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  • News - EY - Majority of oil and gas capital project joint ventures exceed budget - EY - Global
    capital project joint ventures exceed budget Majority of oil and gas capital project joint ventures exceed budget London 28 October 2015 Newsroom News releases PR contacts PR activities Analyst relations Fact and figures Share Analysis of 333 current oil and gas capital projects revealed that 92 of joint venture JV arrangements experienced cost and schedule overruns compared to 83 of non JVs according to EY s new report Joint ventures for oil and gas megaprojects Inappropriate structures selecting unsuitable partners or engaging in an inadequate commercial structure which fail to align or flex to changing participant strategic priorities are the most common downfalls of these JVs Continued oil price volatility and escalation of geopolitical tensions are also adding considerable strain to many JVs The report also finds that while the probability of cost and schedule overruns is higher in projects that are JV led they tend to fare better on the extent of failure compared to non JV projects For overrunning projects completion costs were on average 107 above target for non JVs and 84 above target for JVs Axel Preiss Global Oil Gas Advisory Leader at EY says JVs add both value and complexity to a project Companies tend to invest the most time and resources into pre signature due diligence but often fail to properly maintain investment and oversight once the JV commences This is where most problems begin JVs set up prior to the drop in oil price may now include partners under severe financial stress and whose priorities and willingness to invest may have changed significantly This can in the worst instances lead to JV exits In today s environment companies must invest in alignment between partners while preparing for the risk of exit to reduce market shock Preiss says It is not unusual for individual company objectives to change over the long life cycle of these major projects and we can expect that some JV performances to suffer further as geopolitical issues and oil price uncertainty persists in today s market Too often there is a failure within the JV to maintain trust and alignment of strategic objectives between partners This creates even greater performance challenges Project developers must effectively set up and manage JVs on an ongoing basis to preserve support and investment in these large capital projects Ends Notes to Editors About EY EY is a global leader in assurance tax transaction and advisory services The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over We develop outstanding leaders who team to deliver on our promises to all of our stakeholders In so doing we play a critical role in building a better working world for our people for our clients and for our communities EY refers to the global organization and may refer to one or more of the member firms of Ernst Young Global Limited each of which is a separate legal entity Ernst Young Global Limited a UK

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-majority-of-oil-and-gas-capital-project-joint-ventures-exceed-budget (2016-02-10)
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  • News - EY - More CFOs partnering with CEOs to drive corporate strategy - EY - Global
    their organization CFOs still see their main focus as managing costs Only 49 of CFOs say they will make a high contribution to their business digital approach CFOs do not recognize the impact on their organization of a shift to digital While the relationship between chief financial officers CFO and chief executive officers CEO has become more collaborative in the past three years as finance leaders have stepped up to the role of strategic advisor to the CEO they are still more focused on managing costs and setting budgets than carving out a more strategic role This is according to an EY global survey of 652 CFOs and a series of in depth interviews with CFOs and CEOs Findings from the fifth instalment of the Partnering for performance series indicate that 82 of CFOs feel that when they collaborate with the CEO on M A decisions performance management and the shift to digital and operating model redesign their most important contribution is still within their traditional finance remit Tony Klimas EY Global Finance Performance Improvement Advisory Leader says Many CFOs emerged from the financial crisis with strengthened reputations CEOs relied heavily on CFOs to handle cost cutting and protect their firm during the recent economic downturn Now that the economy is more stable CFOs are finding themselves caught between cost control and growth CFOs now need to find the balance between financial discipline and taking new risks to drive innovation and growth Accelerating digital business Despite an increased involvement in the strategic direction of their firms CFOs seem to lack an understanding of the role they need to play in the shift to digital a key factor impacting businesses today due to the disruption it can cause on their organization s business and operating models Only 50 of CFOs are making the shift to a digital business model a high priority in the next three years according to the survey and only 49 believe they will make a high or very high