EUROPEAN NON-FINANCIAL LISTED GROUPS: ANALYSIS OF 2012 DATA
Members of the ERICA (European Records of IFRS Consolidated Accounts) WG
Manuel Ortega (chairman)
manuel.ortega@bde.es
Ilse Rubbrecht
Ilse.Rubbrecht@nbb.be
Banco de España
Banque Nationale de Belgique
Pilar Saura
pilar.saura@bde.es
Vincenzo Favale
vincenzo.favale@cervedgroup.com
Banco de España
Centrale dei Bilanci / Cerved Group
Riccardo Renzi
riccardo.renzi@bancaditalia.it
Ulrike Pfeiffer
ulrike.pfeiffer@bundesbank.de
Banca d’Italia
Deutsche Bundesbank
Ana Bárbara Pinto
apinto@bportugal.pt
Matthias Lörch
matthias.loerch@bundesbank.de
Banco de Portugal
Deutsche Bundesbank
Olga Lymperopoulou
olimperopoulou@bankofgreece.gr
Martina Hemsath
martina.hemsath@bundesbank.de
Bank of Greece
Deutsche Bundesbank
Claire Mangin
Claire.MANGIN-SOUBRET@banque-france.fr
Sabine Wukovits
Sabine.Wukovits@oenb.at
Banque de France
Oesterreichische Nationalbank
Lisa Schirmer
Lisa.SCHIRMER@acpr.banque-france.fr
Sébastien Pérez-Duarte
Sebastien.Perez_Duarte@ecb.int
Banque de France
European Central Bank
Saskia Vennix
Saskia.vennix@nbb.be
Bartek Czajka (observer)
bczajka@ifrs.org
Banque Nationale de Belgique
IASB
IMPORTANT INFORMATION ABOUT THE SOURCE USED (ERICA1 DATABASE)
The data used in this study are obtained from publicly available financial statements of European nonfinancial listed groups, having been treated manually, by CBSO statistics and accounting specialists, to
be fitted on a standard European format (ERICA format); this manual treatment involves, in some
cases, the interpretation of the original data, a constraint that readers of this document should bear in
mind.
The database does not represent the total population of European non-financial groups; nevertheless,
the coverage attained with ERICA (in the whole dataset of around 1.000 groups, as well as in ERICA+,
a subset of around 250 groups with extra accounting details) on the listed European groups is wellattuned to the situation and national composition of the stock markets. The analysis performed in this
document with both datasets of ERICA, with the limitation expressed in the previous paragraph,
provides a view of the position and performance of the listed non-financial European groups.
The opinions of the authors of this document do not necessarily reflect those of the national central
banks to which they belong or those of the ECCBSO.
All the graphs and tables presented in the document are from the same source (ECCBSO-ERICA
database), except for those cases where another is indicated.
1
ERICA (European Records of IFRS Consolidated Accounts) is a database of the European Committee of Central Balance Sheet Data Offices.
EUROPEAN NON-FINANCIAL LISTED GROUPS: ANALYSIS OF 2012 DATA
ERICA (European Records of IFRS Consolidated Accounts) WG
European Committee of Central Balance Sheet Data Offices (ECCBSO)
February 2014
CONTENTS
I
INTRODUCTION AND MAIN FINDINGS
5
II
PROFITABILITY, AFFECTED BY A DOUBLE DIP TREND
6
II.1
EBIT: IN A CRISIS ENVIRONMENT, THE OPERATIONAL SURPLUS, REPRESENTED BY EBIT,
DECLINED IN 2012
6
II.2
CASH FLOW FROM OPERATING ACTIVITY: DECREASE AFFECTING ALL SECTORS
7
II.3
PROFIT (LOSS) BEFORE TAX: ONE MORE YEAR OF REDUCTION IN THE GENERATION OF
BENEFITS
8
III
FINANCIAL STRUCTURE ANALYSIS
III.1
EQUITY: MODERATE INCREASE IN EQUITY BUT WEAKENING OF THE EQUITY RATIO
III.2
SLIGHT RISE IN CASH AND CASH EQUIVALENTS
9
9
10
III.3
FINANCIAL DEBT ROSE SLIGHTLY AND THE INDEBTEDNESS RATE REMAINED LARGELY
STABLE 12
IV
FAIR VALUE IMPACT ON FINANCIAL STATEMENTS
13
IV.1
POSITIVE IMPACT IN THE STATEMENT OF PROFIT OR LOSS AND NEGATIVE IMPACT IN
EQUITY 13
IV.1.1
Positive impact in the statement of profit or loss due to available-for-sale financial assets
13
IV.1.2
Negative impact on equity due to cash flow hedges
14
BOXES
Box 1 ERICA database: main characteristics and coverage
Box 2 Activities pursued by European non-financial listed groups in Europe: an analysis of their
diversification
ANNEXES (these annexes are only distributed in www.eccbso.org)
Statistical Annex 1
Statistical Annex 2
Statistical Annex 3
Statistical Annex 4
Statistical Annex 5
Statistical Annex 6
Statistical Annex 7
Structure of the balance sheet of European non-financial listed groups in 2012
Structure of the income statement of European non-financial listed groups in 2012
Statistical results on profitability in 2012
Statistical results on financial structure in 2011 and 2012
Statistical results on fair value data for total groups in 2012
Fair value impact on consolidated accounts and its comparison with stock indices
Multiple linear regression model
I
INTRODUCTION AND MAIN FINDINGS
The purpose of this study is to present, in a nutshell, the information available in the ERICA database
(European Records of IFRS Consolidated Accounts) for the listed non-financial groups of eight
participant countries on the main trends in their profitability, their financial structure and the impact of
fair value accounting on their equity and results. Two boxes, at the end of the document, provide some
insights about the good coverage of the database in reference to the listed non-financial European
groups of the participant countries, and its relatively high concentration in a sector of activity. In the
database ERICA, as well in the population of listed groups, the importance of French and German
groups, industry and, of course, the large groups (over 1.5 bn euros revenue) bias the aggregate
values observed. The main findings of the current study are:
1 Profitability affected by a double-dip trend that began in 2011 and has continued during 2012
- 2012 has once more been a year of reduction in the generation of income by the European
non-financial listed groups. Although revenue increased by 6% on average, due to the increase
in all sectors of activity, countries and sizes, EBIT, cash flow and profits declined in 2012. In
this context the European groups included in ERICA had to increase the use and rotation of
their assets, to compensate for the fall in their margins.
