pierre teillet coordinator, a eurostat project, a partnership of: 30/11/2011 essnet on profiling:...

30/11/2011

Pierre TeilletCoordinator,

a Eurostat project, a partnership of:

ESSnet on profiling: developping a method to treat Complex Enterprises

Rome joint Workshop

29-30/11 & 01/12 2011

ROME joint Workshop2

ESSnet on « profiling large and complex MNEs »

The present situation of enterprise slide 3 to 5

Objectives and main features of profiling slide 6

Change in the approachslides 7 to 13

« Process » changes incoming slides 14 and 15

Future work: tests, tests, tests slide 16

Consultation and dissemination slide 17 Annex slides 12 to 15

29-30/11 & 01/12 2011



present situation of the statistical unit « enterprises » (1)

> they are theoretically included in the EGR> supposed to be largely used, e.g in Structural Business Statistics > defined as

- the smallest combination of legal units

- that is an organisational unit- producing goods and services (for the market)- … with a certain degree of autonomy in decision

making

- especially for the allocation of its current resources

29-30/11 & 01/12 2011




> but created nationally without international comparability:

- the sum of the parts usually differs from the total- the required level is not specified (national, European or global?)- standards not consistent for data collection

> with consequences of the increasing “globalisation”: - a deepening gap between managerial structure and legal units

- amplifying problems in statistics (intra group flows, M-X port, split of VA among countries, R&D, ancillary activities etc)

> so that national as well as European statistics are loosing their accuracy

29-30/11 & 01/12 2011




> national and international studies for a long time:- “enterprise”-type units operational for years in NL and UK

- decision to change soon in France (2011/2012 program), etc- “international 2005 study” on MNEs (CN, UK, NL, FR, IT, etc) which results are known as “seeing the whole elephant”:

> leading to MEETS decision to work on better accuracy and consistency of: - statistical units for national collection of data- statistical European aggregates

> embedded in the ESSnet Profiling, part of the EGR program, towards an economic definition of enterprises.

29-30/11 & 01/12 2011



the main objectives of the ESSnet Profiling project

“To see more clearly the whole elephant” (and its different parts), the ESSnet has been assigned to prepare, for the future, to:

> describe consistently the same MultiNational Enterprises (MNEs) in all the EU countries

=> “enterprises” linked between countries through the EGR

> support efficient data collection in SBS, FATS, FDI and if possible in STS

=> a system of statistical units for all business statistics

> for direct dissemination and indirect use (National accounts etc) => most statistical productions concerned

29-30/11 & 01/12 2011



change in the approach (1): operational & accounts analysis

Profiling is a method: > to analyse the

legal – operational and – accounting > structure of an enterprise group > in order to

- establish the statistical units within that group and - their links and - the most efficient structures

> for the collection of statistical data

Analysis of business structures is used instead of pre-existent units (admin or legal background); the SUs must have collection capabilities

29-30/11 & 01/12 2011



change in the approach: (2): negociation with MNEs

Profiling :

> uses the MNEs information system for accounting consolidation> takes the (organisational or management) operating segment as a

starting point for delineation of economic “enterprises” (IFRS8), but can differ at the end

> with the result that an enterprise is (can be): - a single legal unit (if independant)

- an enterprise group (i.e a set of legal unit under common control)- a part of an enterprise group.

> as “enterprises” are organisational units, their autonomy (in decision making for allocation of their current resources) is an essential characteristic.

Delineation, list, names of “enterprises” built with & agreed by the MNEs.

