Item III.1 Profiling methodology D. FRANCOZ Eurostat
ESTP Course How to compile statistics on global enterprises Item
III.1Profiling methodology D. FRANCOZ Eurostat A little bit of
terminology and acronyms
Before to start 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 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. A need
for looking at the whole elephant
Why to profile A need for looking at the whole elephant 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
GEGs 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 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 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 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 A collaborative process
Profiling: A collaborative process 1-With the Group 2-Within NSI:
between profilers and Business statisticians 3-Between profilersin
different NSIs European Profiling consists in
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) How to profile 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
The steps of profiling UCI: Preparing for partnering exercise
2d delineation of GENs and TENs Contact the GEG Identify GEG for
profiling Visit GEG, Obtain perimeter, employment and turnover
variables Partnering exercise Confirmation of TENs UCI: Desk
research 1st delineation of GENs and TENs Agreement on TENs and
GENs End of the profiling process The tools for profiling
Detailed information per legal units Current templates: In the
future: an interactive tool (the Interactive Profiling Tool) All
about the profiling process 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 The steps for
profiling
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
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
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
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
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 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 Main output of each step Sources of
information
GEG GENs TENs Legal units BR data UCI, Partnering SBS data (surveys
or admin data) OFATS data UCI other national data available (STS, )
GEG annual report or web site GEG visit 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. 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 Organisation of
data collection
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 Light vs. Intensive
profiling Light vs. Intensive profiling
Light profiling 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 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.
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) Example 1: SIEMENS Initial operating segments
Geographical
organisation Example 1: SIEMENS Going in the detail of
segments
Split of the "energy" segment Example 1: SIEMENS Split of the
segments Energy segment
Industry segment Energy segment Infrastructures & Cities
Example 1: SIEMENS Example 1: SIEMENS Employment figures Example 1:
SIEMENS To be compared with the EGR list
List of subsidiaries: an extract First step: desk profiling
Example 1: SIEMENS 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
First step: desk profiling
Example 1: SIEMENS 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
A possible operational structure:
Example 1: SIEMENS A possible operational structure: GEN NACE
3Digit employment turnover (external revenue) in M Energy 351
86,000 27,302 Healthcare 266 51,000 13,600 Industry automation 27
105,000 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 French
organisation Example 1: SIEMENS French organisation Example 1:
SIEMENS French organisation Example 1: SIEMENS French organisation
Operational structure: Legal structure:
Example 1: SIEMENS 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
Suitable for light profiling:
Example 2: BRICORAMA 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 Legal
structure of the GEG Example 2: BRICORAMA Detailed list of
subsidiaries Example 2: BRICORAMA Intra-group flows Example 2:
BRICORAMA Income statement by TEN Example 2: BRICORAMA Balance
sheet by TEN: assets Example 2: BRICORAMA Balance sheet by TEN:
liabilities Conclusion: Example 2: BRICORAMA 1 GEN 5 TENs
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 EGR and profiling: two
different visions of the same "object"
Profiling and EGR 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
Interactions between the EGR and the profiling project
Profiling and EGR 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 Principles for a coordinated view between EGR and
profiling
Profiling and EGR 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 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
Thank you for your attention 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) Annex:
core variables 2- Completion of the P&L: useful to check
consistency between operating and net results Annex: core variables
3- Identification, through the Financial Assessment, of the
investment