contribution to it This suggests that many CFOs do not fully understand the impact digital is likely to have on their business nor their responsibility in leading and enabling this transformation CFOs have an important role to play in this area including leveraging digital to cut costs and managing the legal tax and regulatory risks that digital creates Laurence Buchanan EY Digital Leader for Europe Middle East India and Africa says It s surprising that few CFOs are placing a high priority on digital because the digital transformation is arguably one of the biggest challenges and opportunities facing firms today The consequences of ignoring the shift to digital are far too great for only half of CFOs to be embracing it It has the power to transform some organizations from market leaders to irrelevance in a frighteningly short timeframe CFOs who don t embrace this shift will be caught playing catch up as their competition takes advantage of the digital culture to gain traction in the industry Critical

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-more-cfos-partnering-with-ceos-to-drive-corporate-strategy-yet-many-are-ignoring-the-shift-to-digital (2016-02-10)
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  • News - EY - M&A appetite at its strongest in six years as 6 in 10 companies actively pursue acquisitions - EY - Global
    the quality and number of deal opportunities and the likelihood of closing acquisitions Despite the high appetite to acquire any fears about an overheating market can be tempered by strong rigor around deals Executives are judicious about how they use M A almost three quarters 73 have walked away from deals in the past 12 months because they were not fully aligned with their strategy Executives are taking a long term view and evaluating deals more carefully than ever before They are stepping back when necessary This is not a deals for deals sake mentality says Mrs McCrostie Sector convergence a clear blurring of industry lines The continuing convergence of industries looks set to accelerate dealmaking with almost half 48 planning cross sector investments Companies are looking to seize competitive advantage as new technology impacts everything from production to services Acquisitions into manufacturing segments were the most cited Second was retail and wholesale followed by government and public services acquisitions The sectors with the highest level of M A intent are oil and gas 69 consumer products 67 mining and metals 67 diversified industrial products 66 and power and utilities 65 Cross border deals dominate and dealmakers return to the Eurozone Cross border acquisitions look set to dominate the deals market with 70 of respondents looking at non domestic deals Almost a third 29 plan to focus on cross border deals close to home while 41 are looking further afield Compared to six months ago more respondents 40 versus 35 now plan to allocate at least 10 of acquisition capital to emerging markets However the majority of acquisition capital will be invested in developed markets There is a significant increase 26 in the number of executives now looking to acquire in the Eurozone Mature markets continue to drive M A activity says Mrs McCrostie With the majority of potential acquirers looking beyond their own domestic borders there is a marked strengthening among executives around doing deals in the Eurozone This is down to increased confidence in the stability of the region The Eurozone also has a good supply of high quality assets and attractive pricing due to currency fluctuations The US UK Germany China and India are the overall top five investment destinations of choice Brazil the US France Germany Australia and the UK look set to be the prominent acquirers Steadfast economic confidence supporting deal intentions Despite significant market volatility during the survey period companies remain confident about dealmaking in the current macroeconomic environment Economic confidence is steadfastly robust identical to six months ago with 83 of executives optimistic about the global economy Long term prospects for growth albeit modest are shaping views That is supporting strong corporate confidence which is now more upbeat about creating new jobs with almost half 45 looking to hire talent compared to a third 29 six months ago Companies do remain vigilant to potential challenges including potential economic headwinds A third 29 of respondents view increased global and regional political instability as the

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-ma-appetite-at-its-strongest-in-six-years-as-6-in-10-companies-actively-pursue-acquisitions (2016-02-10)
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  • News - EY supports Entrepreneurial Mindset Summit - EY - Global