- With consolidated figures it is not possible to isolate the data and to know whether the
aforementioned increase in revenue is due to corporate growth or organic growth.
- The profits of the ERICA groups, totalling 258 billion euro in 2012, decreased by 8%.
2 Financial structure without significant changes
- The moderate increase detected in equity in 2012 (0.9%) has been based on developments
in the industry sector. These coincided with a slight decline in the equity ratio, although this
behaviour varies across sectors and sizes; the construction sector still posted a lower ratio
than all the other sectors.
- The slight rise in cash and cash equivalents was mainly based on the preference for liquidity
in the large groups, a sign of the heightened economic and financial uncertainty of the previous
years.
- The moderate increase in financial debt in 2012 (2.6%) was due to the behaviour of the
largest groups of the sample, although the weight of financial debt remained stable
3 Differential impact of fair value accounting on profit or loss (positive) and equity (negative) in 2012
- As in previous years the total amount of fair value impact was driven by large groups.
- In profit or loss, fair value accounting was mainly explained by reclassifications adjustments in
available-for-sale financial assets, and in equity it was associated with cash flow hedges.
- The positive impact on the statement of profit or loss was due to some groups from the
construction sector, and industry exerted an influence in respect of derivatives and the hedge
accounting policy of the automobile sector. In equity there was a negative impact related to the
interest rate, exchange rate and commodity hedging in all sectors of activity, except in
construction.
- The correlation analysis shows that, as in 2011, the groups did not use fair value to control
profit for the year 2012.
European non- financial listed groups: analysis of 2012
5
II
PROFITABILITY, TWO YEARS OF NEGATIVE RESULTS
II.1
EBIT: IN A CRISIS ENVIRONMENT, THE OPERATIONAL SURPLUS, REPRESENTED BY EBIT,
DECLINED IN 2012
The data available in ERICA for 2006-2012, analysed in previous versions of this document, reflects a double
dip in profitability: from the sharp decline in 2009, the intense recovery in 2010 and the subsequent
deterioration in 2011, 2012 has once more been a year of reduction in the generation of income by the
European non-financial listed groups. The increase observed in 2012 in revenue, standing at 6%, was greatly
influenced by the good performance in industry and energy groups; in any event, all countries, sectors and
sizes registered increases in their revenue. It has to be highlighted that this increase cannot be readily analysed
because it is difficult to split this behaviour into two components: organic growth of groups keeping their
perimeter of consolidation, and corporate growth, i.e. the increase in revenue that merely reflects the
acquisition in 2012 of new groups or subsidiaries that have been integrated in the year in the perimeter of
consolidation. Significantly, EBIT and profit/losses before tax, in contrast to revenue, have performed poorly in
2012, with a deterioration in all sectors of activity, countries and sizes; the only exception is small groups, which
also reflected an increase in the indicators of income.
EBIT ratios: the poor performance continued in 2012, affecting the majority of sectors of activity
and sizes. To compensate, on average, groups had to increase the use of their assets
The profitability analysis based on the study of the ratio EBIT/total assets can be improved by splitting it into
two components: an indicator of margins (EBIT/Revenue) and one of rotation (Revenue/Total assets). Charts
II.1.1 and II.1.2 facilitate the interpretation of the behaviour of the first two variables, profitability and margins, in
the year 2012 (for more details, see the full statistical annex available on the ECCBSO webpage, at
http://www.eccbso.org). In 2012 the profitability of listed European groups fell slightly (-0.4 points in terms of the
weighted average and -0.2 points in terms of the median), affecting in practice all sectors of activity and sizes.
