Study on State asset management in the EU€¦ · EU28 Summary Report 5 Figure 2 Ownership model of Non-financial assets by EU28 country, 2015 Source: KPMG elaborations. (1) With

Written by KPMG and Bocconi University February 2018

Study on State asset

management in the EU

Final study report for Pillar 2 – EU28 Summary Report

Contract: ECFIN/187/2016/740792

2

EUROPEAN COMMISSION

Directorate-General for Economic and Financial Affairs

Directorate Fiscal policy and policy mix and Directorate Investment, growth and structural reforms

European Commission

B-1049 Brussels

3

EU28 Summary Report

This fiche summarizes and put in perspective at EU level the country-specific analysis

presented in each of the 28 Country Fiches of this report. It provides a tentative overview of Non-financial assets owned by the Public Sector across the EU28

Countries.

Caution is warranted for cross-country comparisons. The information presented here

should be viewed as a first step in drawing a fuller picture of governments’ portfolios

in comparative perspective. To allow for a more comprehensive analysis, further development of the statistics would be needed in order to achieve broader data

coverage and to address differences in accounting methods.

1. OVERVIEW OF OWNERSHIP MODEL BY CLUSTER OF ASSETS BY COUNTRY

As it has been previously stated in the relevant Methodological Notes, Pillar 2 aims at

mapping and assessing the economic value of Non-financial assets included in General Governments’ portfolios across the EU28. This has been done by selecting and

analysing eight specific clusters of Non-financial assets, namely,: Dwellings, Buildings other than Dwellings, Ports, Airports, Roads, Railways, Mineral and Energy Reserves,

and Other natural resources (Figure 1).

Figure 1 Non-financial assets mapped in Pillar 2

Source: KPMG elaborations.

(1) For more details on the choice of Non-financial assets mapped in Pillar 2, please see the Methodological

Notes.

The relative value of Non-financial assets to total assets (Equity and Non-financial

assets) strongly depends on the ownership/management model implemented by the

General government, as ownership models could have relevant public finance effects1.

In all EU28 countries, assets within the Roads cluster in the scope of this analysis

appear to be owned by the General Government, which could decide to entrust their

management to one or more private companies or PSHs, or, again, directly manage

them. Since in all EU28 Countries road networks are directly owned by the State, the

road networks fall always within the scope of Pillar 2.

1 Ownership models play an important role in the value of Non-financial assets, as if their ownership is

transferred to a PSH (or any other private entity), they will not appear directly in the Government’s balance

sheet as Non-financial asset, and therefore in Pillar 2.

However, when the asset is owned and managed by the General government (or one of its bodies), the

assets (and revenues and losses associated with it) are fully recognised in the government’s balance sheets,

following the IPSAS 17 principle – “Property, plant and equipment”. Furthermore, when the assets are

granted in concessions (and, to some degree, this applies also to PPPs), following the IPSAS 32 principle,

they are recognised on the government’s balance sheets, as assets are almost always returned to the

government at the end of the service contract. Therefore, all the revenues and losses related to those

assets are recognized in the government’s balance sheets, contributing to lowering or raising the overall

public debt, respectively.

For more detail about the rules of accounting for Non-financial assets in government’s balance sheets (and

national accounts) and the potential implications on Governments’ public finances, please refer to Section

3.1 of the Methodological Notes.

Non-financialassets

mapped in Pillar 2

DwellingsBuildings

other thandwellings

Airports

MotorwaysMain and

Secondaryroads

Maritime Ports

RailwaysMineral and

Energy Reserves

Othernatural

resources

Study on State asset management in the EU – Pillar 2 EU28 Summary Report

4

The same happens for Natural resources, namely: Mineral and Energy Reserves and

Other natural resources. They are directly owned by the State and always fall within

the scope of Pillar 2.

With regard to Dwellings and Buildings other than Dwellings, onlythe assets directly

owned by the government are considered in the scope of this Pillar.

In 14 of the EU28 Countries, the property of the railway network has been transferred

to one or more PSHs (e.g. in France, the property of the railway network has been

transferred to Réseau ferré de France (RFF)). Therefore railway networks, for half of

the countries, have already been mapped in Pillar 1, since they are owned by one or

more PSHs. For other countries, except for Malta and Cyprus that does not have this

asset, railway infrastructures are considered within the scope of this Pillar.

Regarding the airport networks, there is not a unique model across European

countries:

in 5 countries (i.e. Spain, Germany, Finland, Latvia and Estonia) the property

of the infrastructures has been transferred to one or more PSHs (e.g. in Spain,

the property of the most of the Spanish airports has been transferred to

Aeropuertos Españoles y Navegación Aérea (AENA) SA). Therefore, the airport

networks for these countries fall in the scope of Pillar 1;

in 3 countries (i.e. Denmark, France, and Sweden) there is no unique

ownership model for airports, since the propery of some airports have been

transferred to one or more PSHs, while the others are still owned by the State

(e.g. in France aerodromes within the Ile de France are owned and managed by

a PSH (i.e. the Groupe ADP) while other airports are owned bylocal authorities.

In all these cases, only airports directly owned by the State are considered in

Pillar 2 , since the remaining are already covered in Pillar 1;

in the United Kingdom, most airport networks are owned by the private sector,

and therefore are to be considered out of the scope of this Study;

in the other 19 European countries, the airport networks are directly owned by

the State and fall within the scope of Pillar 2.

