State Development & Investment Corporation (SDIC) is a large, state-owned investment holding company in China. It operates more than 300 branches and subsidiaries and over 80 subsidiary groups—including several listed and offshore companies—arranged into six hierarchies. SDIC invests in a variety of sectors, including asset management, chemical fertilizer production, coal mining, communications, finance, high technology, and power generation. Its total assets are valued at US$36.8 billion.
As SDIC’s many subsidiaries and branches are widely dispersed across the country and include diverse investment funds and businesses, the corporation manages each subsidiary, based on its equity structure and operation. This challenged SDIC’s legacy financial consolidation system, due to frequent changes in equity relationships and structures, industry and statutory reporting requirements, subsidiaries’ varied hierarchies, and the complex financial accounting procedures required for financial consolidations.
To better meet its corporate financial management requirements, SDIC implemented Oracle Hyperion Financial Management. The application has standardized the accounting policies and consolidation tasks across the organization, improved the accuracy and transparency of financial data, and reduced the risk of subsidiary staff manipulating data. It has also eliminated previous uncertainty regarding the length of time required to consolidate accounting information for month-end and annual reports.
Financial data from subsidiaries across the hierarchy automatically flows into Oracle Hyperion Financial Management, where it is calculated, evaluated, verified, and consolidated. By using advanced consolidation features—such as automatic elimination of intercompany transactions and internal accounting items between subsidiaries, and presenting consolidation results based on hierarchies—SDIC has reduced the time taken to consolidate subsidiaries’ month-end financial data from 15 days to 7 days. This ensures the consolidation is complete in the required timeframe each month, and that management can more quickly see an accurate view of the organization’s global financial position. SDIC has also significantly reduced its annual financial consolidation cycle.
Oracle Hyperion Financial Management has standardized corporate financial consolidation processes across subsidiaries and enabled staff at headquarters to more efficiently monitor, manage, and audit the entire consolidation process. By improving the transparency of basic accounting information across the hierarchy of subsidiaries and providing automatic account verification processes for internal transactions, SDIC has also gained more stringent control over its subsidiaries.
In addition, SDIC can now automatically generate statutory and regulatory reports that meet capital market and investor disclosure requirements, and create standardized internal management reports. It can also manage and maintain equity relationships and subsidiary structures without making changes to the system.
The automated consolidation and reporting tasks have significantly improved staff efficiency and reduced labor costs as well. The organization now only requires two people to complete financial consolidation tasks, one from the finance department and one from the IT department.
SDIC needed a financial consolidation application that would support the complex hierarchical structure of its subsidiaries and frequent equity changes, as well as automatically consolidate financial data from across the corporation. It chose Oracle Hyperion Financial Management because the comprehensive, Web-based application was highly scalable and used international, best-practice data acquisition and financial consolidation functions, which suited its needs.
SDIC also wanted an application that would seamlessly integrate with its Oracle Hyperion Planning system, enabling the corporation to construct a financial management system that satisfies its accounting, business support, and strategic financial policy-making requirements.
SDIC began implementing Oracle Hyperion Financial Management at more than 300 branches and subsidiaries and over 80 subsidiary groups in April 2009.
The financial consolidation system went live in September 2009.