Optimizing working capital while maintaining a healthy supply chain with Supply Chain Finance

1. Optimizing working capital while maintaining a healthy supply chain withSupply Chain Finance

2. Focus of this workshop • The renewed focus on working capital optimization for companies and its suppliers over the last few years • Supply Chain Finance (“SCF”), optimizing the working capital position of both a company and its suppliers • Why has Liberty Global opted for a SCF solution? • How the implementation of a SCF program works in practice • Lessons learned

3. About the speakers ING Commercial Banking Oliver Petersen Head Supply Chain Finance Bijlmerplein 888, 1102 MG, Amsterdam T 020 576 8177 E oliver.petersen@ingbank.com Fabrice Legoux Director, Operational Finance Boeing Avenue 53 1119 PE Schiphol-Rijk E flegoux@lgi.com About ING Group N.V. ING is a global financial institution of Dutch origin, currently offering banking, investments, life insurance and retirement services to meet the needs of a broad customer base. ING Bank N.V. has a strong position in the Netherlands and Belgium in commercial as well as retail banking where it operates as a universal bank. ING Bank has significant presence through direct banking in Australia, France, Germany, Italy, Spain and Austria. About Liberty Global LG is the leading international cable company, with operations in 14 countries. LG’s market-leading triple-play services are provided through next-generation networks and innovative technology platforms that connect 24.5 million customers subscribing to 47.5 million television, broadband internet and telephony services as of June 30, 2013. LG’s consumer brands include Virgin Media, UPC, Unitymedia KabelBW, Telenet and VTR. The group actively manages c.US$41 billion of long term financing. Focus on working capital management has also become a high priority within the group who is actively establishing meaningful quick wins in this field.

4. Setting the scene Scarcity of liquidity Economic downturn Stricter regulations • Liquidity is scarce and banks are deleveraging • Basel III and regulation of FI’s are constraining capital and lending • Economic environment pressures profitability • Working capital management has moved to the top of the agenda • Treasurers seeking ways to unlock funds trapped in O2C and P2P • EU Late Payment Directive • Banks focusing more on flow and trade products

5. WCS’ role in companies’ financial supply chain Customers (debtors) Suppliers (creditors) • ING Working Capital Solutions (WCS) was originally established in early 2012 to combine working capital based solutions to corporate clients • WCS aims to provide our clients with best-in-class solutions for working capital improvement from both sides of your balance sheet Purchase-to-pay process Order-to-cash process Finished products Raw materials Work-in-progress Physical Supply Chain: Cash Account Payables Trade Receivables Corporate Companies Financial Supply Chain: Supply Chain Finance • Trade Receivables Purchase Programs • International Corporate Receivables Financing Receivable based Finance Free cash flow gain via Account Payables Accelerated cash release in Account Receivables

6. What is Supply Chain Finance?

7. What is Supply Chain Finance?

8. Key benefits for a Buyer in a nutshell • Improve cash flow position by pushing out payment terms (DPO) • Improve liquidity within the supply chain • Neutral accounting treatment and generally not classified as debt • Standardization of terms and invoicing process • Transparency on what is paid and when • Fully electronic, secured and convenient • Competitive all-in rate

9. Key value drivers for suppliers in SCF • Creation of Value for suppliers: • Cash flow certainty  Elimination of opportunity cost • Transparency  Efficiency gains in reconciliation • Liquidity  Value of additional Free Cash Flow • Financial Cost  Reduced financial cost, 100% funded on a non-recourse basis • Quantification of the SCF value: • Supplier benefits are generally only based on the “hard factor”, the Financial Cost • Experience shows that the “soft factors” represent a large part of the total value!