With regard to maritime ports, in 5 countries (i.e. Belgium, Estonia, Finland, Ireland, and the Netherlands) the property of infrastructures has been transferred to one or

more PSHs (e.g. in Finland the property of maritime ports has been transferred to the port authorities, that operate as private companies). Therefore, maritime port

infrastructures, for these countries, have already been mapped in Pillar 1 (since they are owned by one or more PSHs); while in the remaining ones are accounted forin

this Pillar (with the exception of countries without any maritime ports and United

Kingdom, where the majority of ports is owned by the private sector).

To conclude, it is useful to define the ownership model of non-financial assets for each

country to understand the breakdown between financial and non-financial assets. In this regard, Figure 2 provides a summary of the ownership models adopted by all

Member States.


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Figure 2 Ownership model of Non-financial assets by EU28 country, 2015


(1) With regard to the railway network, the ownership models for Czech Republic, Latvia, the Netherland,

and Sweden pictured in the maps represent the prevalent model for the cluster of asset in the country.

(2) With regard to maritime ports, the ownership models for Belgium and Estonia pictured in the maps,

represent the prelevant model for the assets cluster in the country.

(3) With regard to the airport networks, the ownership models for Finland, Germany and Spain pictured in

the maps, represent the prevalent model for the cluster of asset in the country.

More details about the ownership models and their coverage by EU28 Member States

either in Pillar 1 or Pillar 2 are provided at the Appendix.

Directly owned by the State or not present in the Country

Owned by a PSH

Privately owned

Mixed

Legend

Maritime Ports


Owned by a PSHPrivately owned

Mixed

Legend

Railways


Owned by a PSH

Privately owned

Mixed

Legend

Airports


Owned by a PSH

Privately owned

Mixed

Legend

Dwellings, Buildings other thandwellings, Roads, Mineral and Energy

reserves, Other natural resources


6

2. OVERVIEW OF NON FINANCIAL ASSETS

The value for each of these assets has been estimated through a “valuation

approach”2 (applying either the Perpetual Inventory Method (PIM) or market value). Dwellings, Buildings other than dwellings and Other natural resources are the only

assets whose values are usually mapped in national accounts. Therefore, for these assets, where available, data have been directly retrieved from publicly available

sources.

As shown by Figure 3, the estimated value of non-financial assets included in the EU’s

portfolios as a whole is equal to around 10,500 Eur Bn, accounting for about 63% of

the estimated value of all assets (including financial assets) owned by EU28 General

governments as a whole.

Among Non-financial assets Roads, Other natural resources and Buildings other than

dwellings are the three most valuable assets according to our study, accounting for

34%, 28%, and 24% of the total estimated value, respectively.

Figure 3 Total estimated value of Non-financial assets at an aggregate level for EU28

countries, 2015

Source: KPMG elaboration.

(1) Estimated values refer to 2015 as the latest available year for both financial assets and all clusters of

non-financial assets.

(2) In this chart, the “estimated value” of financial assets is reported in terms of Total Assets of the

country’s PSHs as weighted by the stake(s) owned by the Public sector into the PSHs themselves3.

(3) Since roads and railways are an illiquid asset we applied a Perpetual Inventory Method (PIM). However,

this valuation method tends to slightly overestimate the value of the asset. Therefore the chart shows

the lower bound figure of the range of road and railways valuation estimates only.

(4) The estimated value for Mineral and Energy reserves refers to the estimate computed on 2015 average

prices. Since the prices of Oil and Natural Gas can present many fluctuations over the year, the average

of all price points was used as an accurate representation of the annual value of this assets, in order to

better account for possible outliers.

In order to appropriately carry out a cross-country comparison, we compared the aggregated estimated value of Non-financial assets (i.e. those assets valuated in Pillar

2) and Financial assets (i.e. those assets mapped in Pillar 1) in General Governments’ portfolios as a whole.

As shown in Figure 4 below, the dimension of a country’s economy matters: countries such as Germany, France, United Kingdom and Italy occupy preeminent positions

2 For more detail please see the Methodological notes.

3 For more details on how Total Assets for Financial Assets are calculated, please see Pillar 1.

37%Total assets

16,553.4 Eur

Bn

Non-financial Financial

36.7%

63.3%

Illiquid assets

354.1

2,551.7 108.4

3,611.1410.5 54.3

407.3

2,977.8 10,475.3

0

2,000

4,000

6,000

8,000

10,000

12,000

Dwellings Buildingsother thandwellings

Ports Roads Railways Airports Mineraland

energyreserves

Othernatural

resources

Non-financialassets

Bn Eur


7

when considering the absolute estimated values; however that’s not the case in

relation to the country’s GDP.

Figure 4 Total assets (Equity and Non-financial assets) in General Government’s

portfolios by EU28 country, 2015


(1) The Non-financial assets includes: Dwellings, Buildings other than dwellings, Roads, Railways, Airports,

Ports, Mineral and Energy reserves, and Other natural resources.

(2) Total financial assets includes the total financial assets owned by the PSHs in the country, weighted by

stake(s) owned by Public sector into PSHs.

(3) As reported in Pillar 1, the mapping of Hungary and Lithuania’s financial assets is not reliable since there

are too many missing values to perform a reliable analysis.

