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Providing non-financial information to reporters, analysts and asset managers; the EDINET Case

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  • 1. Nonfinancial Reporting Track:03Providing non-financial informationto reporters, analysts and assetmanagers; the EDINET CaseNomura Research Institute, Ltd.Data Analyst Chie Mitsui
  • 2. Contents for today’s session• About EDINET and its upgrading plan• Expectation for digitalizing non-financial information• Non-financial information provided by new EDINETtaxonomy• New taxonomy design for non-financial information• Sample of the New EDINET (1) ~ (4)• For future upgrade• Issues for XBRL non-financial information• Conclusion -- What we should do ? –About Nomura Research Institute;A research institute, which is a member of the group companies in financialsectors. Nomura securities used to be a parent company before we went topublic on Tokyo Stock Exchange. Our department provides information andsolution for mainly asset management companies, trust banks, andadvisory service companies, etc.1
  • 3. 2Disclosure system EDINET will beupgraded to expand XBRL coverageto non-financial information this year
  • 4. What is EDINET?• About EDINETo Electric disclosure for INVESTORS Network. Electronic disclosuresystem for securities reports and other documents. Company isrequired to submit all those reports under the Financial Instrumentsand Exchange Law.• About Japanese disclosure regulationo Japanese companies are required to submit annual securities report,quarterly reports and extraordinary reports when material fact hasbeen recognized. In addition, when company buys treasury shares,TOB, or issues new securities, also has to file the documents.• History of XBRL in Japano Since 2008, all companies (except for companies that report underUS GAAP) have to file their primary financial statements in XBRL.
  • 5. Plan for Next Generation EDINET4EDINET is scheduled to beupgraded in fiscal 2013Expand XBRL coverage to non-financial information in the securities report or any othertypes of reports.
  • 6. Expectation for digitalizing non-financial information• Handling events and alert function to notifycorporate events.o Using tags, application can pick up only necessary reports when it isannounced in real time.• Tracing historical change in status or events.o Compare and find companies with different tag that is included only oncurrent year’ => those companies have to be investigated carefully.• Comparative analysiso Comparing several companies to find the companies that have thesame tags => those companies might have similarities.
  • 7. Non-financial information provided by new EDINET taxonomy• Material fact• Finance (issuance of new bonds or shares)• Change in personnel of management• M&A, requisitions• Significant impact from unexpected events• Corporate governance, historical event of the company• MD&A or risk recognition• Historical event related to corporate actions• Investment PP&E, R&D, personnel, auditors reports.• Etc, etc…
  • 8. New taxonomy design for non-financial information“Form tree” as presentation link. It isconsisted all list of contents fromwhole report.Comprehensive tag covers all list ofcontents.Each contents connects detail tree asseparated ELS.Form tree Structuring whole regulatory reportsComprehensive tag anddetail tagTag the whole section by a comprehensivetag, then tag only important fact by a detailtag within the comprehensive tag. Result isthat all information has to be tagged atleast once.Tags for each chapter ofregulation or policyExistence of tags tells the fact of disclosure.N/A tags or omitteddisclosure due to lack ofmateriality関連付けContents AText blockContents APricedataText blockDetail treeForm tree contents of tableSame nameContents B関連付けText block
  • 9. 8What is expected from analysts andinvestors?Let’s see the sample data!
  • 10. Business risks [heading]Business risks [text block]Material matters relating to going concern, etc., Business risks [text block]Critical contracts for operation [heading]Critical contracts for operation [text block]Research and development activities [heading]Research and development activities [text block]Research and development activities (N/A)Analysis of financial position, operating results and cash flows [heading]Analysis of financial position, operating results and cash flows [text block]Analysis and responses to significant events related to going concern risks,etc., Analysis of financial position, operating results and cash flows [text block]Sample 1 ”Going concern Risk”Have to find this sentence from more than100 pages reports. Next generation, justsearch for existing of this tag to get thisinformation (in English), immediately afterthe report is disclosedAssetmanagersInline XBRL on browserTaxonomyAlmost all investors andanalysts expect it<ix:nonNumericname="jpcrp_cor:MaterialMattersRelatingToGoingConcernEtcBusinessRisksTextBlock" contextRef="FilingDateInstant" escape="true"><p style="margin-left: 18.0pt; line-height: 13.5pt">(3)継続企業の前提に関する重要事象等</p><p style="margin-left: 27.0pt; text-indent: 9.0pt; line-height: 13.5pt">当社グループは、売上高が前連結会計年度に比べ88億88百万円減少しており、営業損失88億88百万円、経常損失<br />88億88百万円となりました。このことにより、継続企業の前提に重要な疑義を生じさせるような状況が存在してお<br />ります。ただし、………………………………………………………………………………………………………………<br/>………………………………………………………………………………………………………………………。</p></ix:nonNumeric><p>&#160;</p>Source
