item iii.1 profiling methodology - europa list of subsidiaries: an extract to be compared with the...
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Eurostat
Item III.1
Profiling methodologyD. FRANCOZ
Eurostat
ESTP Course
How to compile statistics on global enterprises
Eurostat
A little bit of terminology and acronyms
• GEG: global enterprise group, also known as
�MNE: MultiNational Enterprise group
• UCI: Ultimate Controlling Institutional Unit, aka
�GDC: Global Decision Center
• GEN: Global ENterprise
• TEN: Truncated Enterprise
• NSI: National Statistical Institute
• UCI NSI: main profiler
• Partnering NSI: country which has subsidiaries in the
profiled GEG, but not the UCI
Before to start
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What is profiling
• Profiling is a method
�which analyses the legal – operational and –
accounting structure of an enterprise group
� in order to establish enterprise units within that group
(and their links to legal units)
� and explores the most efficient structures for the
collection of statistical data.
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A need for looking at the whole elephant
Why to profile
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Why to profile
• Need to better take into account the globalisation of the economy
�The GEGs organise themselves at the global level
� The statistical representation of the GEGs may be different from the GEG’s own vision
� National statistics don't take properly into account this global dimension
�Need to improve the consistency of business statistics in
the EU
� Currently, practices differ from one country to another one
� In most countries, the legal unit is used for the enterprise as statistical unit
�To take into account the global dimension may change the
statistics and the economic analysis
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Why to profile
• Need to better take into account the globalisation of the economy
�To take into account the global dimension may change the
national statistics and the economic analysis
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Why to profile
• European Profiling will reconcile
�Global vision of the groups on their activity
�National needs to observe economic activity
• European Profiling is the only way to properly delineate "enterprises" in multinational and complex EG. �describe consistently the same GEG in all EU+EFTA countries
�Ensure consistency of treatment between countries
�Allow producing statistics at different geographical levels
� Fulfil both needs of national statistics and statistics on globalisation
� support efficient data collection in SBS, FATS, FDI & if possible in STS
Eurostat
The profiling project
• Proposes a top down approach to define the new
enterprises at two levels:
� The global enterprises (GEN) defined regardless of the
geographic dimension
� The truncated enterprises (TEN): the national parts of
the GEN
� GEN and TEN delineated in terms of legal units
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Profiling: A collaborative
process1-With the Group
2-Within NSI: between
profilers and Business
statisticians3-Between profilers in
different NSIs
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• Centrally defining “enterprises” in the frame of
multinational enterprise groups (GEG)� Not only delineate the enterprises but also ensure that the enterprises
defined are suitable for data collection and follow up
� The NSI of the UCI has the responsibility of defining the GENs and TENs
� The “partnering” NSIs have the responsibility to confirm the TENs in
their country
� In both cases: discussion with statistical users is essential
• The main process steps are:� Desk profiling (UCI NSI)
� Contact with the GEG (UCI NSI)
� Assess the UCI proposal (Partnering NSIs)
European Profiling
consists in
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2 types of profiling
• Intensive profiling
� For the largest and most complex GEG
�600 GEGs in the target
• Light profiling
� For the less complex GEG but still large enough
�1100 GEGs in the target
• Differences between intensive and light profiling
� Same desk activity
� Contact with the GEG not mandatory in light profiling
� Partnering exercise not mandatory, but highly
recommended
How to profile
Eurostat
The steps of
profiling
UCI: Desk research1st delineation of
GENs and TENs
Identify GEG
for profiling
Contact the
GEG
Visit GEG,Obtain perimeter,
employment and
turnover variables Partnering exerciseConfirmation of TENs
Agreement on TENs
and GENsEnd of the profiling
process
UCI: Preparing for partnering
exercise2d delineation of GENs and TENs
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The tools for profiling
• Current templates:
• In the future: an interactive tool (the Interactive
Profiling Tool)
Detailed
information
per legal units
All about
the profiling
process
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The steps for profiling
• Selection of the GEGs to be profiled in the EGR�Target population: the 600 largest and most complex
GEG in the EU
• Preparation, identification and defining at the global group level centrally by the NSI of the UCI�Defining the UCI, that determines the responsibility for
the profiling of the GEG� Theoretically already done in the EGR
� Check the EGR information
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• Desk preparation: �Collect information on the legal structure, using EGR data
�determine the countries in which the GEG operates, and so determine the NSIs involved (partnering NSIs)
� collect information on the operational structure of the GEG, using the annual reports and information at GEG websites
�Collect the GEG information that is already available at the NSIs (e.g. from surveys)
• Derive and classify GENs at the global level as a proposal ( including identification)�Analyse the operational structure of the GEG
�Prepare a proposal for the GEN structure
� List the legal units for each GEN
The steps for profiling
Eurostat
• Contact and visit the GEG
� To confirm the global perimeter of the GEG, the GENs and
their delineation
� perimeter of the GEG (consolidation perimeter or list of the controlled
affiliates)
� Number and name of GENs and TENs (IFRS 8 as a starting point)
� To collect data on the GENs and TENs (check the ability to
produce consistent data at these levels)
� Ability for the GEG to produce at GEN/TEN level the minimum set of
variables (employment, turnover, NACE)
� Ability to produce SBS variables (SBS are main providers of NA).