However, as already shown above in Figure 2 for the EU28 as a whole, the portfolios of public assets show the same pattern across the EU28 Member States. The share of

Non-financial assets in General governments’ portfolios is higher than the share related to financial ones for most Member States. Figure 5 below shows the results of

the comparison between Financial assets and Non-financial assets across the EU28.

Figure 5 Comparison between Financial assets and Non-financial assets by EU28

country, 2015


(1) Financial assets includes the assets owned by the PSHs in the country, weighted by stake(s) owned by

Public sector into PSHs.

(2) As reported in Pillar 1, the mapping of Cyprus, Hungary and Lithuania’s financial assets is not reliable

since there are too many missing values to perform a reliable analysis.

0%

50%

100%

150%

200%

250%

300%

350%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

FR

DE

UK IT ES

SE

NL

BE

PL

AT

CZ

RO IE FI

DK

EL

PT

HU

HR

BG

SK SI

LU LT

LV

EE

CY

MT

% of GDPBn Eur

Total assets Non-financial assets as % of GDP

0

500

1,000

1,500

2,000

2,500

3,000

3,500

FR DEUK IT ES SE NL BE PL AT CZRO IE FI DK EL PT HUHRBGSK SI LU LT LV EE CY MT

Bn Eur

Financial assets Non-financial assets


8

3. OVERVIEW BY CLUSTER OF NON-FINANCIAL ASSETS

3.1. The estimated value of Non-financial assets by cluster

Economic valuation of the assets in a comparative perspective are carried out using specific benchmarking methods. To do so, and to provide the policy maker with an

overall consistent assessment across the EU28 countries, Non-financial assets are compared considering both the absolute estimated value of clusters by Member State,

as well as the normalised values, adjusted by the country’s gross domestic product (GDP), (again, for a suitable benchmark at the European scale).

Figure 6 graphically shows the aggregate estimated value of the stock of non-financial assets by country, while breaking it down by their “components” (i.e. the clusters of

Non-financial assets). It illustrates how Buildings other than dwellings, Roads and

Other natural resources are the most valued assets in this Study.

Figure 6 Key “Components” of Reported Non-financial Assets by EU28 country, 2015


As shown in Figure 6 above, the dimension of a country’s economy matters; countries such as Germany, France, the United Kingdom, Italy and Spain occupy preeminent

positions when considering the absolute estimated values; however, this is not the case if looking at countries’ GDP. Indeed, some relatively smaller countries (such as

the Baltic, Southeastern States, and Croatia) shows higher normalised estimated

values.

In this paragraph, as mentioned above, we compare Non-financial assets as described

throughout the different Country fiches in this Pillar, considering both the absolute estimated value of clusters by Member State, as well as the normalised values, using

GDP as adjustment factor.

Figure 7 below reports both the estimated absolute value and the normalised

estimated value of Dwellings for each EU28 country. A key insight can be seen by examining the map; those countries showing a high estimated absolute value for

Dwellings do not keep the same position after the estimated value is adjusted by GDP.

Rather, some relatively smaller countries (such as the Baltic states) show a higher normalised estimated value.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

FR DE UK IT ES SE PL CZ AT RO NL DK EL BE FI IE PT HU BG HR SK LT LV SI EE LU CY MT

Eur Bn

Other natural resources Mineral and Energy reserves Railways

Roads Airports Ports

Buildings other than dwellings Dwellings

0%

50%

100%

150%

200%

250%

300%

350%

% of GDP

Non-financial assets as % of GDP


9

Figure 7 Comparison of the estimated value of Dwellings across EU28 Member States,

absolute values and normalised values, 2015

Source: KPMG elaborations

(1) Estimated values for Dwellings have been adjusted by the country’s GDP. (2) Data coverage on Dwellings is not complete because data transmissions to Eurostat is subject to specific

derogations (for more details please refer to Table 11 in the Annex).

Figure 8 below reports both the estimated absolute value and the normalised

estimated value of Buildings other than dwellings for each EU28 country. As for Dwellings, those countries that present a high estimated absolute value for Dwellings

do not keep the same position after the estimated value has been normalised for the

GDP. Rather, some of the smaller countries (such as the Baltic States) show a higher normalised estimated value.

Figure 8 Comparison of the estimated value of Buildings other than dwellings across EU28 Member States, absolute values and normalised values, 2015


(1) Estimated values for Buildings other than dwellings have been adjusted by the country’s GDP. (2) Data coverage on Buildings other than dwellings is not complete because data transmissions to Eurostat

is subject to specific derogations (for more details please refer to Table 11 in the Annex).

Figure 9 below provides a comparison of the estimated value of airports across EU28 Member States. A key insight can be seen by examining the map; those countries

114 Eur Mn – 1,791 Eur Mn

1,791 Eur Mn – 3,212 Eur Mn

3,212 Eur Mn 16,193 Eur Mn

16,193 Eur Mn – 66,063 Eur Mn

Absolute value

Legend

Value as a % of GDP

0.2 – 1.2%

1.2% – 3.7%

3.7% - 6.3%

6.3% - 20.3%

Legend

Absolute value

3,005 Eur Mn – 14,442 Eur Mn

14,442 Eur Mn – 36,700 Eur Mn

36,700 Eur Mn – 94,313 Eur Mn94,313 Eur Mn – 624,018 Eur Mn

Legend10.3% – 13.3%

13.3% – 18.8%

18.8% - 29.3%

29.3% - 72.7%

Value as a % of GDP

Legend


10

showing a high estimated absolute value for airports do not keep the same position

after the estimated value is adjusted by GDP. Rather, some relatively smaller countries (such as Luxembourg, Malta and Cyprus) show a higher normalised

estimated value.