This was true for the weighted average, and almost so in terms of the median (which represents the behaviour
of the population, not affected by the weight of a precise and singular group): only small groups and those
dedicated to services had a minor increase. The decrease observed in the median data was due to a reduction
in the margins and in the rotation (-0.2 and -0.3 points, respectively). But the analysis of the weighted average
paints a more negative picture: the decrease in profitability (in 2012 the drop was 0.4 points, as said, from 5.7%
to 5.3%) was much affected by the evolution of the margins (measured by the ratio EBIT/Revenue), that
declined by 1 point (from 8.7% to 7.7%); this fall rises to 2 points in the construction and service sectors (see
chart II.1.2)
In this context, the European Groups had to boost the rotation of their assets (i.e. their use), with a 3-points
increase for the total sample, and higher improvements in services (the ratio grew 9 points), construction (5)
and industry (a 3-points increase); only the energy sector groups had a deterioration in their ratio
Revenue/Total assets.
6
European non- financial listed groups: analysis of 2012
CHART II.1.1
EBIT / ASSETS TOTAL
WEIGHTED AVERAGE (%)
%
1,9
1,2
2
0
Constru- Services
ction
2011
Total
Small
Medium
Large
Industry
Energy
Constru- Services
ction
2011
2012
Total
Small
Medium
2012
CHART II.1.2
EBIT / REVENUE
WEIGHTED AVERAGE (%)
MEDIAN (%)
%
15
7,6
6,7
4,7
4,6
6,0
5,8
5,6
5,7
4,1
5,3
8,0
7,8
6,2
3,3
4,5
6,0
8,7
9,8
8,8
8,7
7,7
9
6
3
3
0
0
Industry
Energy
2011
II.2
%
12
7,7
8,6
4,5
6,5
6,9
9,2
8,8
8,0
8,7
12
6
Large
7,4
Energy
5,9
Industry
9
6,2
2
0
15
5,7
6,0
5,2
3,7
3,4
5,0
4,8
4,6
4,5
3,2
2,8
4,4
4
2,8
4
4,2
6,1
5,7
5,8
5,4
5,4
4,9
5,3
5,4
6
3,6
4,9
5,0
6
5,7
8
4,8
6,4
8
10
6,1
10
MEDIAN (%)
%
Constru- Services
ction
2012
Total
Small
Medium
Large
Industry
Energy
2011
Constru- Services
ction
Total
Small
Medium
Large
2012
CASH FLOW FROM OPERATING ACTIVITY: DECREASE AFFECTING ALL SECTORS
The developments in cash flow from operating activity were connected to some extent in 2012 to the downward
trend in EBIT; in aggregate terms the decrease (-4%) affected all sectors of activity and, by size, medium and
large groups. Nevertheless, small groups showed an increase in this variable, which affects the statistical
distribution in terms of ratios. Effectively, chart II.2, which shows the relationship of cash flow from operating
activity to revenue, reports on average a decrease in the ratio for the total (from 10.6% in 2011 to 9.6% in
2012), and for all sectors of activity and large groups. Meanwhile, this aggregate ratio detects an increase in
small and medium groups, and subsequently, the median of the ratio is increasing in nearly all sectors and
sizes (except in energy, because the content of this sector of activity in terms of small and medium groups is
low).
European non- financial listed groups: analysis of 2012
7
CHART II.2
CASH FLOW OPERATING ACTIVITIES / REVENUE
WEIGHTED AVERAGE (%)
%
8,7
8,7
7,3
7,9
6,8
7,3
7,3
7,8
5,4
4
0
6,6
4
5,4
8
6,0
8
6,8
7,5
9,5
11,6
10,6
10,7
10,5
11,4
10,6
9,6
12
7,7
8,0
16
7,6
12,2
9,1
8,3
12
11,2
16
12,8
15,9
20
14,4
20
MEDIAN (%)
%
0
Industry
Energy
Constru- Services
ction
2011
II.3
Total
Small
Medium
Large
Industry
Energy
Constru- Services
ction
2011
2012
Total
Small
Medium
Large
2012
PROFIT (LOSS) BEFORE TAX: ANOTHER YEAR OF REDUCTION IN THE GENERATION OF
PROFIT
The level of aggregate profits generated by the listed non-financial European groups is quite impressive,
reaching 258 billion euro. 96% of these surpluses are created by large groups and 63% in the industry. In
relative terms (Profits/Equity ratio) the power to create profit remains quite vigorous, standing at 13.8% for the
aggregate sample. Nevertheless, in 2012, once more, the intensity of the crisis affected the European groups,
reducing their profits (by around 8%), with this behaviour affecting all sectors of activity. In relative terms, the
Profits/Equity ratio worsened, with a reduction of 1 point, from 14.9% to 13.8%, and what is more relevant,
affecting strongly the small groups and the groups of the construction sector, which in weighted average terms
recorded losses. The analysis of the statistical distribution (the median) shows that the reduction in the profit
ratio had a lesser effect (the reduction in the ratio was only 0.1%), but it again affected practically all sectors of
activity and sizes, as can be seen in chart II.3.
CHART II.3
PROFIT (LOSS) BEFORE TAX/ EQUITY
WEIGHTED AVERAGE (%)
0,3
14,0
12,0
5
9,8
6,2
5,8
9,3
9,2
8,4
4,6
6,7
7,9
9,0
10
8,6
15
11,6
14,8
%
11,5
14,6
15,7
9,8
10
7,8
14,9
13,8
12,5
9,5
8,7
15
12,7
12,2
17,7
20
20
17,3
25
MEDIAN (%)
%
5
-1,5
-5
Industry
Energy
2011
8
-1,3
0
Constru- Services
ction
Total
Small
0
Medium
Large
2012
European non- financial listed groups: analysis of 2012
Industry
Energy
2011
Constru- Services
ction
2012
Total
Small
Medium
Large
III FINANCIAL STRUCTURE ANALYSIS
III.1
EQUITY: MODERATE INCREASE IN EQUITY BUT WEAKENING OF THE EQUITY RATIO
Moderate increase in equity in 2012
As in the previous year, there were only slight changes in equity with overall growth of 0.9% in 2012.