10. The SCF market Since 2013 Belgium 2004 Construction Material Industry EUR 25m Supply Chain Financeprogram Sole Arranger and Liquidity Provider Construction Material Industry The Netherlands Germany Belgium Romania Russia Belgium Russia In Progress In Progress Since 2013 Since 2013 In Progress In Progress In Progress Belgium Pan-European Since 2013 Since 2013 2004 2004 Food and Beverage Industry Construction Material Industry Telecom Industry Food Retail Industry Manufacturing Industry Pharmaceutical Industry Steel and Mining Industry Food and Beverage Industry Food and Beverage Industry EUR 25m EUR 25m EUR 25m EUR 20m EUR 15m EUR 25m EUR 50m EUR 50m EUR 50m Supply Chain Financeprogram Supply Chain Financeprogram Supply Chain Financeprogram Supply Chain Financeprogram Supply Chain Financeprogram Supply Chain Financeprogram Supply Chain Financeprogram Supply Chain Financeprogram Supply Chain Financeprogram Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Sole Arranger and Liquidity Provider Food and Beverage Industry Construction Material Industry Pharmaceutical Industry Steel and mining industry Telecom Industry Food Retail Industry Food and Beverage Industry Food and Beverage Industry Manufacturing Industry • There are now an estimated 150 to 200 SCF programs globally • Major international banks surveyed across the world are reporting 30~40% annual growth rates in SCF programs • SCF growth rates are expected to continue to grow by 20~30% by 2015 • Strongest sectors for SCF take-up are retail, manufacturing, consumer products, automotive, agriculture, chemicals and pharmaceuticals • Banks and corporates are largely in agreement about the level to which SCF programs are currently a ‘must have’ business banking product Source : Demica, Global Business Intelligence

11. Why has Liberty Global opted for a SCF solution? • Massively improve trade working capital • Strengthen supplier relationships • One-time implementation • Easily scalable • Standardization and broad reach • Various investor can fund

12. How the implementation of a SCF program works in practice • Preparation • Feasibility • Implementation • Go Live

13. Preparation “I need cash” 1 2 PO Invoice Invoice Suppliers Suppliers Buyer 4 5 6 3 SCF platform Suppliers requests early payment 1. Buyer send purchase order (business as usual) ING pays invoice amount minus a small fee Supplier send goods and invoice (business as usual) Buyer pays ING invoice amount at due date Buyer approves invoice on platform (This is new)

14. Comparables Suppliers Peers Feasibility SCF business case methodology 1 2 3 • Key supplier identification • DPO goals • Feasibility check • Segment suppliers into tiers based on annual spend and outstanding • Identification of key suppliers • Set up days payable outstanding (DPO) goals through various benchmark prisms • Analysis to prepare business case and set ambition for DPO • Rate arbitrage potential to calculate cost neutral term extension • Recommendation on terms • Segmentation/clusters Note: sample charts for illustration purpose

15. Implementation Phase 1. Concept Phase 2. Feasibility Phase 3. Implementation Phase 4. Live Go / No-Go Introduce SCF concept Business case based on spend file analysis Agree on supplier strategy Supplier Activation and Sales Involve key functions P2P process and Ops IT analysis Perfection Legal Docs Supplier Negotiation Accounting and Legal review IT connectivity Ops setup Customer Support • Establish a project manager responsible for internally managing this program for both Liberty Global and ING • Liberty Global establishs a project team consisting of: (i) Finance; (ii) Procurement; (iii) OPS & IT; and (iv) Legal • Schedule periodical update calls / meetings to ensure deliverables are being actively managed • If required, establish a workshop for the procurement team given that they will introduce the suppliers to the SCF program

16. Go Live • Establish strategy with Liberty Global on how to approach its key suppliers • Engage in discussions with Phase 1 suppliers • Give SCF demonstrations to parties requiring it • Potentially put sessions in place for suppliers to help them understand the operational and legal aspects of the SCF program • Process required administration Note: sample charts for illustration purpose

17. Lessons learned • Senior management needs to be aligned and involved. Hard targets need to be set • Establish a project team early in the process • Misconception that a SCF solution only will work on weaker rated suppliers • All companies have a push for cash • Credit risk management • Balance sheet optimization • Ultimately all SCF programs have some form of tailoring requirement

18. Disclaimer The information contained in this document is issued by ING Bank N.V. (“ING”) prior to any engagement by you in respect of any potential transaction to which it may refer (the “Transaction”). The information contained in this document is indicative only and does not constitute an offer to advise or act in any particular capacity in relation to the Transaction. ING’s involvement in the Transaction would be subject to due diligence, internal approvals and the terms and conditions of an engagement letter and related satisfactory documentation. The information contained in this document is given without any liability whatsoever to ING, and is not intended, where applicable, to constitute legal, accounting or tax advice. No representation or warranty, express or implied, is made by ING as to the accuracy, completeness or thoroughness of the content of this document. You should consult with your own legal, accounting and tax advisers, where applicable, as to the information contained herein.