� Ability to produce other variables such as STS.
� Special attention to O-FATS information collected at the GEG level on
“country x Nace CODE”, a concept close to “enterprises” in most cases
The steps for profiling
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• Contact and visit the GEG
�GEG requests
� they know better financial and accounting data than any other
� they ask for a priority list and for a common list of variables
� they ask for common questionnaires to all European countries
� When consolidation is centralised they prefer to provide consistent
information for each country at UCI level than at country level.
The steps for profiling
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• Derive and classify TENs at the national level (including
identification)
� List the legal units for each TEN
�Discuss the GENs and TENs with the statistical users
� Fill the templates that will be transmitted to the partnering
countries
� Inform the NSIs of EU-countries in which the GEG operates on
the draft profile and ask for comments
�Pass the TENs (and the lists of legal units) to the relevant NSIs
for use as supplied in the national business register and for
data collection.
The steps for profiling
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• Partnering NSIs confirm the TEN
� receive proposed TENs (and links with leUs) from the
leader NSI
� validate them through discussion with statistical users
� existence,
� Contents in terms of LeUs,
� suitability for data collection,
� organisation of data collection (which unit to follow?)
� agreement from the national GEG managers
� accept or re-discuss TENs with the UCI NSI
� Feedback process between the partnering and the UCI NSI until an
agreement is reached
The steps for profiling
Eurostat
Variables to be collected
• For the GENs and TENs
�NACE
�Employment
�Turnover
�Variables in the BR regulation
�mandatory
• In addition: core variables
�Variables of the SBS regulation, annex1
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Main output of each step
desk
profiling contact with the group
partnering exercise
GEN GENs delineation in terms of
legal units X X
activity code X X
employment X X
turnover X X Other core variables (operating surplus and investments)
X X
Quality of the legal units X
Identification of new legal units
X
TEN
TENs delineation X X X activity code X X X
employment X X X
turnover X X X other core variables X X
Identification of new legal units
X
Quality of the legal units X changes in the delineation of the TEN
X X
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Sources of information
GEG GENs TENs Legal units
BR data
UCI,
Partnering
UCI,
Partnering
SBS data (surveys or admin data)
UCI,
Partnering
OFATS data UCI
other national data available (STS,
…)
UCI,
Partnering
GEG annual report or web site UCI UCI
GEG visit UCI UCI
OFATS data is a valuable source of information for profiling and can be used
as the source of turnover, employment and NACE to populate TENs' variables
• OFATS data supplied at the TEN level can be used alongside published
annual accounts to validate national data.
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Organisation of data
collection
• Organisation inside the NSI
� May differ from one NSI to another
� Profiling together with BR and EGR
� Profiling together with SBS
� Profiling independent from both
� In small countries: multi-disciplinary teams (BR, SBS, STS, FATS)
working part-time on profiling
� In any case, need for a good coordination between all actors
– Efficiently update EGR with profiling information– Efficiently collect data for SBS (FATS) purposes
Eurostat
• Different ways of collecting data for SBS purposes:
� Decentralised
� The UCI NSI collects only the minimum set of data for GEN and TEN
� National collection for SBS:
– By specific collection from TENs or GEG's national representative– By consolidation of existing information (surveys or use of
administrative data)
� Fully centralised
� By the UCI NSI for all the partnering countries
� On request of the GEG
� Requires an agreement with the GEG
� Requires a good coordination between involved countries
Organisation of data
collection
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Light vs. Intensive
profiling
Intensive profiling
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Light vs. Intensive
profiling
Light profiling
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Conditions for light
profiling
• Availability of the mandatory information of the
following documents:
�Consolidated annual accounts
� With segment information by activity and country
� With the delineation of segments in terms of legal units
�Answer to the O-FATS survey
� That allows to delineate the GENs and TENs
� That allows to derive economic information on GEN (and TEN)
�These two sources are complementary.