Figure 9 Comparison of the estimated value of airports across EU28 Member States,



(1) Estimated values for Airports have been adjusted by the country’s GDP.

(2) Airports in United Kingdom are not in the scope of Pillar 2 since they are fully private.

(3) Airports in Spain, Germany and Finland are considered out of the scope since they have been already

mapped in Pillar 1

(4) Airports in France, Denmark and Sweden are valuated both in Pillar 1 and 2 as some of them are owned

by PSHs.

The scenario became even clearer for Maritime ports. In this case, as Figure 10 shows, top ranked countries in terms of (absolute) estimated values for ports are among the

least valuable if the estimated value of the infrastructure is adjusted by GDP.

Figure 10 Comparison of the estimated value of maritime ports across EU28 Member States, absolute values and normalised values, 2015

Absolute value

129 Eur Mn – 497 Eur Mn

497 Eur Mn – 1,024 Eur Mn1,024 Eur Mn – 3,200 Eur Mn

3,200 Eur Mn – 14,044 Eur Mn

Not in the scope of Pillar 2 since airports are private

Airports have been already evaluated in Pillar 1 since they are owned by a PSH

Legend Legend0.1% – 0.6%

0.6% – 0.9%

0.9% - 1.5%

1.5% - 4.3%

Not in the scope of Pillar 2 since airports are private

Airports have been already evaluated in Pillar 1 since they are owned by a PSH

Value as a % of GDP

Absolute value



7,993 Eur Mn – 21,411 Eur Mn

Not in the scope of Pillar 2 since Maritime ports are private

Legend

There are no Maritime ports in the country

Maritime ports have been already evaluated in Pillar 1 since theyare owned by a PSH

Legend0.5% – 1.3%

1.3% – 2.2%

2.2% - 2.7%

2.7% - 12.8%Not in the scope of Pillar 2 since Maritime ports are private

There are no Maritime ports in the country

Maritime ports have been already evaluated in Pillar 1 since theyare owned by a PSH

Value as a % of GDP


11


(1) Estimated values for Ports have been adjusted by the country’s GDP.

(2) Ports in United Kingdom are not in the scope of Pillar 2 since they are fully private.

(3) Ports in Finland, Ireland and in the Netherlands are considered out of the scope since they have been

already mapped in Pillar 1.

(4) Austria, Czech Republic, Hungary, Luxembourg and Slovakia do not have Maritime ports.

The following two figures show the comparison between the estimated values of roads

and the estimated values of railways. For both assets, those countries that present a high estimated absolute value do not keep the same position after the estimated value

has been normalised for the GDP. Rather, some of the smaller countries (such as the Baltic States) show a higher normalised estimated value.

It is worth highlighting that, in line with the valuation approach implemented, the results in the normalised graphs for road/rail are not driven by country size but by a

combination of (i) population density (less densely-populated country tend to have more kilometers of road/rail length per capita); (ii) GDP per capita (the lower it is, the

higher the estimated value of road/rail as a percentage of GDP, for a given road/rail

length per capita); (iii) the legacy of a large rail network in the new Member States. Note, however, that the correction factor slightly mitigates this effect.

Figure 11 Comparison of the estimated value of railways across EU28 Member States, absolute values and normalised values, 2015


(1) Estimated values for Railways have been adjusted by the country’s GDP.

(2) Railways are out of the scope of Pillar 2 because, given their ownership model, they have already been

mapped in Pillar 1.

(3) Cyprus and Malta do not have railways in their countries.

Absolute Value

3,646 Eur Mn – 13,188 Eur Mn


46,043 Eur Mn – 89,008 Eur Mn

There are no Railways in the country

Railways have been already evaluated in Pillar 1 since they are owned by a PSH

Legend

Value as a % of GDP

7.1% – 19.4%

19.4% – 34.3%

34.3% - 44.0%

44.0% - 60.3%

There are no Railways in the country

Railways have been already evaluated in Pillar 1 since they are owned by a PSH

Legend


12

Figure 12 Comparison of the estimated value of roads across EU28 Member States,



(1) Estimated values for roads have been adjusted by the country’s GDP.

Figures 13 and 14 show the comparison between the estimated values of Mineral and Energy reserves in the scope of the study and the estimated values of Other natural

resources. Both assets show the same trends whn normalised for GDP. In fact, the great disparity among the size of Mineral and Energy reserves and Land, respectively,

among countries translates in a great heterogeneity in the economic values of proven

reserves even when they are normalised for GDP. In fact, countries with the highest estimated values in absolute terms are approximately still the most valued in relative

terms.

Figure 13 Comparison of the estimated value of Mineral and Energy reserves across

EU28 Member States, absolute values and normalised values, 2015

Source: KPMG calculations on Orbis (BvD) database.

(1) Estimated values for Mineral and Energy reserves have been weighted by the country’s GDP.

