Managing Risk and Opportunity through Uncertainty

WORKING CAPITAL WORKING CAPITAL FINANCING: DRIVING THE BENEFIT Measures Used to Evaluate Working Capital Improvement Approaches Treasury’s Role in Working Capital Management Use of Working Capital Optimization Programs 41% 35% 35% 19% 9% 3% Weighted average cost of capital (WACC) Supplier Financing Distributor/Customer Financing Sale of Receivables Cost of long term debt Marginal cost of short term funds Internal hurdle rate Other (cash cycle/ leverage ratio) Minimize cost of goods (COGS) The role of treasury in working capital management differs by company, but over 80% are involved in some capacity. For some corporates (31%), treasury is central to working capital management, with full visibility over their commercial activities. Corporates that cited the use of Supplier Financing in their CTD survey over a two year period exhibited Days Payables Outstanding that were on average ~17% (+10 day increase) higher than those that did not cite the use of Supplier Financing. 31% 50% 19% Full responsibility Ad hoc involvement Not involved 76 166 46 85 62 81 51 75 36 67 45 60 41 55 51 54 60 43 Healthcare Consumer Telecom Power Industrials Technology Chemicals Mining Energy Corporates That Adopt Supplier Finance Exhibit Higher Average DPO DPO of respondents that do not use Supplier Finance DPO of respondents use Supplier Finance Two financial years prior (Year T-2) Last financial year (T) 32% 10% 37% 60 70 DPO of respondents that use Supplier Finance 55 55 DPO of respondents that do not use Supplier Finance Corporates That use Supplier Finance Reflect a Higher DPO Trajectory Over Time +10 day increase 26 27