• If mandatory information cannot be completed
� contact the GEG to complete the profiling. In that case, it will
become an intensively profiled GEG
� If the GEG is small enough, convert to automatic procedure
Eurostat
IPT: a tool to make
coordination easier
• IPT: Interactive Profiling Tool
�Allow profiling teams to smoothly exchange information
during the profiling process, but respecting the
confidentiality rules in force concerning exchanges of
individual data.
�Centralise information on the GEN and the TEN for the
group under profiling process.
�Release information on profiling to the users
�Be the central place of guidelines, metadata, templates
and other documents related to International profiling.
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IPT: a tool to make
coordination easier
• What could be done with the ITP
�Exchange information between the EGR and the IPT (direct
transfer from EGR to IPT)
�Exchange information between the national environment
and the IPT (batch procedure)
�Modify information online for authorised members
(profiling teams of the UCI or partnering countries)
�Read information on a given group
�Add new legal units
� Send notifications to the partnering or UCI countries during
the profiling process (this should be done automatically
according to some trigger signal)
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Example 1: SIEMENS
• Initial operating segments
• Geographical
organisation
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• Going in the detail
of segments
Split of the "energy" segment
Example 1: SIEMENS
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• Split of the segments
� Industry segment
� Energy segment
� Infrastructures &
Cities
Example 1: SIEMENS
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Example 1: SIEMENS
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• Employment figures
Example 1: SIEMENS
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• List of subsidiaries: an extract
To be compared with the EGR list
Example 1: SIEMENS
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First step: desk profiling
• Several options for GEN
�Consider only the 4 operational segments (Industry, Energy,
Healthcare and Infrastructures and cities) and integrate the
activity of the 3 cross-sector segments into them
� Requires information to split the activity of the cross sector
businesses
� Siemens publishes information for these three cross sector
businesses, but information is very poor for equity investments
Example 1: SIEMENS
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First step: desk profiling
� Split the Industry, Energy and Infrastructure segments into
several global enterprises
� Segment information presented in the annual report detailed by
sub-segments
� Requires checking the autonomy of enterprises defined in the
frame of the segments
�Consider 6 global enterprises in line with the segments
� exclude equity investments
� Consider transversal activities in a segment "others"
• Need for a contact with the group
Example 1: SIEMENS
Eurostat
A possible operational structure:
GEN
NACE 3Digit
employmentturnover (external
revenue) in M€
Energy 351 86,000 27,302
Healthcare 266 51,000 13,600
Industry automation 27105,000
9,563
Drive technologies 281 9,640
Instrastructures&Cities 302 89,000 16,731
financial services 649 3,000 859
others 701 36,000 1,031
Example 1: SIEMENS
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French
organisation
Example 1: SIEMENS
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French
organisation
Example 1: SIEMENS
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French
organisation
Example 1: SIEMENS
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French
organisation
Example 1: SIEMENS
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• Operational structure:
� a national restriction of the GENs
• Legal structure:
�Transversal to the economic structure
� One sub-holding which controls the most part of LeUs
� One LeU with activity in the 5 GENs
– Should be split into the different TENs� 6 LeU which directly depend from SIEMENS AG
• GEN structure should be suitable for national
purposes
• Way to collect information on TENs:
� See if SIEMENS SAS or SIEMENS SA could report for all the
TENs
Example 1: SIEMENS
Eurostat
• Suitable for light profiling:
�Medium size group: 3510 employees
�Active in 3 other EU countries
�Quasi monoactive
�Detailed segmental information incl. by country
�Detailed list of subsidiaries
�Possibility to delineate the global enterprises in terms of
legal units
Example 2: BRICORAMA
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Legal structure of the GEG
Example 2:
BRICORAMA
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Detailed list of subsidiaries
Example 2: BRICORAMA
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• Intra-group flows
Example 2: BRICORAMA
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Income statement
by TEN
Example 2:
BRICORAMA
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Balance sheet by TEN: assets
Example 2: BRICORAMA
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Balance sheet by TEN: liabilities
Example 2: BRICORAMA
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Conclusion:
• 1 GEN
�NACE: 475 "Retail trade of other household equipment in
specialised stores"
�Additional activity: windmill (NACE:3411: production of
electricity)
� Currently side activity
• 5 TENs
� France, Belgium, Netherlands, Spain, Hong-Kong (small
activity)
• Central collection of data at the UCI level is possible
Example 2: BRICORAMA
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EGR and profiling: two different visions of the same "object"
• EGR: legal structure of the global enterprise group
• Profiling: economic structure of the global enterprise
group
Profiling and EGR
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Interactions between the EGR and the profiling project
• The EGR: a fundament for profiling
�EGR: starting point of profiling� Profiling population selected in the EGR
� UCI in EGR defines the profiling country
� EGR perimeter starting point for profiling
• Profiling: a fundament for EGR quality
� Global economic information on the GEG
� Delineation of GEN and TEN in terms of legal units and economic information on GEN and TEN
� Updated information on legal units
Profiling and EGR
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Principles for a coordinated view between EGR and profiling
• The perimeter of the groups treated in the IPT should
be identical in the EGR and the IPT database at the
beginning of the profiling process and at the end
(when the country of the UCI considers the profiling
to be achieved).