(2) Belgium, Estonia, Finland, Latvia, Luxembourg, Malta, Portugal, Slovenia and Sweden have no Mineral

and Energy reserves in the scope of the study.

1,074 Eur Mn – 28,437 Eur Mn

28,437 Eur Mn – 48,253 eur Mn


Absolute Value

Legend7.8% – 19.0%

19.0% – 35.4%

35.4.7% - 50.8%

50.8% - 128.3%

Value as a % of GDP

Legend

Absolute value



24,361 Eur Mn – 152,002 Eur Mn

Legend

There are no Mineral and Energy reserve in the country

Legend

Value as a % of GDP

0.2% – 0.7%

0.7% – 1.9%

1.9% - 8.8%

8.8% - 65.1%There are no Mineral and Energy reserve in the country


13

Figure 14 Comparison of the estimated value of Other natural resources across EU28

Member States, absolute estimated values and normalised estimated values, 2015

Source: KPMG calculations on Orbis (BvD) database.

(1) Estimated values for Other natural resources have been weighted by the country’s GDP.

(2) In order to ensure comparability across EU28 Countries, only the estimated value of lands have been

considered as a proxy of Other natural resources.

3.2. Competitive features for the economic sectors related to Non-financial

assets

The economic sectors related to Non-financial assets are often characterized by a non-

competitive structure with a strong public sector presence – this is typically the case

of infrastructure networks. For this reason, the EU Commission has designed specific “packages” to promote competition in these sectors with the aim of stimulating

economic performance across all sectors of the economy and offering a broader choice of better-quality products and services and at more competitive prices.The competitive

features of these economic sectors have been analysed at EU28 level mainly across the following relevant dimensions:

concentration of the market;

sector profitability and relevance of the public sector presence.

Competitive features are analysed for those sectors mainly linked to the management

of the infrastructure networks.

However, the EU Commission “packages” are mainly directed to the users of

infrastructures (e.g. companies operating rail transport services) rather than to managers of infrastructures.

3.2.1. Market concentration

The concentration of the market related to Non-financial assets, as shown in Figure

15, has been analysed based on the cumulative market share in terms of Operating revenues of:

the top 1 company of the sector;

the top 5 companies of the sector;

the top 20 companies of the sector.


4,976 Eur Mn – 30,722 Eur Mn

30,722 Eur Mn – 100,090 Eur Mn

100,090 Eur Mn – 726,103 Eur Mn

Absolute Value

Legend3.1% – 10.8%

10.8% – 17.5%

17.5% - 26.5%

26.5% - 55.3%

Value as a % of GDP

Legend


14

The following paragraphs will provide a brief description of “packages” adopted by the

EU Commission, checking the actual market concentration of the sectors at EU28 level4.

Railways and roads

EU legislative intervention

Regarding railways, four legislative packages were adopted between 2001 and 2016 with the main aim to gradually open up rail transport service markets for competition.

With regard to the railway infrastructures, the entities in charge of the management of

the rail infrastructure (i.e. infrastructure managers) are now separate, at least in accounting terms, from the companies operating rail transport services; this is one of

the imperative applications of Dir 91/440, relating to the development of the Community’s railways, adopted on 29.07.91.

The legislation regulating the competition within the road transportation sector roughly

corresponds to the laws which apply to the railway network.

Market concentration

As shown by Figure 15, the sector “services activities incidental to land transportation”, which includes rail and road “infrastructure managers”, is still

characterised by an high cumulated market share of the top 20 companies across Europe (i.e. around 56%).

Market concentration is particularly high when railways only are considered, since in

almost all EU28 countries there is only one infrastructure manager for railways.

Airports


Also in the case of airports the legislation has been mainly directed to the users of

infrastructures (e.g. companies operating in transportation services) rather than to managers of infrastructures.

In the 1990s, a single market for aviation was created.

The Regulation 1008/2008 November 1st 2008 set the common rules for the economic operation of air services in the European Community (i.e. the “Air Service

Regulation”). The Commission also drafted the Aviation package for improving the competitiveness of the EU Aviation Sector5. Market concentration

The sector “service activities incidental to air transportation” is still characterised by a

high market share of the top 20 companies (i.e. around 65%).

Ports


4 For more information about the sector analysed please see Table C in Appendix EU28. Due to the

hetherogeneity of other sectors related to Non-financial assets, it is not possible to estimate the specific

competitive features for the other assets mapped in Pillar 2 (Dwellings, Buildings other than Dwellings,

Mineral and Energy reserves and Other natural resources).

Please note that to carry out a reliable analysis, NACE sectors (Rev.2) are taken into account, since they

represent the best proxies of markets we are concerned with. However, these NACE secors do not refer only

to our specific markets and therefore could include a wider selection of operators. 5 For more information about the Aviation package for improving the competitiveness of the EU Aviation

Sector please see: https://ec.europa.eu/transport/modes/air/consultations/2015-aviation-package_en

[Accessed 21st July 2017].

https://ec.europa.eu/transport/modes/air/consultations/2015-aviation-package_en


15

In 1986, the European Commission adopted the first piece of legislation which

regulated the competition for international maritime ports and insured that competition was not distorted by abusive agreements: Regulation (EEC) No 4056/86.

Then in 2003 the Commission adopted a new policy package in order to liberalize port services.

