Investor’s Guide to ESEF Reporting

The future of financial reporting is here, and as European listed companies have started publishing in ESEF, a question begs itself. How do you, the investor, benefit from the new European Single Electronic Format?

The new European Single Electronic Format is supposed to make financial disclosures of listed companies more transparent and easier to compare, but how can you, as an investor benefit from the new format? In this article, we’ll give you a full explanation of what you can gain from ESEF. But first, let’s look at what an ESEF report is.

If you are new to analyzing financial reports, we’ve made an pdf on what you should initially look for in annual reports. You can find it at the very end of this article

What Is ESEF?

A financial report formatted in ESEF isn’t a single file but rather a zip-folder containing several files, which collectively make up the zip-package. A financial report in ESEF is made up of a visual layer and an XBRL layer. This means they can be read by both humans and machines alike, making them ideal for investors to analyze and compare financial reports. Accessing the XBRL layer even makes it possible to analyze financial reports in languages you don’t speak.

How Do You Read a Financial Report in ESEF?

If you just want to access the visual representation of the financial report in question, you can do so by opening the XHTML file locate in the reports folder in the ESEF package.

However, if you want to maximize the potential of the new format you need to use an iXBRL consumption tool such as the free ParsePort XBRL Inspector. Using such a tool will let you access both the visual layer and the XBRL layer of the report in question.

What Should a Financial Report in ESEF Include?

Without going into the nitty gritty details of the ESEF requirements, the best way to explain what should be included is to say, that financial reports in ESEF should include the same information they always have, but further they need to be both human and machine readable, and the information accessible to a machine should be identical to the information accessible to a human.

How Investors Can Benefit from ESEF

The primary benefit to the new reporting format is first and foremost the increased transparency and accuracy of financial reports, but that said, there are several things you can do with ESEF reports, if you have access to a decent consumption tool:

  1. The XBRL taxonomy allows you to perform analyses of annual reports in languages you do not speak. You can simply look at the XBRL data and load the taxonomy in a language you speak
  2. You can easily compare annual financial reports from different companies or different years by viewing certain figures (such as net profit, operating cash flow or net debt) head-to-head
  3. You can more easily weed through jargon related to specific industries by looking at the way extensions are anchored to the ESEF taxonomy, making it easier to analyze financial reports from unfamiliar business areas
  4. You can easily access all annual reports published by European listed companies either through the databases of the national regulators or by going to https://filings.xbrl.org/

This list is in no way exhaustive, and every day investors discover new ways to benefit from the European Single Electronic Format. How much you plan to rely on the new format in your analysis process is up to you, but with consumption tools available at no expense to you, there is no reason to ignore the new reporting format.

What should You Look for in an Annual Report?

We’ve made a short guide on how you can get a quick idea of whether a company is doing well or not by looking at their financial report. If you are new to private investment, or if you just want to brush up on your analyzing skills this is for you.

Analyzing Annual Financial Reports 101
Kim Eriksen

Kim Eriksen

Kim Eriksen is the co-founder and CEO of ParsePort

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