  • 11. Sample 2 Subsidiaries, affiliatesInline XBRL On browser<ix:nonNumeric name="jpcrp_cor:OverviewOfGroupEntitiesTextBlock"contextRef="FilingDateInstant" escape="true"><h3>4【関係会社の状況】</h3><div class="pageBreakAfter"><table style="border-collapse: collapse"><colgroup><col style="width: 108.0pt; min-width: 108.0pt" /><col style="width: 65.0pt; min-width: 65.0pt" /><col style="width: 54.0pt; min-width: 54.0pt" /><col style="width: 84.75pt; min-width: 84.75pt" /><col style="width: 57.75pt; min-width: 57.75pt" /><col style="width: 118.5pt; min-width: 118.5pt" /></colgroup><tbody><tr style="height: 50.25pt; min-height: 50.25pt"><td style="border: solid black 0.75pt"><p style="margin-right: 22.5pt; margin-left: 22.5pt; text-align: center;line-height: 10.0pt">名称</p></td><td style="border: solid black 0.75pt; border-left: none"><p style="margin-right: 13.5pt; margin-left: 13.5pt; text-align: center;line-height: 10.0pt">住所</p></td>SourceSubsidiaries location and size tell us thecompany’s business strength and mainmarkets, etc. Useful information forestimating future performance.AssetmanagersWithout categorize information such as area code orindustrial classification, it is still difficult to useTaxonomyCompany history [heading]Company history [text block]Description of business [heading]Description of business [text block]Overview of group entities [heading]Overview of group entities [text block]Information about employees [heading]Information about employees [text block]
  • 12. On the other hand, a tag"OtherMaterialRemunerationToIndependentAuditorsNA" means no remuneration except audit.Sample 3 Corporate governanceInline XBRL On browserExplanation about corporate governance, etc. [heading]Explanation about corporate governance [heading]Explanation about corporate governance [text block]Details of audit fee, etc. [heading]Details of remuneration to independent auditors [heading]Details of remuneration to independent auditors [text block]Other material remuneration to independent auditors [heading]Other material remuneration to independent auditors [text block]Other material remuneration to independent auditors (N/A)Details of non-audit services rendered by independent auditors [heading]Details of non-audit services rendered by independent auditors [text block]Details of non-audit services rendered by independent auditors (N/A)If there are no "N/A" tag in thissection, we can say, thiscompany paid for the auditor forother material remuneration.Assetmanagers<ix:nonNumericname="jpcrp_cor:OtherMaterialRemunerationToIndependentAuditorsTextBlock" contextRef="FilingDateInstant" escape="true"><div class="content3">②【その他重要な報酬の内容】</div><div class="content" style="margin-left: 36pt">(前連結会計年度)</div><div><p style="margin-left: 36.0pt; line-height: 13.5pt">&#160;&#160;当社の連結子会社である○○○○は、当社の監査公認会計士等と同一のネットワークに属している○○に対し<br />て、………………………………………………………………………………………………………………………………<br/>……………………………………………………………………………………………………………。</pTaxonomySource
  • 13. Sample 4 Adopted accounting policy or methods<ix:nonNumericname="jpcrp_cor:AccountingPolicyForDepreciationOfSignificantAssetsTextBlock"contextRef="CurrentYearDuration" escape="true"><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 45.0pt;text-indent: -18.0pt">(2)重要な減価償却資産の減価償却の方法</p><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 36.0pt">イ&#160;&#160;有形固定資産(リース資産を除く)</p><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 45.0pt">&#160;&#160;当社及び国内連結子会社は定率法を、また、在外連結子会社は定額法を採用しております。</p><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 36.0pt">ロ&#160;&#160;無形固定資産(リース資産を除く)</p><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 45.0pt">&#160;&#160;定額法を採用しております。</p></ix:nonNumeric><ix:nonNumeric name="jpcrp_cor:AccountingPolicyForSignificantProvisionsTextBlock"contextRef="CurrentYearDuration" escape="true"><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 45.0pt;text-indent: -18.0pt">(3)重要な引当金の計上基準</p><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 36.0pt">イ&#160;&#160;貸倒引当金</p><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 45.0pt">&#160;&#160;売上債権、貸付金等の貸倒損失に備えるため、</p><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 36.0pt">ロ&#160;&#160;賞与引当金</p></ix:nonNumeric><ix:nonNumericname="jpcrp_cor:AccountingPolicyForForeignCurrencyTranslationForPreparationOfConsolidatedFinancialStatementsTextBlock" contextRef="CurrentYearDuration"escape="true"><p style="margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; margin-left: 45.0pt;text-indent: -18.0pt">(4)重要な外貨建の資産又は負債の本邦通貨への換算の基準DisclosureOfAccountingPoliciesAbstractAccountingPolicyForMeasuringSignificantAssetsTextBlockAccountingPolicyForDepreciationOfSignificantAssetsTextBlockAccountingPolicyForSignificantProvisionsTextBlockAccountingPolicyForRecognitionOfSignificantRevenuesAndExpensesTextBlockAccountingPolicyForForeignCurrencyTranslationForPreparationOfConsolidatedFinancialStatementsTextBlockAccountingPolicyForHedgingConsolidatedFinancialStatementsTextBlockAccountingPolicyForGoodwillTextBlockScopeOfCashAndCashEquivalentsInConsolidatedStatementOfCashFlowsTextBlockOtherSignificantInformationForPreparationOfConsolidatedFinancialStatementsTextBlock
