Research Alert: Top European Companies Lose Ground in Battle for Cash, According to New REL/CFO Europe ''Cash Masters'' Study

Despite a booming economy and record sales figures, the top 1,000
public companies in Europe lost ground in the battle to generate and
manage cash in 2006, according to the new "Cash Masters" study
performed by cash flow management consultancy REL (NASDAQ: ANSR) and
CFO Europe magazine.

The annual REL/CFO Europe study examines how effectively major
corporations are turning sales into free cash flow and how much
cushion they have in their operations, identifying the companies that
excel in this area - "Cash Masters" - as well as those who lag behind.
At first glance, Europe's top 1,000 companies appear to have posted
gains in almost every key metric associated with cash in 2006.
Bolstered by a sales increase of 10.6%, cash flow from operations rose
by 4.2%, to EUR 662 billion.

Upon closer examination, the picture is not as encouraging. The
REL/CFO Europe study results shows that European companies did not
take full advantage of the increase in sales, and let every key metric
deteriorate in relative terms. Cash Conversion Efficiency (CCE), a
critical measure of how effective companies are at turning sales into
free cash flow, fell significantly, in part because just over half of
the companies in the study were unable to improve their gross margins
or get greater leverage by reducing sales and marketing costs.

In addition, while European companies appear flush with cash, the
reality is that the ratio of cash on-hand as a percent of sales is at
its lowest level in three years. As a percentage of sales, companies
had 8% cash on-hand in 2006, a drop of 10% from the previous year.
This follows a 5% increase in 2005. Much of the 2006 reduction in cash
was utilized on capital expenditures (CAPEX), which increased by 12.7%
to EUR 388 billion. Also worth noting is the fact that equity
increased by 7.3% to EUR 2,342 billion in 2006, and debt increased by
5.7% to EUR 1,830 billion.

According to the REL/CFO Europe study, European companies could
generate an additional EUR 407 billion of cash flow annually if all
companies matched the cash conversion performance of top performers in
their industries.

This is an abbreviated version of the Research Alert on this
topic. The complete Research Alert is available online at
www.relconsult.com/masters. Findings from the survey are featured in
the October issue of CFO Europe. A more detailed REL analysis of the
survey findings is also available online at:
www.relconsultancy.com/cashmasters or at www.cfoeurope.com.