business valuation cbre 2015

VALUATION & ADVISORY SERVICES BUSINESS VALUATION 2015

Financial Asset Valuation

Employee Subscription Right

Convertible Bond

Redeemed Preferred Stock

Guarantee Contract

DEFINITIONThe employer entitle employee to purchase company stock at a specific price in a specified period of time.

Besides the principal and interest, holder can convert bond into a specified number of common stock in the issuing company at a specific price.

A type of preferred stock that allows the issuing company to buy back the stock at a specific price after a specified period of time without paying interest for preferred stock anymore.

A contract to perform the promise, or discharge the liability, of a third person in case of his default.

世邦魏理仕www.cbre.com.cn

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WHEN to ASSESS the FAIR VALUE

The issue date. EMPLOYEE SUBSCRIPTION RIGHT

CONVERTIBLE BONDREDEEMED PREDERRED STOCK

GUARANTEE CONTRACT


On balance sheet day when following circumstances occur: 1. Guarantee contract possibly bring the

economic benefits outflow; Or 2. The amount of economic outflow cannot be

measured reliably.

Financial Asset ValuationVALUATION METHODS

Employee Subscription

RightUse binomial

option pricing model of income

approach.

Convertible Bond/Redeeme

d Preferred Stock

Use discounted cash flow method

and binomial option pricing

model of income approach.

Guarantee Contract

Evaluate enterprise credit rating in accordance to

international rating criteria and then

use binomial option pricing

model.


VALUATION PROCESS



Collect Data

Site Inspection

Submit Reports

Follow Up

Sign Contract

Company Valuation

Company Valuation

Fair Value

DEFINITION

According to related report standards, qualified person issue the report of the amount of sources and reserves of mineral and energy. Report standards for mineral are JORC Standards, NI43-101 and SAMREC Standards, for oil is PRMS.

The value of the property which would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.



Company Valuation


According to the regulation of exchange market, there must be “acquisition price valuation” on/before the following occasion: 1) extremely substantial transaction, 2) major transaction, 3) related party transaction, 4) reverse takeover action

MERGER and ACQUISITION

INVESTMENT and FINANCING REFERENCE 欢迎阁下致电垂询：电话： 8610 85880566 手机： 86 13718783915电邮： [email protected]

When investing, financing or applying for loan, valuation is required as decision making evidence.

TAX REPORT When involves endowment, legacy distribution or asset transfer, valuation is required as evidence of tax report.

Company ValuationVALUATION METHODS

Prio

rity

Market Comparison With necessary adjustments, use the value of traded similar enterprise or listed company as comparable case to valuate the fair value of the subject.

Acce

ptab

le Income

Approach Valuate the projected net income of the subject and discount it to determine the value of asset.

Exce

ption

Cost Approach

Reasonably appraise the value of all assets and liabilities on the balance sheets to determine the value of the subject.

Company Valuation

VALUATION PROCESS



Collect Data

Site Inspection

Submit Reports

Follow Up

Sign Contract

Minerals and Energy Sources Valuation

Sources and Reserves Report

Valuation Report

DEFINITION

According to related report standards, qualified person issue the report of the amount of sources and reserves of mineral and energy. Report standards for mineral are JORC Standards, NI43-101 and SAMREC Standards, for oil is PRMS.

According to related report standards, qualified valuer issue the report of the value of mineral and energy. Related report standards are CIMVAL Standards, SAMVAL Standards and VALMIN Standards.





According to the regulation of exchange market, following listed documents must be attached with sources and reserve report: 1) newly listed, 2) extremely substantial transaction, 3) major transaction, 4) reverse takeover action

SOURCES and RESERVES REPORT

VALUATION REPORT


According to the regulation of exchange market, following listed documents must be attached with sources and reserve report: 1) extremely substantial transaction, 2) major transaction,3) related transaction, 4) reverse takeover action


VALUATION METHODS

Market Comparison On valuation point, use the value of similar market transaction to valuate fair value of the subject, which requires recent comparable cases to realize the objectivity and reliability.

Income Approach

Sum up discounted value of annual projected net cash flow. This method is suitable for mine development in the production phase.

Cost Approach

Apply the amount of investment and cost of mine development as the evidence for mine valuation. This method is suitable for mine development in the early phase.


VALUATION PROCESS



Collect Data

Site Inspection

Submit Reports

Follow Up

Sign Contract

Biological Asset Valuation

Biological Asset

Agriculture Products

Fair Value

DEFINITIONAnimals or plants which have life, such as grape trees crops, artificial forest trees, sheep, cows and pigs.

Products of biological assets such as grapes, cotton, wood, wool, milk and meat.