Only the industry sector showed a positive trend in the period considered, with an equity increase of 4.7%. In
contrast to that, the energy, construction and services sectors posted a decrease in equity. In terms of size,
large groups in particular contributed to the overall increase.
CHART III.1.1
CHANGES IN THE CONSTITUENTS OF EQUITY
CHANGE 2012 (IN %)
%
10
+4.7%
5
+0.9%
+0.1%
+1.2%
0
-8.7%
-2.1%
-5
-3.0%
-5,9%
Energy
Construction
-10
Industry
Services
Total
Small
Other equity interest
Non-controlling interests
Retained earnings
Other reserves
Share premium
Share capital
Medium
Large
Treasury shares
The equity ratio (Equity / Total assets) declined slightly
Both figures of the equity ratio declined slightly: the weighted mean and the median dipped 0.2 points to 31.7%
and 38.0%, respectively.
The weighted average did not trend uniformly across sectors or sizes. The largest decline had been reported in
the energy sector (-3.3 points). In contrast to that, the services sector showed an increase of 1.9 points. The
construction sector still posted a lower ratio (less than 20%) than all the other sectors (around or above 30%).
With regard to the size of the groups, only medium groups were able to improve their equity ratio slightly, by 0.5
points. The ratio of the small groups shrank by -2.5 points.
European non- financial listed groups: analysis of 2012
9
GRAPH III.1.2
EQUITY RATIO - EQUITY / TOTAL ASSETS
WEIGHTED AVERAGE (%)
19,1
33,4
38,0
33,5
37,6
41,3
40,8
38,2
38,0
38,1
26,2
18,2
24,1
32,0
29,3
30
30
37,9
41,4
41,3
%
40
31,1
35,0
31,3
34,5
34,6
32,1
31,9
31,7
30,7
28,8
28,6
34,7
40
31,9
50
34,7
50
MEDIAN (%)
%
20
20
10
10
0
0
Industry
Energy
Constru- Services
ction
2011
Total
Small
Medium
Large
Industry
Energy
Constru- Services
ction
2011
2012
Total
Small
Medium
Large
2012
The picture is similar for the median. Again, the largest decline had been reported in the energy sector (-2.7
points), but the construction sector also showed a distinct fall of 2.1 points. The equity ratio of the other two
sectors remained practically stable. With regard to the size of the groups, only the medium groups were able to
slightly raise their ratio by 0.4 points.
III.2
SLIGHT RISE IN CASH AND CASH EQUIVALENTS
Distinct increase in liquidity in 2012
The trend of the previous years to hold more and more cash and cash equivalents - which seemed to be broken
in 2011 – resumed in 2012. The strong preference for liquidity was a sign of the heightened economic and
financial uncertainty of the previous years. In 2012, there was again a distinct increase in cash and cash
equivalents of 8.2% on average. In particular, the energy sector experienced strongly accelerating growth rates
(17.4%). The increase in liquidity in industry (8.2%) and the services sector (7.5%) was far more moderate.
Only groups in the construction sector reduced their cash funds, by 4.9%
CHART III.2.1
CHANGE IN CASH AND CASH EQUIVALENTS
9,1
1,0
1,0
4,2
7,5
0,3
5
3,7
10
2,4
15
8,2
20
8,2
%
17,4
2012
-0,8
0
-0,7
-4,9
-2,9
-5
-10
-15
-20
-18,5
Industry
Energy
Construction
Services
WEIGHTED AVERAGE (%)
Total
Small
Medium
Large
MEDIAN (%)
The overall median only showed a slight increase of 1.0%. Notably, the changes in single medians often
differed from the changes on average. For example, the median of the construction sector fell much more
steeply (-18.5%) than the weighted average. On the other hand, the increase in liquidity in the other three
sectors was much less pronounced in the median than in the weighted average. This highlights the fact that
large companies enhance their liquidity more than small and medium sized ones.
10
European non- financial listed groups: analysis of 2012
Slight reduction in the relative weight of net investment expenses
As in previous years, the overall net investment expenses ratio did not increase in 2012. However, there was
no significant reduction in investment activities as in the year 2011; industry and the energy sector lowered their
net investment expenses ratio by around 1% on average. Activity in construction and the services sector
remained practically unchanged. Small groups reduced the share of net investment expenses more than large
or medium sized groups. The medians across all sectors and sizes were virtually stable, but not uniform, during
the last year. There was only one exception: the median of the energy sector fell significantly.