Market concentration

Among the markets analysed, the port sector seems to be characterised by a

relatively lower market concentration. In particular, “service activities incidental to

water transportation” is denoted by a relatively lower market share of the top 20 companies (i.e. around 52%).

Figure 15 Cumulative market share in terms of Operating revenues of top companies in economic sectors related to Non-financial assets, 2015

Source: KPMG elaboration on Orbis (BvD) database, 2015 [downloaded in September 2017].

3.2.2. Market profitability and relevance of the public sector presence

Sector profitability and relevance of the public sector presence in markets related to Non-financial assets, as shown in Figure 16, has been analysed based on the following

three KPIs:

the average EBITDA margin of the industry, used to explore the average

profitability of the firms within the sector;

the share of PSHs’ operating revenues, used to investigate the relevance of

public sector in the market;

the relevance of the sector within total economy by measuring its value added.

The following paragraphs will provide a brief analysis of the sectors at EU28 level6.

6 For more information about the sector analysed please see Table C in Appendix EU28. Due to the

hetherogeneity of other sectors related to Non-financial assets, it is not possible to estimate the specific

competitive features for other assets mapped in Pillar 2 (Dwellings, Buildings other than Dwellings, Mineral

and Energy reserves and Other natural resources).

Please note that to carry out a reliable analysis, NACE sectors (Rev.2) are taken into account, since they

represent the best proxies of markets we are concerned with. However, these NACE secors do not refer only

to our specific markets and therefore could include a wider selection of operators.

12

8

12

29

31

38

52

56

65

0 10 20 30 40 50 60 70 80 90 100

Market share in terms of operating revenues (%)

Top 1 Top 5 Top 20

5223Service activities incidental to air transportation

5221Service activities incidental to land

transportation

5222 Service activities

incidental to water transportation


16

Railways and roads

As shown in Figure 16, the sector “services activities incidental to land transportation” is characterised by a high profitability and by a significant public sector presence (i.e.

around 30% of the market share).

It is also worth highlighting that all railways infrastructure managers across the EU28

countries are public sector entities.

Airports

The sector “services activities incidental to air transportation” is characterised by a

high profitability and by a strong public sector presence (i.e. around 45% of the market share).

Ports

The sector “services activities incidental to water transportation” seems to be the least

profitable sector among the sectors analysed. However, it is characterised by a relatively lower public sector presence (i.e. around 20% of the market share).

Figure 16 European market attractiveness of Non-financial assets, 2015

Source: KPMG elaboration on Orbis (BvD) database, 2015 [downloaded in July 2017].

4. DATA COMPARABILITY AND DATA COVERAGE: LIMITATIONS OF NON-FINANCIAL ASSETS

In this section, we discuss the two main issues affecting comparison of Non-financial

assets among countries.

It is not always possible to reliably compare some clusters of assets among some

countries. This is particularly true, as was previously mentioned, for assets like Dwellings, Buildings other than dwellings and Other natural resources. This is mainly

due to the fact that, although EU Member States have a obligation to provide data on

the value of assets according to ESA2010 standards, some items are voluntary and some derogations are granted to EU28 countries regarding compulsory items. This, of

course, generates many data gaps. These gaps have been filled first by looking other sources, then if other sources were not available we estimated the missing values

-10

-5

0

5

10

15

20

25

30

35

40

70.065.060.055.050.045.040.035.030.025.020.015.010.05.00.0

EBITDA margin Industry (%)

Share of PSH total revenues (%)

Service activities incidental to air transportation

Service activities incidental to water transportation

Service activities incidental to land transportation

High profitabilityLow public sector market share

The size of the bubbles shows value added of the total industry scaled by GDP High profitabilityHigh public sector market share

Low profitabilityHigh public sector market share

Low profitabilityLow public sector market share


17

using a market approach, as shown in Table 1 above. More details on this issue are

provided in the Methodological Notes of Pillar 2 and at the Annex.

Table 1 Data coverage for Dwellings, Buildings other than dwellings and Other natural

resources


(1) Since the value for Buildings other than dwellings for Italy was not available from Eurostat, then it has

been retrieved from ISTAT.

(2) Only France and Czech Republic report both Land and Non cultivated biological resources.

Therefore, data comparability across countries for some clusters of assets is not

always ensured, mainly due either to lack of data, and the fact that our estimates are

not fully comparable with Eurostat data.

5. SUMMARY

This “consolidated” EU28 Fiche provides a cross-country comparison of the Non-financial assets owned by the Public Sector across the EU28 Countries, taking into

account the different ownership models.

Countries with the highest estimated value of total assets in absolute terms (Financial and Non-financial) tend to be the biggest European Countries, both for population and

GDP. However, when adjusting the estimated value for GDP we are presented with a different picture.

Country DwellingsBuildings other

than dwellings

Other natural

resources

Austria

Belgium

Bulgaria

Croatia

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Latvia

Lithuania

Luxembourg

Malta

Netherlands

Poland

Portugal

Romania

Slovakia

Slovenia

Spain

Sweden

United Kingdom

The value of the asset is directlyavailable from public sources

Legend

The value of the asset has beenestimated

+

+


18

Furthermore, when looking at the estimated value of Non-financial assets, the

Ownership models adopted by the Member States take on a key role. Those countries which report the highest GDP adjusted estimated value of Non-financial assets are, in

fact, those which adopt ownership models in which the asset is directly owned by the Government. As a matter of example, the Southeastern countries (such as Romania

and Bulgaria) show relatively higher normalised estimated value compared to other EU countries; this is mainly related to the fact that the Non-financial assets analysed in

this report are directly owned by the Government, and fall within the scope of Pillar 2.

