1. 11. Rules of consolidation
ESTP Course on the EGR
3-4-5 December 2014
11. Rules of consolidation

2. NSA DnB BvD EGR Data providers COMMERCIAL DATA PROVIDERS (CDP)
So our main input comes from 3 different sources.
The “National Statistical Authorities” from the participating countries and 2 commercial data providers.

3. Data entities Legal Units (LEU) Relationships (REL) Enterprises (ENT)
Links
Enterprise Groups
(GRP)
The data providers mainly provide us with information on 5 “Entities”
Entity is an abstract definition.
Color coding
Links intentionally left out

4. Data entities per provider
NSA
LEU
REL
ENT
GRP
DnB
BvD
COMMERCIAL DATA PROVIDERS (CDP)

5. Data per entity and frame year (FRY)
2014
2014
NSA NL
2014
2014
NSA UK
All the sources provide data per entity and per frame year.
Color coding.
2014
NSA ..

6. Data per entity and frame year (FRY)
2014
2014
NSA NL
2014
2013
2014
NSA UK
More frames open at the same time possible.
Processing only 1 year at a time!
2014
NSA ..

7. Consolidate
2014
2014
2014
rEGR
VALIDATE
TRANSFORM
CONSOLIDATE
Validate (BR, LEID) , transform (Unify) , consolidate.

8. Goal of consolidation [EX]
Enterprise Group
Swedish Enterprise
Dutch Enterprise
LEU SW
REL
REL
LEU SW
LEU NL
REL
REL
REL
All the data from the different providers and countries should be combined and prioritized to form
the global enterprise group. The internationals.
We will use this picture as our goal in upcoming examples!
LEU SW
LEU SW
LEU NL

9. Combining (national) data
IKEA Global Group
Swedish Enterprise
Dutch Enterprise
LEU SW
REL
REL
LEU SW
LEU NL
REL
REL
REL
NGH
GGH
LEU SW
LEU SW
LEU NL

10. Prioritizing data IKEA Global Group Swedish Enterprise
Dutch Enterprise
LEU SW
REL
REL CB
REL
REL
LEU SW
LEU NL
LEU
DnB
LEU
BvD
REL
REL
REL
Some sources will deliver the same legal units and relationships to the same subsidiary.
Resident rel before cross-border
LEU SW
LEU SW
LEU NL

11. Consolidation process
Cons. Legal units
Cons. Relationships
Create cluster of control
Cons.Enterprise group (and Enterprise)

12. Consolidate legal units (overview)
Select preferred source
Determine continuity

13. Consolidate legal units (select source)
Source provided
Transformed
Consolidated
NSA(3) LEID X
NSA(3)
LEID X
NSA(1) LEID X
NSA(2) LEID X
DnB(1) LEID X
BvD(2) LEID X
BvD(1) LEID X
WITHIN ONE FRAMEYEAR
Collect
LEID
Priority:
NSA
DNB
BVD
Prioritize
Update

14. Consolidate legal units (continuity)
Source provided
Transformed
Consolidated
NSA(3) LEID X
NSA(3)
LEID X
NSA(1) LEID X
NSA(2) LEID X
DnB(1) LEID X
BvD(2) LEID X
BvD(1) LEID X
WITHIN ONE FRAMEYEAR
Collect
LEID
Same EGR
identification?
UNIT in T or T-1
Priority:
NSA
DNB
BVD
Prioritize
Update

15. Consolidate legal units (continuity)
This is little complex, what it comes down to that NSA_ID is primarely used to identify.
If not available, LEID will be used

16. Consolidate legal units (continuity)
LEID
NSA ID
EGR ID
2010 oktober
CCRRRRR12345
2010 november
2011 oktober
CCRRRRR23456
CCRRRRR98234

17. Consolidated legal units [EX]
LEU FR
LEU SW
LEU NL
LEU NL
LEU NL
So then we have consolidated legal units.

18. Goal of consolidation [EX]
Enterprise Group
Swedish Enterprise
Dutch Enterprise
LEU SW
REL
REL
LEU SW
LEU NL
REL
REL
REL
We are not there yet! 
LEU SW
LEU SW
LEU NL

19. Consolidate relationships
Start form “scratch”, per subsidiary EGR identification
Collect all transformed direct relationships with same subsidiary EGR identification (can be more than one LEID)
Determine highest prio per parent – subsidiary combination
Create direct relationships in order of prio if no BR violation (for example, no more than 100%)
Collect transformed indirect relationships with same subsidiary LEID
Discard superfluous for which there is direct control
Discard lower priority if more than 1 parent
Establish indirect relationship.
End the ones that are not recreated

20. Consolidate relationships (1) P2
20% P3
40%
Transformed relationships, explain percentages and P1, P2.
Refer back to sheet 19 P1
55%% P4
20% P2
45%

21. Consolidate relationships (2) P2
20% P1
55%% P4
20%

22. Consolidated units and relations [EX]
LEU FR
LEU SW
LEU NL
LEU NL
LEU NL
So if we go back to our example let’s say the following relationships remain after consolidation.

23. Consolidated legal units and control [EX]
LEU FR
LEU SW
LEU NL
LEU NL
LEU NL
100%
100%
No priority
100%
100%
100%
40%
Controlling relationships determine the cluster as we will see during deriving the cluster of control.