CHART III.2.2
NET CASH FLOW FROM INVESTING ACTIVITIES / REVENUE
WEIGHTED AVERAGE (%)
0
-5,4
-4,8
-5,6
-3,4
-4,5
-3,6
-4,3
-4,4
-3,6
-3,8
-9
-12
-15
-3,4
-2,5
-7,2
-7,8
-6,9
-8,3
-4,6
-3,9
-7,1
-7,1
-7,0
-7,7
-6
-10,2
-12
-8,4
-7,2
-9,3
-8,1
-9
-7,1
-3,2
-3
-6
-3,3
-3
%
-4,6
-15
-18
-15,0
0
MEDIAN (%)
%
-18
Industry
Energy
Constru- Services
ction
2011
Total
Small
Medium
Large
Industry
Energy
Constru- Services
ction
2011
2012
Total
Small
Medium
Large
2012
Slightly higher liquidity rate
Considering the distinct increase in cash and cash equivalents, the liquidity in relation to total assets also
showed a slight increase of 0.6 points on average, with a level of 7.4% at the end of 2012. The median ratio
remained largely stable (+0.1 points) at a level of 7.5% by year-end.
The main driver of the increase in the weighted average was in the services sector, where the liquidity rate rose
from 6.9% to 8.5%. Industry and the energy sector marginally improved their ratio as well; only the construction
sector remained practically unchanged.
CHART III.2.3
CASH - CASH AND CASH EQUIVALENTS / TOTAL ASSETS
MEDIAN (%)
4
2
2
0
8,0
7,4
7,2
7,9
6,8
6,8
7,5
7,4
7,4
6,4
4,9
6
4
7,5
8,9
8,0
7,6
7,0
8,1
7,7
6,4
7,4
6,7
8
%
4,5
4,2
6
4,8
8
6,8
6,9
8,4
8,5
10
7,5
9,7
%
8,0
10
9,8
WEIGHTED AVERAGE (%)
0
Industry
Energy
2011
Constru- Services
ction
2012
Total
Small
Medium
Large
Industry
Energy
2011
Constru- Services
ction
Total
Small
Medium
Large
2012
European non- financial listed groups: analysis of 2012
11
III.3
FINANCIAL DEBT ROSE SLIGHTLY AND THE INDEBTEDNESS RATE REMAINED LARGELY
STABLE
Moderate increase in financial debt in 2012
Total financial debt rose moderately by 2.6% on average. The trends by sector and size were not uniform:
again a strong increase in industry can be observed (+6.6%), a distinct decline in construction and a moderate
gain in the services sector. The energy sector remained virtually stable. Compared to 2011, the changes in
financial debt were less pronounced. In contrast to that, the median showed a slight overall decline of 0.8%.
And again the trends by sector and by size were not uniform.
CHANGE IN FINANCIAL DEBT
GRAPH III.3.1
2012
10
%
6,6
5
2,7
2,6
1,0
2,8
2,8
1,5
0,9
0,3
0,1
0
-0,2
-0,8
-4,6
-0,8
-2,4
-2,8
-5
Industry
Energy
Construction
Services
WEIGHTED AVERAGE (%)
Total
Small
Medium
Large
MEDIAN (%)
The weight of financial debt remained largely stable
Although the absolute amount of financial debt rose slightly in 2012, the indebtedness rate remained largely
stable, at around 31% of total assets. The overall rate even decreased by 0.1 points on average. The most
significant change can be seen in the services sector, where the ratio rose from 35.8% in 2011 to 37.3% in
2012. All other sectors showed only slight changes. Furthermore, the larger groups had an average ratio lower
than the small and medium ones.
The changes in the median were more pronounced by sector than those in the weighted rate, and the changes
are again not uniform. The median of the indebtedness rate across all sectors and sizes decreased by 0.6%.
CHART III.3.2
FINANCIAL DEBT / TOTAL ASSETS
WEIGHTED AVERAGE (%)
26,1
27,4
27,1
27,2
24,6
23,4
26,5
39,1
38,1
42,1
25,9
10
26,0
10
26,9
20
23,4
20
23,1
31,1
31,1
30
0
Industry
Energy
2011
12
40
30
0
%
35,7
50
40,7
40,7
46,3
43,6
31,6
37,3
31,7
35,8
40,1
39,9
30,1
29,6
29,5
40
29,3
50
MEDIAN (%)
%
Constru- Services
ction
Total
Small
Medium
Large
2012
European non- financial listed groups: analysis of 2012
Industry
Energy
2011
Constru- Services
ction
2012
Total
Small
Medium
Large
IV FAIR VALUE IMPACT ON FINANCIAL STATEMENTS
Fair value impact analysis relies on financial statements for the year 2012 and includes data from 221 groups
that have been included in ERICA + (with some extra details on top of that available for the rest of the groups
included in ERICA, which make this analysis possible), 148 of which were subject to fair value revaluation,
corresponding to 67% of the total sample (57% in 2011). 119 groups reported fair value in the statement of
profit or loss, 92 made adjustments with an impact on equity and 73 groups did not make any fair value
adjustment.
IV.1
POSITIVE IMPACT ON THE STATEMENT OF PROFIT OR LOSS AND NEGATIVE IMPACT ON
EQUITY
In 2012, fair value has differentiated impacts on the statement of profit or loss and on equity. While in the
statement of profit or loss the impact is positive mainly due to reclassification adjustments in available-for-sale
financial assets, in equity it is negative essentially due to cash flow hedges. Large groups tend to record most
of all fair value revaluations compared with small and medium sized groups. As in the previous years, the total
amount of fair value was driven by large groups.