The same happens for some Baltic States (such as Lithuania) and for Croatia; in fact, they do report the highest normalised estimated values for Non-financial assets.

It is worth highlighting that in 14 countries, including the biggest European countries (such as Germany, France, Italy, United Kingdom and Spain), the property of railway

infrastructures has been transferred to one or more PSHs. Therefore, the railway networks for these countries fall within the scope of Pillar 1.

Therefore, we can conclude that ownership models play an important role in the value of Non-financial assets, as if their ownership is not transferred to a PSH (or any other

private entity), they will appear directly in the Government’s balance sheet as Non-

financial asset, and will therefore impact Pillar 2 results.

In general, the analysis shows that, at the European level, Non-financial assets

represent the majority of the General government’s total holdings (63.3% of total assets). This trend is also usually present when looking at the country specific

breakdown of the share of total assets.

To conclude, a disclaimer must be added with regard to the comparison of clusters of

Non-financial assets across countries. Indeed, a key challenge is related to data coverage, as transmission of data by Member States to Eurostat is still scattered, and

a comprehensive datasets across sectors and countries is still to be released. In fact,

general and country-specific exemptions regarding data transmission obligations are still applied (affecting, in particular, the following clusters: Dwellings, Buildings other

than dwellings, and Other natural resources).


19

Appendix I EU28

Table A Mapping Non-financial assets across Pillars, 2015

Source: KPMG elaboration

(a) This table includes only the assets whose value has not always been mapped in Pillar 2 of this Study.

(1) Airports are valuated both in Pillar 1 and 2 as some of them are owned by PSHs.

(2) This country does not have this particular type of asset covered by the study.

(3) In United Kingdom, since this asset has been privatised, then this asset is considered out of the scope of

this Study.

Country Maritime ports Roads Airports RailwaysMineral and

Energy reserves

Austria Not present(2) Pillar 2 Pillar 2 Pillar 1 Pillar 2

Belgium Pillar 1 Pillar 2 Pillar 2 Pillar 1 Not present(2)

Bulgaria Pillar 2 Pillar 2 Pillar 2 Pillar 2 Pillar 2

Croatia Pillar 2 Pillar 2 Pillar 2 Pillar 2 Pillar 2

Cyprus Pillar 2 Pillar 2 Pillar 2 Not present(2) Pillar 2

Czech Republic Not present(2) Pillar 2 Pillar 2 Pillar 2 Pillar 2

Denmark Pillar 2 Pillar 2- Pillar 1

- Pillar 2(1) Pillar 1 Pillar 2

Estonia Pillar 1 Pillar 2 Pillar 1 Pillar 1 Not present(2)

Finland Pillar 2 Pillar 2 Pillar 1 Pillar 2 Not present(2)

France Pillar 2 Pillar 2- Pillar 1

- Pillar 2(1) Pillar 1 Pillar 2

Germany Pillar 2 Pillar 2 Pillar 1 Pillar 1 Pillar 2

Greece Pillar 2 Pillar 2 Pillar 2 Pillar 1 Pillar 2

Hungary Not present(2) Pillar 2 Pillar 2 Pillar 1 Pillar 2

Ireland Pillar 1 Pillar 2 Pillar 2 Pillar 1 Pillar 2

Italy Pillar 2 Pillar 2 Pillar 2 Pillar 1 Pillar 2

Latvia Pillar 2 Pillar 2 Pillar 1 Pillar 2 Not present(2)

Lithuania Pillar 2 Pillar 2 Pillar 2 Pillar 2 Pillar 2

Luxembourg Not present(2) Pillar 2 Pillar 2 Pillar 2 Not present(2)

Malta Pillar 2 Pillar 2 Pillar 2 Not present(2) Not present(2)

Netherlands Pillar 1 Pillar 2 Pillar 2 Pillar 1 Pillar 2

Poland Pillar 2 Pillar 2 Pillar 2 Pillar 1 Pillar 2

Portugal Pillar 2 Pillar 2 Pillar 2 Pillar 2 Not present(2)

Romania Pillar 2 Pillar 2 Pillar 2 Pillar 2 Pillar 2

Slovakia Not present(2) Pillar 2 Pillar 2 Pillar 2 Pillar 2

Slovenia Pillar 2 Pillar 2 Pillar 2 Pillar 2 Not present(2)

Spain Pillar 2 Pillar 2 Pillar 1 Pillar 1 Pillar 2

Sweden Pillar 2 Pillar 2- Pillar 1

- Pillar 2(1) Pillar 2 Not present(2)

United KingdomOut of the

scope(3) Pillar 2Out of the

scope(3) Pillar 1 Pillar 2

20

Table B Estimated value of Non-financial assets by EU28 country, 2015


(a) The values written in italics were estimated through our own models as explained in the Methodological Notes.

(1) For some countries the value of Mineral and Energy reserves is zero because it reflects the estimated value of proven Oil and Natural gas reserves, as reported by the CIA's

World Factbook Database.

(2) The value of Other natural resources includes only the value of land. Please not that Czech Republic and France transmit also the value of other “components” included in this

clusters, namely Non cultivated biological resources and Water resources. For more detail, please see Czech Republic and France’s Country fiches.