�The EGR should be updated by the IPT data (set of
information to be defined).
• The common units in the EGR and on the IPT should
be identified with to the same ID number
� It could be the LEID number for the legal unit and the
group ID number for the group.
Profiling and EGR
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Profiling and FATS
• FATS among the main statistical users for profiling (with SBS)
• Analytically:
� Same statistical unit "enterprise" followed in FATS and defined
through profiling
� TEN are defined not only in EU, but worldwide
� TEN allow to produce information by country and activity
• Operationnally
� FATS can help profiling
� To delineate the GENs and TENs: especially for light profiling�
complete the annual report information to produce data by country and
activity
�Profiling can collect information for FATS purposes
� Information collected on TENs (turnover, employment, NACE) also
available for non-EU countries
Eurostat
Thank you for your attention
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Annex: core
variables
1- Strategic need: the main aggregates of the P&L by nature:needed as proxies of the GDP (productive analysis and NA providing)
P & L by nature
(not by function) (consolidated for the GE or the TE)
Content of the boxes
1st evaluation of VA ( by the production
side )
=
“Production” = Proxy of the “Revenue” variable?
+ pure T-O
+ other activity products
+- � produced inventories
T-O (sales to 3rd parties) net of granted discounts & rebates (IAS18) if possible split between sales of merchandise and other sales. Newly produced inventories and fixed assets (incl grants on fixed assets)
+- Other products and expenses Patent, franchise & brand royalties etc ; more useful if split between products and charges.
- Used purchases
- Other external expenses
Purchases of goods (raw material, equipments and parts etc), services and merchandises, net of � in inventories of received discounts and rebates +anciliary costs on purchases (CIF etc)
2nd evaluation of VA ( by the components)
=
+ Employees wages and salaries Including bonuses and share of results + Taxes on products and indirect taxes
+Depreciations Physical and value change
= Current operating result (optional for the MNEs)
Close to net operating result of the NA
+- Other current products and charge Other current non recurring products & charges (e.g sellings of assets, depreciations of goodwill)
Operational result
Eurostat
Annex: core
variables
2- Completion of the P&L: useful to check consistency between operating and net results
Financial result
+ Treasury products Net costs of net financial debt - Cost of debt
+- Other financial products and costs - Taxes costs Taxes on result + deferred taxes + participations
des salariés aux résultats +- Net result quota-share of minority owning of non-consolidated interests
When the MNE has a real influence on decisions
+- Pre-tax net result of: . non-continued activities
. ceased or being sold activities
IFRS 5
Net result
- Minority interests
Part of the Net result accruing to minority holders, for globally consolidated affiliates
Net result, share of the group
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Annex: core
variables
3- Identification, through the Financial Assessment, of the « investment »
ASSETS
Content of the boxes
Non floating assets
Tangible assets
Equipment, machines etc Activity-used buildings Buildings for hire Biological non current assets (forest, orchard, cattle, etc)
Intangible assets
Goodwill Other intangible (patents, brands, etc)
Financial assets
Equity share in associate enterprises (Equity share in TEs of other countries) Other disposable (sellable) financial assets Non current assets, disposable to be sold ??
Floating assets
Inventories Goods and merchandise Biological current assets (crops, vegetable and fruits, animal products, etc)
Financial floating assets Credits to clients Other financial current assets Cash and similar
Total Assets