The ERICA WG has published a new “ERICA series” document: "Goodwill analysis"

The objective of this study is to analyse goodwill amounts recognised in a sample of European non-financial listed groups through two prisms: (a) to understand the goodwill evolution and (b) to assess the relevance of amounts of goodwill recognised in annual accounts, particularly with regard to the risk of overestimation. The analysis shows that the economic context in which the company is operating is reflected in the general trend in goodwill and that the change in goodwill amounts recorded over the period 2016-2020 does not show any difference from the market's perception of the economic environment.

ERICA WG has published its document Annual Synthesis of the year 2021.

This brochure provides an overview of the work carried out by the ERICA WG during the year 2021. It also includes a summary of the content of the 2019 ERICA database and the analysis that was done by means of the data collected both from 2019 annual reports and 2020 half-yearly reports. Finally, the list of document published during the year 2021 and the work plan for the year 2022 can be consulted.

ERICA WG has published its document: "European non-financial listed groups: Analysis of 2020 data"

The study presents some highlights of European non-financial listed groups, on profitability and financial structure in 2020, as well as financial debt structure and cost of debt. One of the main findings of the study is that the pandemic crushed operating results and profitability in 2020. In addition, equity and net indebtedness were affected as well: both measures declined significanlty. The drop in net indebtedness was largely due to better cash positions, as gross indebtedness increased. In spite of that, the cost of financial debt continued its downward trend.

ERICA (European Records of IFRS Consolidated Accounts), is a database, for internal use within the members of ECCBSO, composed of a dataset of around 1,000 European non-financial groups, fully representative of the stock markets of the countries participating in the project (Austria, Belgium, France, Italy, Germany, Greece, Portugal, Spain and Turkey). The data are obtained from publicly available financial statements, having been treated manually, by CBSO statistics and accounting specialists, to be fitted on a standard European format (ERICA format). This manual treatment means, in some cases, the interpretation of the original data, a constraint that readers of this document should bear in mind.

The BACH WG has updated its Get Insights with 2020 data.

BACH Get Insights is a portfolio of selected economic and financial indicators enabling to easily get a picture of the most recent situation of European non-financial corporations also exploring developments on European business environment and specific topics concerning companies.

The FSA (Financial Statement Analysis) Working Group releases

- Recent trends in customer and supplier payment periods on the eve of the Covid crises (Trade Credit_Report) and

- Financing costs and financial pressure: were non-financial corporations prepared for the pandemic crises? (The Financing Costs of NFC in European Countries)

The BACH WG has published a new Outlook document: Past economic performance of climate policy relevant sectors

This analysis utilizes BACH data from 11 European countries (Austria, Belgium, Czech Republic, Germany, Spain, France, Croatia, Italy, Poland, Portugal and Slovakia) to assess the structure and evolution of non-financial corporations in climate policy relevant sectors (CPRS) and non-CPRS. The aim is to highlight structural differences both over time and between the sectors. Therefore, the analysis considers the asset-capital structure, as wells as the income-cost structure.

Structural differences between CPR and non-CPR sectors were most prominent with respect to their capital intensity, with CPRS having a larger share of long-term assets. Both sectors went through a deleveraging process over the period from 2007 to 2019. In addition, short-term debt has been replaced by long-term debt. The data also suggests that growth dynamic has been stronger in non-CPRS, which was accompanied by a stronger increase in staff costs. Profitability gaps between CPR and non-CPR sectors harmonized across countries until 2019. Regarding profitability, CPRS offered higher returns on sales whereas non-CPRS yielded higher returns on assets.

The ERICA WG has published a new “ERICA series” document: "IFRS 15 - First application impact"

In 2018, the International Accounting Standard IFRS 15 on "Revenues from contracts with customers" came into force. Its impact is analysed based on the 2018 figures. One of the main effects of the standard application is that it can imply changes in the temporal distribution of revenue recognition and its associated costs, which might as well imply an impact in other areas of analysis. The main outcome of the ERICA Series is that the overall impact of the new standard on equity remains limited. At a more detailed country or sector level, the largest equity effects are negative.

This article published by Banco de España not only describes developments in the profitability, solvency and liquidity of Spanish non-financial corporations, drawing on the integrated spanish CBSO database, which contains annual information up to 2019 but also analyses the impact of the COVID-19 crisis on the profitability and the solvency of the corporate sector in 2020, on the basis of various microsimulations.

The findings show on one hand that the decline in profitability appears to have been particularly steep in the SME segment and, especially, in the sectors hardest hit by the crisis. On the other hand the results show that the crisis seems to have prompted a sharp rise in the financial pressure borne by the firms, in addition to undermining, albeit more moderately, their solvency.

You can see the whole article here.

ERICA WG has published its document: "European non-financial listed groups: Analysis of 2019 data"

The study presents some highlights of European non-financial listed groups, on profitability and financial structure in 2019, as well as financial debt structure and cost of debt. One of the main findings of the study is that the deterioration in operating results and profitability, that started in 2018, continued in 2019. The first application of the new accounting standard for leases – called IFRS 16 – resulted in poorer solvency and higher net indebtedness but did not stop the downward trend in the cost of financial debt. An exceptional additional chapter is devoted to the impact of the Covid-19 pandemic crisis on the financial performance and structure of European non-financial listed groups during the first half of 2020. Unsurprisingly, 2020 half-year figures demonstrate that the Covid-19 crisis seriously affects their profitability and solvency.

ERICA (European Records of IFRS Consolidated Accounts), is a database, for internal use within the members of ECCBSO, composed of a dataset of around 1,000 European non-financial groups, fully representative of the stock markets of the countries participating in the project (Austria, Belgium, France, Italy, Germany, Greece, Portugal, Spain and Turkey). The data are obtained from publicly available financial statements, having been treated manually, by CBSO statistics and accounting specialists, to be fitted on a standard European format (ERICA format). This manual treatment means, in some cases, the interpretation of the original data, a constraint that readers of this document should bear in mind.

The ERICA WG has published a new “ERICA series” document: "IFRS 16 Leases - Expected Impact"

IFRS 16 Leases represents the biggest change to lease accounting in over 30 years. The goal of this analysis is to ascertain ex ante the impact of IFRS 16 on the ERICA dataset and give detailed insight into this. The main impacts are expected to be an increase in financial liabilities and an increase in EBITDA.