  • 14. 13Sample 4 Adopted accounting policy or methodsThese accounting policies are one of the most important information toanalyze data. But how can we handle them?Even if we put detail tags on the document by inlineXBRL, currentdocument style doesnt seem to work for the calculation.....AnalystsBefore we start to discuss tags on this part, we should discuss what kind ofinformation must be digitalized and tag on them.For example,“Accounting Policy For Depreciation Of Significant Assets”First, we have to organize information,For dimension members = asset name?For elements = term, straight line / percentage other...., residual valueExpect to use this information, but…….
  • 15. 14User expects more after EDINETgets upgraded…
  • 16. For Future - flag information -Business risksEven if Japanese,hard to readseveral pages.Flag Information abstract (The followings fact must be “true” or “false” )Unique management policy taken by company groupAbnormal changes in financial position or business performanceHigh dependence on certain suppliers or customers with whom continuity oftransactions is uncertainHigh dependence on certain products or technologies whose future is uncertainRegarding damages relating to transactions based on unique business practicesRegarding long commercialization periods relating to new products or technologiesLegal or regulatory restrictionRegarding major lawsuitsSignificant items relating to directors, employees, shareholders, subsidiaries, jointlycontrolled entities and associatesRegarding significant business relationships relating toIssues in futureMarket fluctuation riskForeign exchange rate fluctuation riskTags of risk as flag type elements seems fine. But can we categorize each company’s risk?
  • 17. For Future - cross check related reports -Change in number of issued sharesIf each document has the same tags ( e.g., number of shares, date ofissues etc ), we can check the fact over several documents, historically.Company has to report when companyissues new securities or buy treasuryshares as “Shelf RegistrationStatement“ or “Share Buyback Report”.Then those events must be written insecurities reports next year.AssetmanagersWe always want to knowhow many shares exist.Shelf RegistrationStatementShare BuybackReportSecurityReports
  • 18. For Future – adopt XBRL for voluntary disclosureIf EDINET will encourage to introduce infrastructureXBRL for company side, user hopes that company willmake those document in XBRL as same format in future.Even if all securities reports will be written in XBRL,we are still taking management plan (estimation) andperformance data from Midterm Management Plan,which companies file to Tokyo Stock Exchange.AssetmanagersAnalysts Usually company gives us more detailed informationon segment at the analyst conference. Disclosure ofthe securities reports isn’t enough for analysis.
  • 19. 18Issues for XBRL non-financialinformation
  • 20. What prevents it from realizing global comparability?Financial informationBS IS CFNon financial informationCorporateGovernanceLargeShareholderFinancial informationhas almost sameglobally but….RiskMD&AAffiliateSubsideryFact is written inLocal Language,what can we do?<ix:nonNumericname="jpcrp_cor:MaterialMattersRelatingToGoingConcernEtcBusinessRisksTextBlock"contextRef="FilingDateInstant" escape="true"><p style="margin-left: 18.0pt; line-height: 13.5pt">(3)継続企業の前提に関する重要事象等</p>Need global code forcompany and rulefor human nameCompanycode location,industry…Name has tobe set a factin alphabet
  • 21. How we can transfer non-financial information using XBRL?• XBRL cannot solve all issues itself.• We need to digitalize information before discusstaxonomy.• Develop common framework of non-financialinformation to be able to share other reports.• Introduce more systemic-friendly design e.g.,flag control, global code supporting transferinformation, etc..Most important… work together!
  • 22. Conclusion -- What we should do ? --We should develop data structure or frame that can beshared globally as soon as possible.non-financial XBRL is going to start, will be developedmany taxonomies very soon. But without any commonframe or rule, it will be difficult to compare each other.On the other hand, we should develop discussion tocheck reliability of narrative contents and best practice tovalidate them (more difficult than financial information).
  • 23. Any Questions? Thank you!c-mitsui@nri.co.jp22

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