(3) This country does not have this particular type of asset.

(4) In United Kingdom, since this asset has been privatised, then this asset is considered out of the scope of this Study.

(5) Since for this cluster of assets the ownership model is the Indirect Ownership & Indirect Management model, then this asset has been already valuated in Pillar 1 through the

equity method

Data in Eur Bn

Country Dwellings

Buildings other

than dwellings Maritime Ports Airports Roads Railways

Mineral and

energy reserves(1)

Other natural

resources(2)

Total Non-financial

assets

Austria 0.6 49.0 Not present(3) 2.5 90.5 Pillar 1(5) 2.9 159.3 304.9

Belgium 17.6 55.0 Pillar 1(5) 3.6 42.5 Pillar 1(5) <0.5Bn 53.7 172.3

Bulgaria 8.9 27.4 1.3 0.7 18.0 27.3 1.2 25.1 109.7

Croatia 3.1 13.8 1.0 0.6 47.4 18.8 5.5 17.7 107.9

Cyprus 1.2 3.0 <0.5Bn 0.7 10.5 Not present(3) 11.5 0.6 28.0

Czech Republic 9.9 118.6 Not present(3) 1.1 86.7 73.0 1.0 16.5 306.7

Denmark 14.2 55.7 4.6 <0.5Bn 29.3 Pillar 1(5) 32.0 69.5 205.7

Estonia <0.5Bn 5.3 Pillar 1(5) Pillar 1(5) 26.0 Pillar 1(5) <0.5Bn 5.2 36.9

Finland 1.5 43.9 Pillar 1(5) Pillar 1(5) 63.3 37.4 <0.5Bn 36.4 182.5

France 59.4 328.2 13.8 6.5 724.4 Pillar 1(5) 4.8 726.1 1,863.2

Germany 27.6 624.0 13.8 Pillar 1(5) 565.4 Pillar 1(5) 18.0 454.1 1,702.9

Greece 2.2 18.6 8.0 4.2 110.9 Pillar 1(5) 0.6 44.5 188.9

Hungary 3.1 42.3 Not present(3) 0.9 44.8 Pillar 1(5) 2.0 17.7 110.8

Ireland 12.0 31.1 Pillar 1(5) 2.6 49.1 Pillar 1(5) 0.8 74.2 169.8

Italy 54.4 254.7 21.4 14.0 350.9 Pillar 1(5) 30.7 324.0 1,050.1

Latvia 2.4 8.7 3.1 Pillar 1(5) 12.3 13.6 <0.5Bn 4.3 44.4

Lithuania 0.8 4.2 2.0 <0.5Bn 30.5 11.8 0.6 4.2 54.4

Luxembourg <0.5Bn 14.7 Not present(3) 0.8 7.7 3.6 <0.5Bn 3.2 30.2

Malta 1.9 6.7 <0.5Bn <0.5Bn 1.1 Not present(3) <0.5Bn 2.1 12.4

Netherlands 3.3 86.2 Pillar 1(5) 6.9 53.0 Pillar 1(5) 85.8 36.8 272.0

Poland 7.4 44.3 3.2 2.7 130.4 Pillar 1(5) 11.5 156.1 355.4

Portugal 16.9 18.8 4.0 3.4 46.7 24.3 <0.5Bn 5.5 119.6

Romania 16.1 25.4 2.1 1.1 127.5 72.0 37.6 19.5 301.2

Slovakia 3.2 16.4 Not present(3) <0.5Bn 38.7 29.0 1.6 4.0 93.0

Slovenia 2.1 10.2 0.9 <0.5Bn 18.5 10.7 <0.5Bn 1.3 43.7

Spain 66.1 150.0 20.7 Pillar 1(5) 404.0 Pillar 1(5) 7.5 336.0 984.2

Sweden 1.4 158.7 7.9 <0.5Bn 184.4 89.0 <0.5Bn 81.4 523.1

United Kingdom 16.6 337.0 Out of the scope(4) Out of the scope(4) 296.8 Pillar 1(5) 152.0 298.9 1,101.2


21

Table C NACE sectors analysed for competitive features

Sector NACE code Definition

Service activities

incidental to air

transportation

52.23

This class includes:activities related to air

transport of passengers, animals or freight (operation of terminal facilities such as airway

terminals etc, airport and air-traffic-control

activities,ground service activities on airfields etc.); firefighting and fire-prevention services at

airports.

Service activities

incidental to land transportation

52.21

This class includes: activities related to land transport of passengers, animals or freight

(operation of terminal facilities such as railway stations, bus stations, stations for the handling of

goods,operation of railroad infrastructure, operation of roads, bridges, tunnels, car parks or

garages, bicycle parkings, winter storage of caravans); switching and shunting; towing and

road side assistance.

Service activities incidental to

water transportation

52.22

This class includes: activities related to water transport of passengers, animals or freight

(operation of terminal facilities such as harbours

and piers; operation of waterway locks etc.; navigation, pilotage and berthing activities;

lighterage, salvage activities; lighthouse activities).


Study on State asset management in the EU€¦ · EU28 Summary Report 5 Figure 2 Ownership model of Non-financial assets by EU28 country, 2015 Source: KPMG elaborations. (1) With

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