CHART IV.1
FAIR VALUE REVALUATION (TOTAL BY SECTOR AND SIZE)
BY SECTOR
5.000
BY SIZE
millions
4.000
4.000
millions
3.000
3.000
2.000
2.000
1.000
1.000
0
0
-1.000
-1.000
-2.000
-2.000
-3.000
-3.000
Construction
Energy
Income statement
IV.1.1
Industry
Equity
Market services
Total
Large
Income statement
Medium
Small
Total
Equity
Positive impact on the statement of profit or loss due to available-for-sale financial assets
In the statement of profit or loss, the total fair value impact is positive due to the construction sector, and more
precisely from one company with huge losses from a decrease in the percentage of participation and also in
market price shares. In energy, the fair value impact is low as a result of a contrary effect on their components.
On one hand, there is a notably positive impact from non-current assets due to one group lessening its
participation followed by an exit from the shareholders’ pact. On the other hand, the negative impact is
influenced by negative variations in fair value of commodity derivatives. Industry is clearly influenced by
derivatives and the hedge accounting policy of the automobile sector. This sector uses hedging instruments
such as option and forward currency contracts in order to cover currency risks attached to future transactions,
interest rate swaps and commodity swaps to hedge against raw materials prices. As remeasurement of the
derivatives is initially accounted for in the reserve for cash flow hedges in equity and only recognised in the
statement of profit or loss when the hedge item is recognised as profit and loss, there is an impact both on the
European non- financial listed groups: analysis of 2012
13
statement of profit or loss and on equity for these groups using derivatives to hedge balance sheet items and
future cash flows.
IV.1.2
Negative impact on equity due to cash flow hedges
On equity the total impact is negative and mainly explained by construction and market services. By
component, it is clear that the negative impact of cash flow hedges is in all sectors, except in industry. In fact,
industry has a positive impact that offsets almost half of the total negative impact. In energy, the negative
impact is explained by derivatives to cover interest and exchange rate variations. In market services, exchange
rate hedges are used by a telecommunications group to cover the possible loss in foreign investments due to
the depreciation of currencies and interest rate variation.
GRAPH IV.1.2
FAIR VALUE REVALUATION IN PROFIT OR LOSS AND EQUITY (TOTAL BY
SECTOR)
PROFIT OR LOSS
8.000
EQUITY
millions
4.000
millions
6.000
2.000
4.000
2.000
0
0
-2.000
-2.000
-4.000
-4.000
Construction
Energy
Industry
Market services
Total
Non-current assets
Financial instruments designated as hedges
Financial instruments
Reclassification of available-for-sale financial assets
Reclassification of cash flow hedges
Construction
Energy
Industry
Available-for-sale financial assets
Market services
Total
Cash flow hedges
Overall, fair value revaluation in the statement of profit or loss has a limited weight in revenues. However, some
small and medium groups have higher ratios (above 15%) which cause differences between the simple average
and the weighted average, namely in market services. The weight of revaluation in equity in total equity is for all
sectors less than 2%, except for the construction sector (10%), mainly due to the sector’s low equity.
A correlation analysis between Fair value revaluation in the statement of profit or loss and Profit (loss) for the
year, before fair value revaluation, allows us to conclude that non-financial groups did not use fair value to
control profit for the year in 2012. As in previous years, fair value revaluation increased the magnitude of profit
instead of smoothing it. Furthermore, a regression analysis using a set of accounting variables such as total
assets, intangible assets, revenue, profits, research and development and also sector and as a dependent
variable the absolute value of fair value revaluation, shows an adjusted R square of just 45% for total fair value
revaluation. The low R square values indicate that accounting variables cannot be the only way to address fair
value impact and that there is perhaps an absence of important variables, such as market indices.
Finally, a comparison with stock market indices shows that the trends reflected by the impact of fair value
accounting groups coincide with the positive trend of the stock markets in Europe in 2012, irrespective of the
measure chosen (weighted average or median). This pattern is also followed by all sectors of activity analysed
(the detailed information is available in the statistical annex of the document), with the exception of energy,
where some operations affected the weighted average, not reflecting properly the improvement in the the
capitalisation of the European groups.
14
European non- financial listed groups: analysis of 2012
ERICA DATABASE: COVERAGE AND MAIN FIGURES
BOX 1
The analysis conducted in this document is mainly based on consolidated financial statements available in the
ERICA database, including data reported in 2012 by almost 1,000 non-financial European groups listed on a
European stock exchange; paragraphs II and III of this document (i.e. profitability and financial structure analysis)
are based on the core of common data included in ERICA, while paragraph IV (fair value impact) benefits from
the availability of some extra details, obtained in this case for a sub-set of 250 groups, called ERICA + in this
document2.
REPRESENTATIVITY OF THE SAMPLE USED SECTORS AND COUNTRIES COVERED
Main figures for 2012 (filter utilized to avoid double sector and country accounting) data in billion of €
Num ber
Total Assets
Equity
TABLE BOX 1
Financial liabilities
Cash Flow Op.
Act.