24. Consolidated legal units and control [EX]
LEU SW
LEU NL
LEU NL
So this is what remains from our original example.

25. Cluster of control [EX]
Enterprise Group
Swedish Enterprise
Dutch Enterprise
LEU SW
REL
REL
LEU SW
LEU NL
REL
REL
REL
How the group and enterprise are projected on the structure will be explained later on.
LEU SW
LEU SW
LEU NL

26. Deriving the cluster of control
The ‘cluster of control’ defines legal units that are involved in [controlling] relationships with each other, ultimately all being under control of the defined topmost legal unit (the head of the group).
[controlling] : A legal unit can have control with a single relationship in two cases:
‘Type of ownership’ = ‘I'(ndirect)’
(‘Type of ownership’ = ‘D(irect)’ and voting power > 50%)
Combine clusters with cumulative direct control > 50%!

27. Deriving the cluster of control
So if we look at the direct relationship (incl. cumulative) which clusters of more than 1 legal unit do we see?

28. Deriving the cluster of control (direct)

29. Combining cluster using indirect rel.
For each ‘cluster’ C found until now:
If the top-most legal unit is involved as a subsidiary in an indirect relationship with a legal unit that is not yet in cluster C : ‘combine’ cluster C with the cluster of the parent.
For all legal units in the ‘cluster’ C, including the top-most legal unit:
If the legal unit is involved as a parent in an indirect relationship with a legal unit that is not yet in cluster C : ‘combine’ cluster C with the cluster of the subsidiary.
Repeat the above with the newly formed clusters until no more clusters can be combined.
Explain on previous sheet

30. Deriving the cluster of control (indirect)

31. From cluster to enterprise group
The identification of the cluster as defined by the EGR is the linking pin to the Enterprise Group data supplied. The identification (continuity) of the Enterprise Group is determined by looking at the overlapping Enterprises and the number of persons employed.

32. From enterprise to enterprise group
The enterprise is linked to the cluster (enterprise group) by the reporting legal unit.
Enterprise.reporting legal unit

33. Continuity of cluster (enterprise group)

34. Continuity of enterprise group
Final Enterprise
Group
Preliminary
Enterprise Group
Persons Employed Enterprise in Final Frame
Persons Employed Enterprise in Consolidation Area E1
FG1 - 10 E2 4 E3
PG1 15 E4 11 E5
PG2 54 77 E6
FG2
PG3 45 E7 12 E8
FG3 32 E9
PG4 14

35. Continuity of enterprise group
C1 = Collection of enterprises which are related with the final enterprise group but not with the preliminary enterprise group. C1
PG1
PG2
PG3
PG4
FG1
E1,E2,E5
E1, E2, E3, E4
No overlap
FG2 E7
FG3 -

36. Continuity of enterprise group
C2 = Collection of enterprises which are related with the preliminary enterprise group but not with the final enterprise group. C2
PG1
PG2
PG3
PG4
FG1 -
No overlap
FG2
FG3

37. Continuity of enterprise group
C3 = Collection of enterprises which are related with the preliminary enterprise group and also with the final enterprise group. C3
PG1
PG2
PG3
PG4
FG1
E3, E4 E5
No overlap
FG2 E6
FG3 E8

38. Continuity of enterprise group
Calculate total number of persons employed per collection: PE_P_C1 = Persons Employed of the Preliminary enterprise group delimited to collection C1. PE_F_C1 = Persons Employed of the Final enterprise group delimited to collection C1. Analogous for PE_P_C2, PE_F_C2, PE_P_C3, PE_F_C3.

39. Continuity of enterprise group
For example, collections for checking if PG1 is a continuation of FG1:
PG1=>FG1
Note
PE_P_C1
Always 0
PE_F_C1 68
E1 (10), E2 (4), E5 (54)
PE_P_C2
E3 and E4 both are also in FG1
PE_F_C2
PE_P_C3 26
E3 and E4 are in PG1
PE_F_C3 25
E3 and E4 are in FG1

40. Continuity of enterprise group
Define X0 IF PE_F_C3 >= 70% * (PE_F_C1 + PE_F_C3) AND PE_P_C3 >= 70% * (PE_P_C2 + PE_P_C3) THEN X0 = 0 (possible continuation) ELSE X0 = 1 In the example for PG1 as a possible continuation of FG1 : 25 >= 70% * ( ) == False AND 26 >= 70% * (0 + 26) == False Therefore X0 = 1 (no continuation)

41. Continuity of enterprise group
Define X1 (absolute values between pipes ||) IF
(i11 ≤ MIN_PE < i21 AND |PE_P – PE_F| ≥ a11 + (b11 * MIN_PE)) OR
(i21 ≤ MIN_PE < i31 AND |PE_P – PE_F| ≥ a21 + (b21 * MIN_PE)) OR
(i31 ≤ MIN_PE < i41 AND |PE_P – PE_F| ≥ a31 + (b31 * MIN_PE)) OR
(i41 ≤ MIN_PE < i51 AND |PE_P – PE_F| ≥ a41 + (b41 * MIN_PE)) OR
(MIN_PE ≥ i51 AND |PE_P – PE_F| ≥ a51 + (b51 * MIN_PE))
THEN X1 = 1
ELSE X1 = 0
PE_P : Total number of persons employed of the preliminary enterprise group
PE_F : Total number of persons employed of the final enterprise group
MIN_PE : The minimum of PE_P and PE_F
Default values for parameters:
i1=0, i2=10, i3=50, i4=100, i5=500, a1=20, b1=0, a2=0, b2=2, a3=0, b3=1, a4=0, b4=0.5, a5=0, b5=0.25

42. Continuity of enterprise group

43. Thanks for your attention
Questions?