Europe's CFOs upbeat about 2006

European CFOs are confident about the overall business conditions for the
coming year, a new survey has found.

The European CFO poll, conducted by Richard Davies Investor Relations on
behalf of Financial News and SG CIB, the corporate and investment banking arm of
Société Générale, found that only a tiny minority of finance directors were
concerned about the economic landscape over the next 12 months.

However, the principal challenges facing finance directors included perceived
governance over-regulation and under-funded pension schemes.

Most respondents welcomed governance codes of practice, but more than a
quarter said they had a negative impact on board-level remuneration.

Some 15% of CFOs said audit quality also was an ongoing concern, and one in
four companies admitted it had recently changed, or is considering changing, its
auditor.

More than half of finance directors said that pension fund deficits were
having a negative impact on the company’s balance sheet, although there was
little consensus as to how the problem of under-funded schemes should be solved.

Some 64% of CFOs said they saw pension deficits as a significant obstacle to
M&A activity, and were generally getting more involved in the management of
their pension schemes. Many companies conceded that they were partly to blame
for deficits, having decreasing contributions in the 1990s.

The majority of CFOs said they had taken advantage of favourable market
conditions to issue or refinance debt over the past year, and expected M&A
to be a bigger focus over the coming year.