EBIT
P/(L) bef. Tax
Revenue
By country
France
334
2196,60
727,74
603,26
115,57
150,45
96,35
1437,82
Germany
221
1823,68
548,45
557,64
95,89
103,09
95,26
1473,27
Italy
127
581,48
202,93
191,53
32,31
39,69
24,57
374,66
44
128,87
52,84
37,30
8,19
10,23
6,56
105,72
Austria
Spain
111
763,43
213,92
312,62
38,54
58,28
18,92
403,94
Belgium
76
196,32
72,70
63,31
15,38
19,12
12,40
129,34
Greece
50
81,97
29,10
29,93
1,63
5,64
0,29
59,47
Portugal
35
127,48
32,62
59,02
6,09
7,79
3,94
73,83
By sector
1. Industry
442
2726,45
946,63
806,67
165,86
173,15
163,77
2075,39
2. Energy
50
1448,33
414,13
423,57
70,08
88,91
52,44
792,61
3. Construction
55
324,10
58,85
129,94
9,00
15,06
-0,88
199,34
444
1453,61
446,59
542,41
70,79
117,83
42,55
1032,32
4. Services
5. Not classif ied
6
4,08
1,87
1,02
0,32
0,29
0,27
2,42
470
126,80
40,69
58,61
1,53
4,89
-0,51
46,52
By size (revenue)
1. Small groups (<250mn)
2. Medium (250mm-1,5bn)
286
351,86
122,99
141,68
17,26
22,73
9,60
195,86
3. Large groups (>1,5 bn)
241
5477,91
1704,38
1703,33
297,26
367,62
249,06
3859,70
997
5956,57
1868,06
1903,62
316,05
395,24
258,15
4.102,08
Total
a. Note: The number of firms by country and by sector or by size are different: some double accounted groups belong to the same country but are in
different sectors.
This box shows the great representativeness of the ERICA database over the listed markets of non-financial
groups. Table 1 of this box sets out, accordingly, the importance of French and German groups in ERICA (as
occurs in the total population): nearly 70% of the revenue, equity or total assets of the 997 groups analysed is
reported by the groups of these two countries, with the percentage rising to 89% in the variable cash flow of
operations activities. With regard to size, for all variables analysed (total assets, equity, financial liabilities,
revenue, EBIT, cash Flow, profit/losses) between 89% and 95% are reported by the large groups (those with
revenue over 1.5 bn euro). If we consider the main activity pursued by the groups (see box 2 for more details
about the degree of diversification of European listed non-financial groups) the previous table details the
importance of the industrial groups: 42% of financial liabilities and 50% of the EBIT are covered in industrial
groups, a percentage that increases to 63% when referring to profit and loss before tax. The second sector of
activity in importance is services; both, services and industry covers 89% of the total number of groups analysed.
2
The number of groups included in ERICA is below those reported in the 2011 study (nearly 200 fewer),
due to the focus of the analysis in 2012 being exclusively on listed groups: the document prepared one
year ago included for 2011 some IFRS non-listed Italian groups.
European non- financial listed groups: analysis of 2012
15
The coverage of ERICA+ concerning the number of listed consolidated groups varies from Portugal (100%) to
Germany (6%); however, quantitative indicators show that ERICA+ is a sound sample of the consolidated groups´
population with higher coverage rates (from 69% in Italy to 100% in Portugal). When looking at ERICA the
coverage is clearly greater compared to ERICA+. ERICA contains between 44% (in Germany) and 100% (in
Portugal) of all listed groups. Using a quantitative indicator the coverage is very high for all countries and varies
between 84% in Austria and 100% in Portugal and Spain.
CHART BOX 1.1
COVERAGE OF DATABASE
ERICA + (RELATED TO TOTAL LISTED GROUPS)
100
%
ERICA (RELATED TO TOTAL LISTED GROUPS)
100
93
100
89
73
80
96
97
100 100
97
92
75
80
60
93
89
84
69
65
%
100
87
97
100
75
60
50
44
43
34
40
34
40
25
14
20
20
6
4
0
0
Belgium
France
Germany
Greece
Italy
Portugal
Spain
Austria
Related to number of listed groups
Related to a quantitative indicator
Belgium
France
Germany Greece
Italy
Portugal
Spain
Related to number of listed groups
Related to a quantitative indicator
The sectoral breakdown of the listed European groups differs greatly from country to country. Industry is
especially important in most of the countries except in Portugal and Spain. The construction sector accounts for a
large part of the stock market in Austria and Spain, while in other countries it plays a minor role. The energy
sector has a high share of the stock market in Italy, Portugal and Spain, but a low one in Belgium and Greece.
The sectoral structure is well represented by both databases even for those countries with a lower coverage in
terms of quantitative indicators (i.e. in Italy, ERICA+ offers an over-represented energy sector and France an
under-represented services sector, although they have an overall good representation in the database).