    Summit London 23 October 2015 Newsroom News releases PR contacts PR activities Analyst relations Fact and figures Share Leading figures in education workforce development entrepreneurship and philanthropy will meet in New York City on 27 October 2015 for the inaugural Entrepreneurial Mindset Summit hosted by the Network for Teaching Entrepreneurship NFTE with signature support from EY The event will focus on how young people can be equipped with the entrepreneurial skills necessary to succeed in today s global economy It will explore how we can activate and begin measuring an entrepreneurial mindset in youth using NFTE s Entrepreneurial Mindset Index EMI an emerging methodology developed in conjunction with the Education Testing Service which will enable schools youth organizations businesses and governments around the world to systematically identify and measure the presence of key entrepreneurial skills and behaviors Maria Pinelli EY Global Vice Chair Strategic Growth Markets and Chair of NFTE says Skills such as initiative and self direction flexibility and adaptability and creativity and innovation are the very ones that employers say they are looking for and currently find lacking among young people In an increasingly complex and unpredictable world these attributes are also likely to play an even more important role in equipping future leaders with the ability to continually adapt to change to recognize opportunities and to innovate in the face of challenges Kim Smith Senior Vice President of Programs and Research at NFTE says Ample research suggests that an entrepreneurial mindset is not a fixed trait but rather a set of skills and behaviors that can be taught practiced and cultivated and that having an entrepreneurial mindset lays a foundation for success We must equip youth with the entrepreneurial skills necessary to succeed in the innovation economy The EMI is significant as it s the first time entrepreneurial skills have been identified and measured in youth in this way with a view to changing the way they are taught Standardized testing has tended to drive a focus on teaching measurable areas of intelligence like math and language at the expense of hard to measure characteristics like creativity and resilience Pinelli adds EY s support of the EMI is yet more evidence of our commitment to advising guiding and recognizing entrepreneurs and championing the role of entrepreneurship in building a better working world We ve long known that entrepreneurs can be made as well as born so a new approach to teaching these skills has the potential to be transformational NFTE is one of the organizations EY collaborates with in its drive to help the next generation to succeed in the world of work Its support for the EMI is part of a long standing and ongoing relationship with the charity EY supports NFTE s project based curriculum that teaches entrepreneurial skills to young people from disadvantaged backgrounds by providing funding mentoring and board participation Nicky Major EY Global Corporate Responsibility leader says Supporting young people to develop skills needed in the future workforce is one of the

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-supports-entrepreneurial-mindset-summit (2016-02-10)
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  • News - EY - Institutional investor attitudes shifting as environmental and social risks impact investment decisions - EY - Global
    governance ESG risks influence business operations and investors decisions Notably 64 report that companies are not adequately disclosing ESG risk with 39 calling for companies to disclose information more fully in the future The implications for publicly traded companies are significant Thirty six percent of institutional investors said they divested holdings of a company s shares in the last year due to the risk of stranded assets 1 while another 27 expect to monitor this risk closely in the future Juan Costa Climent EY Global Leader Climate Change and Sustainability Services says Companies providing non financial information often come at it from the perspective of the customer and the regulator and not investors Investors clearly want this information to focus on how these risks affect a firm s value rather than seeing it simply from the perspective of managing risk Investor strategy Institutional investors also no longer regard ESG risks as specific to energy and extraction industries as 62 of investors consider non financial data to be relevant to all sectors today compared to 34 of respondents from the 2014 survey The survey also outlines top ESG concerns for institutional investors when making investment decisions If a company were to show a risk or history of poor environmental performance 76 would reconsider their investment If a company was not addressing risks in its supply chain 73 say they would reconsider their investment Forty one percent would rule out an investment immediately if a company showed the absence of a clear strategy to create value in the short medium and long term Despite these calls for better information just 24 say that non financial performance frequently plays a pivotal role in their investment decisions For some respondents the reason for this relates to the information itself Twenty seven percent say that their investment decisions have not been affected by non financial reporting in the last year because they find it difficult to determine how material the information is to financial performance due to the fact that the information is not verified or is difficult to compare across regions or countries Investor expectations appear to be growing more holistic and sophisticated says Costa Climent They not only want non financial information that provides a forward looking view into a company s performance risk and value but they also want it to be comparable across sectors and regions while reflecting a seal of approval at board level Regional response By region institutional investors in Europe were most likely to have an investment decision affected by non financial information followed by Latin America a region that has previously showed the least interest in non financial reporting The survey also found that 37 of institutional investors are using structured methodical evaluation of companies environmental and social impact statements and disclosures up from 20 of those surveyed last year Other notable changes to investor requirements year on year relate to the importance of integrated reporting Seventy one percent consider integrated reporting as essential or important when