29-30/11 & 01/12 2011



change in the approach (3): Intra-ESS cooperation to list the SUs

Profiling proposes to:> drop the previous “smallest combination of legal units” which is usually:

- national - bottom-up - usually non autonomous

as basis of the enterprise;

> use “a part of an enterprise group” called “global enterprise (GEN)” which is usually:

- top-down - multinational - compulsarily autonomous

> complement it by “truncated enterprises” as national parts of GENs.> and include “enterprise” in a system of statistical units

From bottom-up/national to top-down/global analysis

29-30/11 & 01/12 2011



change in the approach (4):

Economic/statistical world (global)

Global Enterprise group

Legal Unit

Legal/administrative world (global)

Local (legal) unit

Global Enterprise

Local unit

Economic/statistical world (sub-global)

Truncated Enterprise group

Truncated Enterprise

Local unit

Legal/administrative world (sub-global)

Legal or operational unit (sub global)

Local unit legal or operational

SPE SPE

the system of Statistical Units

29-30/11 & 01/12 2011



change in the approach(5): testing « ability »

> For the majority of EU statisticians, a large change to the usual way:- from surveying SUs (statistical units), predetermined in the BR,- to a dialog with MNEs,- using their common language: the standardised business accounting

> Leads to necessary pre-checkings, from BR staff: - are the priority variables we need available in the MNE information system at the level of the “enterprises”?- if yes, are they economically significant?

> The checks are to be made first at EU level (then at national level): - are there theoretically consistent data all over the EU? - will we be able to gather them consistently from the truncated national parts of the “enterprises”?

Is the « enterprise » able to produce structural statistical data ?

29-30/11 & 01/12 2011



change in the approach (6): testing « ability » (continued)

> What are the priority variables to check, (statisticians view)?- the usual BR variables (to identify, assess the continuity and link different kind of units, split the populations and stratify); - the SBS variables; as such and as SBS are main providers of NA; the NA themselves; - special attention to outward-FATS statistics, that operate at the MNE level on “enterprises”

> How can the MNEs work on checkings (the business view)? - they ask for a priority list;- they want this list to be common to all European countries; - they ask for common questionnaires for priority variables; - they know better accounting data than any other.

=> priority to components of value added (in an accounting shape), the “core variables”

Is the « enterprise » able to produce structural statistical data ?

29-30/11 & 01/12 2011



change in the approach (7): the common language to use

Profiling proposes to use (largely) the IFRS (the EU-GAAP): knowing their pros and cons:

Pros:- Widespread and the only “administrative” “ EU standards- Good standardisation of elementary flows and stocks- Compulsory for stock-traded and bond-traded groups - Include “operational segments” (with usually displayed turn-over, operational

results and employment figures) Cons:

- Consolidated data at world level (needs extra data if intra-group flows) - Sometimes at levels lower than UCI - No standardised publication tables - Still uncertain stability for operational segments (as compared to legal units ?) - “operational segments” can be geographical splits not segmental ones

talking the business only common language: the « IFRS »

29-30/11 & 01/12 2011



Process changes incoming: networking and platforming (1)

> For the NSI of the UCI country of a MNE, the tasks are: No more registering SUs (statistical units) directly from admin or legal world, but:

- check the global perimeter of the MNE , - visit the MNE,- propose GENs (global enterprises in agreement with the MNE) and TENs, - link the GENs with legal units (can be “m to n” links), - test at EU (then at world) level the ability to produce adequate statistics,- send the resulting TENs to partnering NSIs and discuss with them,

> For the partnering NSIs: - receive proposed TENs (and links with legal units) from the leader NSI- validate them (existence, ability, agreement from the national managers) - accept or re-discuss them with the leader NSI

> Each NSI plays alternatively the 2 roles

« networking » the global and national statistical units

29-30/11 & 01/12 2011



Process changes incoming: networking and platforming (2)

> For the profilers, a WEB platform (mid-2012) will support the process : - maintaining the global perimeter of the MNE (if updates),

- supporting the dialog UCI NSI / partnering NSIs,- recording the GENs, TENs, and their characteristics- recording the GENs / TENs links with Legal Units (can be “m to n” links), - recording the tested ability to produce adequate statistics,

> For the EGR, consistency & completion will be organised (end 2012-13): - all new LeU will be identified through the EGR ID service- all GENs will be introduced by the UCI country of the MNE- all TENs will be introduced by its country

> Each NSI is potentially a profiler and an EGR contributor : - but the services can be, or not, different

> Enterprises are EGR SUs

Profiling web platform and links with the EGR

29-30/11 & 01/12 2011



Future work: manual, guidelines … and tests, tests, tests !

