confident about global economic growth prospects ► Of those expecting zero or negative growth, Sweden, Italy and Russia are most notable Local economyGlobal economy Romania

9. Page 9 EY CONFIDENTIAL With regards to employment, which of the following does your organization expect to do in the next 12 months? Improving confidence will drive more companies to create jobs GlobalRomania ► Job creation, at 42%, is up from 28% in Oct 2012 ► The workforce-reduction response (10%) is the lowest it has been in two years

10. Page 10 EY CONFIDENTIAL Emerging economies are more upbeat about local prospects than their more developed counterparts Gap between local and global economic confidence Top 5 countries and Romania with the highest positive view on their local economy relative to the global economy Top 5 countries and Romania with the highest positive view on the global economy relative to their local economy April 2013 ► Emerging market countries show greater confidence in their local economies versus the global economy ► European country results indicate an ongoing concern for Eurozone issues Top 5

11. Page 11 EY CONFIDENTIAL What is your perspective on the state of your local economy today? Romania Local economic confidence

12. Page 12 EY CONFIDENTIAL How do you think the Boardroom agenda at your company has changed from a year ago? Conservatism, and risk management will remain at the forefront of boardroom agendas without evidence of a lasting recovery Global Romania Apr-13 ► Efficiency and cost control remains the #1 priority but to a lesser degree than six months ago ► Confidence in economic indicators is taking longer to translate into boardroom action around less certain growth activities - such as innovation or investing in new geographic markets * Corporate governance only asked in April 2013

13. Page 13 EY CONFIDENTIAL What do you believe to be the greatest economic risk to your business over the next 6-12 months? Companies view Eurozone crisis and slowing growth in emerging markets as ongoing challenges to their businesses GlobalRomania ► Local concerns drive risk prioritization; emerging markets respondents are most concerned about slowing growth in those markets; European companies are most focused on the Eurozone; and US companies are most concerned about the US debt ceiling

14. Page 14 EY CONFIDENTIAL Access to capital

15. Page 15 EY CONFIDENTIAL Please indicate your level of confidence in credit availability at the global level Credit is increasingly available globally—almost half of respondents see improvement GlobalRomania ► At 49%, number of respondents seeing improvement is the highest it has been in the last two years ► US and China have the highest levels of confidence in credit availability at the global level ► 14% are seeing a decline in credit availability are the lowest in two years

16. Page 16 EY CONFIDENTIAL Debt-to-capital ratios remain fairly constant today – but an appetite for leverage may return over the next year How do you expect your company’s debt to capital ratio to change over the next 12 months? What is your company’s current debt to capital ratio? Global Romania ► 46% of respondents have a debt-to-capital ratio of less than 25% ► Over the last 6 months debt-to-capital ratios have slowly crept up as credit becomes more available ► 24% of respondents plan to increase debt-to-capital ratio – up from 18% six months ago

17. Page 17 EY CONFIDENTIAL Does your company plan to refinance loans or other debt obligations in the next 12 months? With large-scale changes to capital structures near completion, companies are now focused on refinements Global Romania ► Twenty percentage point drop in those "Optimizing the capital structure" since Oct 2012 ► Companies continue to refine specific components of their capital structure such as interest rates, debt maturity dates, and covenants ► Minor change in percentage of companies who plan to refinance debt in the next 12 months – 29% up from 26% in Oct 2012

18. Page 18 EY CONFIDENTIAL What will be the primary purpose of your refinancing? With large-scale changes to capital structures near completion, companies are now focused on refinements Global Romania ► Twenty percentage point drop in those "Optimizing the capital structure" since Oct 2012 ► Companies continue to refine specific components of their capital structure such as interest rates, debt maturity dates, and covenants ► Minor change in percentage of companies who plan to refinance debt in the next 12 months – 29% up from 26% in Oct 2012

19. Page 19 EY CONFIDENTIAL Cash is dominant as the primary source of deal financing in the near-term What is the likely primary source of your company’s deal financing in the next 12 months? Global Romania ► Fewer than ever plan to use debt as the primary source of deal financing (30%, less than one-third), despite abundant credit availability ► Companies’ reluctance to use their own equity may be indicative of volatility in the capital markets