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-institutional-investor-attitudes-shifting-as-environmental-and-social-risks-impact-investment-decisions (2016-02-10)
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  • News - EY - ETF industry expects nearly 18% growth per year over next three to five years - EY - Global
    says The ETF industry has an ability to turn investment problems into investment opportunities so seeing this level of confidence in spite of current economic headlines is not surprising We continue to see great energy and promise for the future However as it seeks to deliver growth in the short term the ETF industry needs to keep its long term legacy in mind and ensure it does not harm potential growth expansion over the next 5 10 or 20 years US continues to lead the ETF market though Europe and Asia see growth US ETF providers now manage US 1 905t of assets four times the total for Europe and 18 times that of Asia excluding Japan after averaging cumulative annual growth rates of nearly 24 for a decade ETF assets still equate to less than 12 of the US mutual fund market though all US respondents expect the industry to gain net new assets in the next 18 months and half anticipate growth of more than 20 ETF assets grew faster in Europe than in the US or Asia during the first eight months of 2015 and survey respondents expect this performance to continue The majority expect their own firms to expand by at least 10 to 15 each year over the next three to five years Asian ETF assets have grown at an average rate of 29 9 over the past decade though they have followed a more volatile path than in Europe or the US Respondents expect this growth to continue with the majority believing their own businesses will grow by 25 to 30 per year over the next three to five years despite a decline in Asian wide ETF assets during the first eight months of 2015 New product spending will increase Product development is moving faster than at any point in the ETF industry s history as 83 of survey respondents expect to increase new product spending in the next 18 months Enhanced beta is expected to generate more growth according to 24 of respondents compared to 16 in 2014 Currency hedged ETFs is another area expected to generate future growth according to 22 of respondents compared to only 5 in 2014 Providers also continue to develop new ideas around single emerging market ETFs infrastructure ETFs and socially responsible ETFs Matt Forstenhausler EY Global ETF Leader says US based ETF providers continue to lead in innovation and the introduction of product into new markets The process of issuing trading selling and administering ETFs varies significantly between regions and countries Accordingly as they look to grow internationally providers market makers and service providers find it necessary to adapt their business models to local conditions Tension exists between some promoters and investors around which products will generate growth While 24 of promoters and investors believe enhanced beta products will generate growth in the future only 4 of investors compared to 22 of product promoters view currency hedged ETFs as more important for future growth Likewise 32 of

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-etf-industry-expects-nearly-18-percent-growth-per-year-over-next-three-to-five-years (2016-02-10)
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  • News - EY - Lending expected to grow more than 3% in 2016, boosting Eurozone economy - EY - Global
    EY Financial Services Leader for Europe the Middle East India and Africa EMEIA says While larger corporates continue to pay off bank debt new lending to business looks more encouraging than it has for a long time It s the first year new loans to business have grown across all markets since 2012 and the cost of borrowing is also falling particularly in the periphery economies which should unlock some demand for lending and encourage investment and growth in the wider economy The average cost of borrowing for businesses has fallen significantly this year with rates in Spain having declined from 3 5 on average in 2014 to 2 7 this year while rates in Italy have fallen from 3 1 to 2 2 over the same period Although the compression of borrowing costs in Germany and France has been less marked average rates have now fallen below 2 Spain Germany France and Italy all expected to see business lending growth Both Spain and Italy have witnessed strong gains in new lending to firms in recent months which has been supported by the targeted