The value of the property which would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.




WHEN to ASSESS the FAIR VALUEIn accordance with the provisions of the IAS 41, following circumstances need to be assessed:

1. The initial booked day (such as the birthday of a cow, the time crops are planted).

2. Each balance sheet day (at least twice a year for public companies).

BIOLOGICAL ASSET

AGRICULTUREPRODUCT


1. The initial booked day (like the harvest day).2. Each balance sheet day (at least twice a year for

public companies).

Biological Asset ValuationVALUATION METHODS

Prio

rity

Market Comparison If there is an active market for biological assets or agricultural products, the market prices should be the appropriate basis for determining the fair value of the assets.

Acce

ptab

le Income

Approach If the price or value of a biological asset market cannot be obtained, the fair value should be determined by the present value of the expected net cash flow.

Exce

ption

Cost Approach

It is suitable for biological assets, such as the newly planted fruit trees, which have little or no biological conversion from the original cost.


VALUATION PROCESS



Collect Data

Site Inspection

Submit Reports

Follow Up

Sign Contract

Merger and Acquisition Valuation

Enterprise Merger

Assessment of Acquisition Price

Assessment of Acquisition Price Allocation

DEFINITIONIn order to form a process that involves the input and the processing of input, create a business which can make output when purchase or merge assets or companies.

Value the fair value of the acquired assets or companies at the acquisition date, to make sure the acquisition price reasonable.

On the acquisition date, the acquisition price will be assessed into acquired tangible assets, intangible assets, debt and goodwill.





According to the regulation of exchange market, there must be “acquisition price valuation” on/before the following occasion: 1) extremely substantial transaction, 2) major transaction, 3) related party transaction, 4) reverse takeover action

ASSESSMENT OF ACQUISITION PRICE

(BEFORE MERGE)

ASSESSMENT OF ACQUISITION PRICE

(AFTER MERGE)


In accordance with the provisions of the IFRS 3, enterprises merger transaction must be followed by the action “Assessment of Acquisition Price Allocation”.


VALUATION METHODSAssessment of Acquisition Price

Market Approach

Use the recent market transaction as comparable to be the valuation evidence.

Income approach

Calculate the replacement cost of replace or reproduce company, based on the market price of similar market transaction, or the sum of the value of each independent asset in the enterprise.

Cost Approach

Calculate the sum of the discounted value of predicted net cash flow in the year.

Assessment of Acquisition Price Allocation

Asset/Debt

Categories Valuation approaches

Valuation methods

Asset Securities Market Approach

Market value method

Asset Trademarks/copyrights

Income approach

Option money economization

Asset Patents/ technology

Income approach

Residual income method

Asset Tenant relationship

Income approach

Residual income method

Asset Machines and equipment

Cost approach Replacement cost method

Debt Account receivables

Cost approach Adjusted book value method

Debt Long-term debt

Income approach

Discounted cash flow method

Debt Employee options

Income approach

Binomial option pricing method

Asset Goodwill Acquisition price less net asset price


VALUATION PROCESS



Collect Data

Site Inspection

Submit Reports

Follow Up

Sign Contract

Intellectual and Intangible Asset Valuation

Promotion

Customer

Art

Contract

DEFINITIONTrademark, authenticate, internet domain name, noncompetitive agreement.

Client relation and client contract.

Audio-visual copyright, musical copyright, literary copyright, pictorial copyright.

Use permission, construction permission, contract of tenancy, supply and marketing contract, employment contract.



Technology Patent, technology, formula, software, database.



1. In accordance with the provisions of IFRS 3, valuation for all assets and liabilities (intangible assets included) in acquired business is required when merge.

2. When intellectual assets and other intangible assets are pledged for loan.

3. Applied as reference when merger, acquisition or contribution of capital happen.

INTELLECTUAL and INTANGIBLE ASSET



VALUATION METHODS

Trademark, copyright

Option money economization

Multi-period excess earnings

approach

Patent, internet domain name


approach

Customer relation


approach

Supply and marketing

contract, noncompetitive

agreement, contract of

tenancyIncome difference

comparison

Software, formula, software

Income difference comparison/ Multi-period

excess earnings approach


VALUATION PROCESS



Collect Data

Site Inspection

Submit Reports

Follow Up

Sign Contract

Paul HungAssociate DirectorHead of Business Valuation, Greater China+86 137 1878 [email protected]

Peter MaManagerBusiness Valuation, Greater China+86 10 8688 [email protected]

Valuation & Advisory Services | China11th Floor| Tower 2, Prosper CenterNo. 5 Guanghua Road | Chaoyang District | Beijing, PRC 100020

business valuation cbre 2015

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