20. Page 20 EY CONFIDENTIAL Growth strategies

21. Page 21 EY CONFIDENTIAL Appetite for growth rebounds as confidence in the global economy returns and credit availability improves Which statement best describes your organization’s focus over the next 12 months? Global Romania ► At 52%, companies report a clear focus on growth as fundamentals continue to improve ► Although there is growing optimism, a third of companies will continue to focus on cost reduction and operational efficiency ► Respondents focused on stability and survival decreased significantly

22. Page 22 EY CONFIDENTIAL Companies with excess cash are investing more in growth and away from returning cash to stakeholders If your company has excess cash to deploy, which of the following will be your focus over the next 12 months? Global Romania ► Organic growth remains top preference of companies with excess cash—up to 45%, a resurgence from the Oct 2012 drop ► In total, 41% of companies are focused on returning cash to stakeholders, through paying down debt, paying dividends and buying back stock—a 10 percentage point drop since Oct 2012 Invest in growthReturn to stakeholders

23. Page 23 EY CONFIDENTIAL Organic growth will be driven by a portfolio of activities with different risk profiles What is the primary focus of your company’s organic growth over the next 12 months? Global Romania ► 30% of companies pursuing organic growth will focus more rigorously on execution of core products/existing markets ► Over half of companies will be more bold in pursuing higher risk organic growth strategies

24. Page 24 EY CONFIDENTIAL Investing dominates the Capital Agenda over the next year Which statement best describes your organization’s focus over the next 12 months? The Capital Agenda

25. Page 25 EY CONFIDENTIAL M&A

26. Page 26 EY CONFIDENTIAL Strong consensus - global deal volumes expected to improve over the next year What is your expectation for M&A/deal volumes in the next 12 months? Global deal volumes Local deal volumes ► Globally, 72% of companies expect improvement in deal volumes ► Only 5% forecast a decline in deal volume of any kind ► At the sector level, Technology is most optimistic

27. Page 27 EY CONFIDENTIAL Appetite for acquisitions is more positive and driven by the increase in number and quality of opportunities Do you expect your company to pursue acquisitions in the next 12 months? Level of confidence at the global level Global Romania ► At 29%, expectation to pursue acquisitions is up from six months ago ► 64% of companies who expect to acquire have revenues in excess of US$1billion ► Brazil, India and the US are the most likely countries to pursue acquisitions

28. Page 28 EY CONFIDENTIAL Globally twenty-nine percent of respondents expect to pursue acquisitions in the near term while sector appetite varies Global Romania ► Top sectors to pursue acquisitions are Technology, Automotive and Life Sciences

29. Page 29 EY CONFIDENTIAL Market share gains – new or existing – are the primary drivers of companies inorganic growth strategy What are the main drivers of your company’s planned acquisition in your chosen market/country? Select two. Global Romania ► Rationale for planned acquisitions has incrementally migrated toward top-line growth versus cost efficiencies ► The use of acquisitions to drive cost and margin efficiencies has declined over the last six months as the level of expected returns are likely slowing

30. Page 30 EY CONFIDENTIAL Expectations for valuations to increase are at their highest level in two years What do you expect the price/valuation of M&A assets to do over the next 12 months? GlobalRomania ► 44% expect price/valuations to rise in the next year ► At 7%, respondents expecting M&A valuations to decrease are at their lowest level

31. Page 31 EY CONFIDENTIAL While valuation gaps are narrowing, this trend is not expected to continue over the next year Do you expect the valuation gap between buyers and sellers in the next 12 months to: Do you believe the valuation gap today between buyers and sellers is... Global Romania ► Most respondents (82%) say the gap is 20% or less, compared with 68% in Oct 2012 ► Fewer (18%) say the gap is 21% or more versus 32% in Oct 2012 ► A majority (62%) sees the valuation gap at best staying the same over the next year

32. Page 32 EY CONFIDENTIAL Smaller deals are expected to dominate the next 12 months despite significant cash balances and strong availability of credit What is the expected deal size? Global Romania ► Expectation for large deals (above US$1billion) has leveled ► While companies are moving toward a growth and investment mindset, conservatism and caution persist