longer term refinancing operations TLTRO But the total stock of loans continues to fall as debt repayments outweigh new loans Flows are likely to remain positive in the coming quarters reflecting the improving economic backdrop and more positive bank sentiment as well as supportive European Central Bank ECB actions quantitative easing and TLTROs The German banking sector appears relatively robust and well placed to respond to the expected pick up in loan demand this year as the economic recovery gathers momentum Business loans are forecast to rise by 1 6 in 2015 with growth picking up to an expected 4 4 in 2016 pushing the stock of business lending to 1 370b by the end of 2016 France has had a more difficult start to the year and EOFS expectation for growth in corporate loans has been revised to just 0 8 for 2015 as demand for loans from the non financial corporate sector has fallen back But with business sentiment still robust this is expected to be only a temporary pause in activity Growth in corporate loans should therefore pick up to 3 6 in 2016 in line with the projected upturn in business investment The Italian banking sector remains hampered by high and rising non performing loans but these are finally forecast to peak this year at 16 3 of total loans This should facilitate a gradual recovery in the stock of corporate loans with positive growth of 2 5 forecast for 2016 and 4 2 in 2017 Tom Rogers Senior Economic Adviser to the EOFS says The ECB s lending surveys have shown a continued easing of credit conditions in the region and accelerating demand for loans The improvement has been fairly broad based although Spain and Italy stand out in terms of expectations of strengthening corporate loan demand due to improved business confidence With credit conditions easing and bond yields expected to

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-lending-expected-to-grow-more-than-3-in-2016-boosting-eurozone-economy (2016-02-10)
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  • News - EY - Media and entertainment industry poised to generate one of the best profit margins in 2015 - EY - Global
    on the exploitation of digital distribution and finding new and innovative ways to reach and interact with the consumer With surging demand for content M E companies are growing their profitability through multiple consumer offerings better knowledge of consumer tastes and preferences and continued international expansion In 2015 it is estimated the M E industry will outperform several major cross industry stock market indices Figure 1 The 11 sectors of the M E industry measured by EY are expected to have a 2015 estimated profit margin of 28 3 second only to the Hang Seng Index 34 3 followed by the FTSE Index 27 9 the S P 500 Index 27 8 the Sensex 27 0 the CAC 40 Index 19 5 the DAX 30 Index 17 9 and the Nikkei Index 14 4 Looking at the 2011 2015e compound annual growth rate in terms of EBITDA dollars the M E industry is the third fastest growing industry as compared to leading stock market indices at 7 behind the S P 500 Index at 10 and the Hang Seng Index at 8 and ahead of the FTSE 100 Index 6 the DAX 30 Index 4 the Nikkei Index 4 the Sensex 3 and the CAC 40 Index 0 Figure 1 When looking at the estimated 2015 profitability of the 11 M E sectors Figure 2 cable operators are expected to have the highest profitability at 40 followed by cable networks 36 interactive media 34 information services 30 electronic games 28 conglomerates 28 satellite television 25 TV broadcast 21 film and TV production 14 consumer publishing 13 and music 13 A review of the 2011 2015e compound annual growth rate in terms of EBITDA dollars indicates that interactive media is the fastest growing media and entertainment sector at 17 followed by film and TV production 14 music 9 electronic games 7 conglomerates 6 cable networks 6 TV broadcast 5 information services 4 cable operators 4 satellite television 4 Only consumer publishing is projecting a decline estimated at 7 Figure 2 Highlights across the 11 M E sectors include Cable operator margins continue to be the highest among all M E sectors as a result of high margin data and business to business services Margins remain stable due to price increases despite rising programming costs and increasing competition from over the top OTT services Cable networks are benefiting from digital licensing affiliate fee increases and international expansion However profit margins are partially offset by rising programming costs and declining viewership on linear television platforms mainly due to cord cutting or cord shaving Additionally advertising revenues have been under pressure further impacting EBITDA The interactive media sector is growing from mobile monetization targeted product launches for emerging markets and continued growth in online video and programmatic advertising resulting in the highest compound annual growth rate CAGR among all M E sectors Information services companies are reporting stable revenues and margins as they increase focus on digital subscriptions and transition from information reference tools

    Original URL path: http://www.ey.com/GL/en/Newsroom/News-releases/news-ey-me-industry-poised-to-generate-one-of-the-best-profit-margins-in-2015 (2016-02-10)
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