STRUCTURE BY COUNTRY AND SECTOR (RELATED TO A QUANTITATIVE INDICATOR)
ERICA+
%
France
Belgium
Greece
Germany
18%
80%
60%
36%
2%
1%
22%
23%
20%
0%
2%
6%
15%
13%
10%
24%
31%
39%
7%
21%
2%
1%
6%
Portugal
Italy
100%
11%
0%
6%
9%
CHART BOX 1.2
Spain
10%
1%
37%
37%
7%
7%
22%
22%
32%
35%
38%
54%
14%
20%
18%
40%
61%
63%
58%
54%
62%
64%
27%
24%
21%
22%
ERICA+
Total
quoted
groups
61%
51%
49%
20%
35%
34%
34%
0%
ERICA+
Total
quoted
groups
Market services
16
ERICA+
Total
quoted
groups
ERICA+
Construction
Total
quoted
groups
ERICA+
Total
quoted
groups
Energy
European non- financial listed groups: analysis of 2012
ERICA+
Total
quoted
groups
Industry
ERICA+
Total
quoted
groups
STRUCTURE BY COUNTRY AND SECTOR (RELATED TO A QUANTITATIVE INDICATOR) ERICA
%
Belgium
Austria
100%
5%
8%
15%
13%
80%
36%
2%
1%
60%
46%
40%
France
30%
23%
23%
20%
2%
2%
6%
14%
13%
10%
31%
39%
2%
1%
7%
6%
14%
14%
24%
10%
1%
10%
1%
40%
38%
6%
9%
Portugal
Italy
Greece
Germany
37%
37%
7%
7%
22%
22%
40%
61%
61%
58%
49%
20%
34%
64%
62%
CHART BOX 1.3
Spain
35%
35%
18%
18%
24%
24%
23%
23%
ERICA
Total
quoted
groups
61%
49%
49%
51%
39%
34%
34%
0%
ERICA
Total
quoted
groups
ERICA
Market services
Total
quoted
groups
ERICA
Total
quoted
groups
Construction
ERICA
Total
quoted
groups
ERICA
Energy
Total
quoted
groups
ERICA
Total
quoted
groups
ERICA
Total
quoted
groups
Industry
European non- financial listed groups: analysis of 2012
17
ACTIVITIES PURSUED BY EUROPEAN NON-FINANCIAL LISTED GROUPS IN EUROPE: AN ANALYSIS OF THEIR
DIVERSIFICATION
BOX 2
In order to identify how the revenue of the groups is divided between the different activities the groups may
pursue, two different approaches were followed. The first approach takes into account all the activities of the
groups, whether these activities belong to the same upper level of sector of activity (according to NACE) or not.
The second approach takes into account only those second and third activities declared by the groups that
belong to different upper levels of sectors of activity.
While with the 1st approach
PERCENTAGE OF REVENUE FROM EACH ACTIVITY
COUNT ALL ACTIVITIES
COUNT ONLY ACTIVITIES IN DIFFERENT SECTOR
50% of the groups have only
one activity, with the 2nd
approach this percentage rises
to 74%. In terms of revenue,
the degree of concentration
rises. More precisely with the
1st approach, 82% of revenue
is derived from the first activity, and with the 2nd approach this percentage rises to 91%.
The chart to the right shows
RELATIONS OF ACTIVITIES OF GROUPS 2012
the nature of the other
3
4
Energy 23
Construction 19
activities in which the groups
4
4
1
3
are involved. From this chart
we can see that, for the
3
4
8
0
majority of the groups, the
25
3
Services 91
Industry 102
second activity in which they
In blue, number of groups with main activity in the specific sector. In grey, number of groups developing secondary activities in the specific sector.
For example,out of 19 groups classified in Construction, 8 have secondary activities in Services, 3 in Energy, 3 in Industry and the rest 5 have only
are involved is in the services
their main activity, that is Construction.
sector.
From a sectoral point of view,
NUMBER OF REAL CASES & NUMBER OF ACTIVITIES FOR EACH SECTOR
while with the 1st approach all
COUNT ALL ACTIVITIES
COUNT ONLY ACTIVITIES IN DIFFERENT SECTOR
sectors are equally diversified,
100
100
with the 2nd approach the
80
80
60
60
construction sector is the most
40
40
diversified. From a group size
20
20
standpoint, with the 1st
0
0
Construction
Energy
Industry
Market Services
Construction
Energy
Industry
Market Services
approach around 50% of the
1 Activity
2 Activities
3 Activities
1 Activity
2 Activities
3 Activities
groups have only one activity,
irrespective of their size. With
NUMBER OF REAL CASES & NUMBER OF ACTIVITIES FOR EACH GROUP SIZE
the 2nd approach, this
COUNT ALL ACTIVITIES
COUNT ONLY ACTIVITIES IN DIFFERENT SECTOR
percentage rises to over 70%
100
100
and only large groups are
80
80
diversified in their activities. In
60
60
40
40
terms of revenue, for all
20
20
sectors and group sizes and
0
0
Small
Medium
Large
Small
Medium
Large
for both approaches, the
1 Activity
2 Activities
3 Activities
1 Activity
2 Activities
3 Activities
biggest percentage of revenue
arises from the first activity.
3,0
8,0
1,0
15,0
82,0
91,0
1 Activity
2 Activities
3 Activities
1 Activity
Units
2 Activities
3 Activities
Units
81
72
53
46
12
11
5
5
3
28
27
23 26
18
6
9
5
Units
15
6
5
2
8
2
2
Units
88
59
48
37
30
27
22
13
11
9
37
30
27
13
8
1
18
European non- financial listed groups: analysis of 2012
5
5