33. Page 33 EY CONFIDENTIAL Top investment destinations continue to evolve while spanning emerging and developed markets Which are the top 5 countries (outside your local market) in which your company is most likely to invest? Global April 2013 1China 2India 3Brazil 4US 5Canada 1China =1Brazil =1Poland 4Argentina =4Austria Romania ► Top 5 countries for investment in Oct 2012 were China(1), US(2), India(3), Brazil(4) and Germany(5) ► Today, the US has dropped to 4 th position and Canada enters the top 5 ► Beyond the top 5, ‘rapid growth’ or new emerging markets dominate ► European countries are notably absent from the top 15 destinations in Apr 2013 with the exception of Germany which has moved to 15th Top destinations =1. Poland 4. Argentina =4. Austria 1. China =1. Brazil

34. Page 34 EY CONFIDENTIAL Optimism in emerging markets investing persists, but companies are exercising more caution Which statement best describes your approach to M&A in those emerging markets which are experiencing slowing growth? ► While 76% of respondents remain optimistic about opportunities; only 31% have not changed their approach to investing in emerging markets ► 45% say they will “apply further rigor,” when assessing deals ► 24% are becoming less optimistic or discontinuing their emerging markets strategy entirely

35. Page 35 EY CONFIDENTIAL Regulatory and political risk are now considered the top obstacles to emerging market deals What is the primary barrier to doing deals in emerging markets? ► The top two responses—regulatory and political risk—account for nearly half (49%) of all respondents ► Historical perceptions have subsided around a lack of reliable financial information and valuation gaps as key barriers to getting deals done in emerging markets

36. Page 36 EY CONFIDENTIAL Overestimating strategic value is the leading reason for deals not meeting expectations For acquisitions completed recently, what was the most significant issue that contributed to deals not meeting expectations? GlobalRomania ► 30% cited that overestimating the strategic value of deals was the most significant issue for deals not meeting expectations ► Risk from unforeseen liabilities has become a more prominent reason for deals not succeeding ► Poor integration and sales volume declines have subsided since Oct 2012

37. Page 37 EY CONFIDENTIAL Companies not pursuing deals largely point to external variables What is the primary reason for not pursuing acquisitions in the next 12 months? ► Top three variables, totaling 59%, all pertain to factors largely outside of the boardroom and the company’s control

38. Page 38 EY CONFIDENTIAL Divestments are becoming a core part of strategy - activity levels reflect a consistent appetite to pursue them Is your company likely to make an asset sale/divestment in the next 12 months? ► Divestment intentions have normalized as more companies have shifted from a stabilization to growth agenda ► 18% of companies are likely to divest in the next 12 months, consistent with the findings from our recent Global Corporate Divestment Study When do you expect to initiate your next divestment? Source: EY Global Corporate Divestment Study 2013 Global

39. Page 39 EY CONFIDENTIAL Rationale for divestments continues to evolve as companies recognize the opportunity to use them as a tool for growth and value creation What are the main drivers of your company’s planned divestment activity? (Select two) RomaniaGlobal ► Focus on core assets and enhancement of shareholder value remain the top two reasons to divest ► 29% of companies plan to use divestments to raise cash to compensate for underperformance of the aggregate business up from 18% in Oct 2012

40. Page 40 EY CONFIDENTIAL Companies planning a divestment primarily focus on business units and consider a variety of structures to maximize value What form do you expect your divestments to take? ► Most companies (67%) expect to divest business units;16% will contribute to a joint venture (JV) ► 17% expect to make full enterprise sales

41. Page 41 EY CONFIDENTIAL Companies not pursuing divestment are most concerned about valuation gaps and disruption to the core business What are the reasons for you not pursuing divestments? Select two. ► 48% and 45% respectively, identify the valuation gap and disruption to the core as the primary concern for not pursuing divestments ► While not considered a top concern, 31% of companies do not feel they are proficient at the divestment process

42. Page 42 EY CONFIDENTIAL Survey demographics

43. Page 43 EY CONFIDENTIAL Survey demographics What is your position in the organization? What best describes your company ownership? What are your company’s annual global revenues in US$? Global Romania

44. Page 44 EY CONFIDENTIAL Proportion of top industries represented GlobalRomania

45. Page 45 Ernst & Young Assurance | Tax | Transactions | Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.www.ey.com © 2013 EYGM Limited. All Rights Reserved. This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.