> manual, guidelines, etc - manual: version 1 at the end of 2011; final version end of 2013

- guidelines: version 1 March 2012; final version end of 2013 - material for training: initial June 2012; final February 2013- organisational and financial models for profiling: June 2013

> Tests, tests, tests ! : - partners profiling tests: 20 MNEs in 2011; 40 in 2012-13 + 40 “light”- 5/6 new testing countries in 2012- all other ESS countries invited as “piloting” countries in 2013

> Implementation in the future operational process (from 2014): - a target population of 500 MNEs for “complete profiling” - a target to be defined for “light profiling”

Partnering, testing, piloting … and implementation

29-30/11 & 01/12 2011



consultation and dissemination

Our project lasts until the end of 2013, now mainly on testing

We are in constant coordination with:- the EGR ESSnet- the Consistency ESSnet- the EU studies on globalisation (e.g on value chains) and on MNEs- the Eurostat groups on BR, SBS, FATS, NA etc - other interested countries (US, Canada, Australia, China, …)- international bodies such as OECD, UNECE, etc

We will appreciate your comments:[email protected]

---------------------------------------------------------------------------------------------------

Thank you for your attention

29-30/11 & 01/12 2011


ESSnet on « profiling large and complex MNEs » AnnexCore variables: the highest priority to test ability for SBS & NA:

P & L by nature

(not by function) (consolidated for the GE or the TE)

Content of the boxes

“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.

1st evaluation of VA ( by the production

side )

=

- 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)

+ Employees wages and salaries Including bonuses and share of results + Taxes on products and indirect taxes

+Depreciations Physical and value change

2nd evaluation of VA ( by the components)

=

= 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

francdu

Je ne sais pas si cela va intéresser les gens du BR WG.Par contre, je serais d'avis d'ajouter une slide sur la suite des opérations:- rédiger une note proposant un data model pour les entreprises à l'EGR- début de la phase de test et rédaction de guidelines puis, en année 3 et 4 diffusion de la méthode aux EM pour qu'ils puissent mettre en oeuvre le profilage dans leur pays.

29-30/11 & 01/12 2011


ESSnet on « profiling large and complex MNEs » Annex Core variables: reconciliation with the P&L

+ Treasury products - Cost of debt

Financial result

+- Other financial products and costs

Net costs of net financial debt

- 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

francdu


29-30/11 & 01/12 2011


ESSnet on « profiling large and complex MNEs » AnnexCore variables: where to find the right variables in the financial statement?

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)

Non floating assets

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 ??

Inventories Goods and merchandise Biological current assets (crops, vegetable and fruits, animal products, etc)

Floating assets

Financial floating assets Credits to clients Other financial current assets Cash and similar

Total Assets

francdu


29-30/11 & 01/12 2011


ESSnet on « profiling large and complex MNEs » AnnexCore variables: what if a complete balance-sheet for the enterprise?

LIABILITIES


Shareholders funds

Shareholders funds

+ Equities + Other non distributed reserve funds + Non distributed net results + Value of non current assets disposable for sale (directly accounted for in the shareholders funds) = Total of shareholders funds - Minority shareholding = Shareholders funds, part of the group

Non current liabilities

Long term debt Deferred taxes Long term reserves

Current liabilities

Supplyers credit Short term financial debt Short term part f long term debt Exigible taxes Short term reserves Liabilities directly linked to non current assets disposable for sale

TOTAL LIABILITIES

francdu


pierre teillet coordinator, a eurostat project, a partnership of: 30/11/2011 essnet on profiling:...

Documents

profiling large

essnet profiling project

complex mnes change

statistical unit enterprises

complex mnes present

multinational enterprises

mnes cn

accuracy slide