Society of
Share and Business Valuers
AGM: was held on 9 June 2010
Next meeting to be advised.
Recent SSBV presentations
"Beta and total beta: misconceptions and interpretations"by Dr Christopher Tofallis, June 2010
Beta or Total Beta? That is the question.
Beta is a well known and established measure of volatility. However, arguably it is an unstable statistic that may perhaps even be worthless. Many people, relying upon textbook knowledge, do not always appear to understand what it measures. There is also an inconsistency between the interpretation of beta and how it is calculated.
Total beta is simpler to calculate and also coincides with the interpretation that people usually give. It does not depend on the correlation between the asset and the market and so should be more stable.
Dr Tofallis is a senior lecturer in Operational Research/Management Science at the University of Hertfordshire Business School. He holds a first class honours degree in physics, a Masters degree in Operational Research (LSE), a PhD in applied mathematics, and strongly believes that quantitative methods must be simple and transparent in order to gain wide acceptance. Currently engaged in research aimed at developing quantitative methods which are easy to comprehend and yet provide advantages over existing methods, he will discuss the merits of both of these measures.
FRC Study: Accounting for Acquisitions, January 2010
The Financial Reporting Council (FRC), the UK's independent regulator responsible for promoting confidence in corporate governance and reporting, has conducted a study, recently, into accounting for acquisitions in accordance with IFRS 3, Business Combinations. The study considers the extent to which there has been compliance with the requirement to identify and value intangible assets, such as brands, technology and customer contracts, separately from goodwill.
Speakers:
Ian Wright, Director of Corporate Reporting at the FRC
Shân, an SSBV member
Download Powerpoint presentation from this talk.
Alfred King of
Marshall and Stevens:
“US Implementation of Fair Value”, October 2008
Al’s latest book ‘Executives Guide to Fair Value’ (Wiley 2007): re-directing the focus of its pre-decessor, ‘Fair Value for Financial Requirements’ (Wiley 2006) - attracted reviews :
“The advent of fair value reporting is not your Momma’s (or your Papa’s) kind of accounting. If you’re a financial professional above the age of twenty-five who is working in industry, read this book. From choosing a fair value specialist to the perils of ‘made as instructed’ valuations to purchase price allocations to impairment testing to that SEC tripwire, customer relationships, fair value expert Al King gets it right. And he does so with neither jargon nor literary anesthesia. As a former CFO myself, all I can say is WOW!” - Warren D. Miller, CFA, ASA, CMA, CPA, Cofounder, Beckmill Research
Download Powerpoint presentation from this talk.
Rob May’s Discussion Outline: "The RICS and intangible asset valuations", June 2008
- ·There are well-defined valuation methods but are there recognised international standards for the valuation of intangible assets? Some of these assets are only found as an apportionable part of a larger transaction, such as goodwill.
- Roles of IVSC and RICS as setters of standards for valuers of assets. The direction of travel of the RICS.
- The kinds of intangible that the RICS is researching - business valuations/ goodwill, property-rich SPVs, licences and permits for trades like agriculture, minerals extraction, carbon trading and waste handling.
- Goodwill. What is it, why is it important to real property valuers?
- Conclusions. A work in progress. Taking an inclusive approach alongside experts in each of these fields. Care needs to be taken to manage the competencies of the individual practitioners. I also know my own limitations!
Chris Hart’s Discussion Outline: “Gather all ye men of goodwill”, June 2008
- Current problems with HMRC - incorporations & apportionments of property transactions for SDLT
- How HMRC formed their current view.
- Balloon' in a property context
- UK GN 3.
- The three elements property, chattels & 'goodwill'.
- Is this really goodwill or a group of intangible assets?
- How the market has been apportioning these elements.
- How might it be sensibly, practically and consistently achieved.
Speaker Details:
Rob May MA, FRICS is chairman of the RICS Trading-related Valuation Group, with special expertise in the valuation and licensing of pubs. Rob has been recruited last year by one of his former clients, Enterprise Inns plc, to manage their rent roll and advise both their in house management and leased pub retailers on the profitability of their businesses. Rob has recently been taking particular interest in defining and analysing the definition and valuation of goodwill, and has been asked by the RICS to chair a group to investigate the setting of standards for the valuation of any types of intangible assets.
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Chris Hart, FRICS, is a specialist in UK property taxation valuations, he was, at one time a First Class Valuer in Chief Executives Office of the VOA, specialising in, Income and Corporation Tax [including Capital Gains Tax] and Capital Allowances. He devised the HMRC, method of apportionment for Capital Allowances in “second hand buildings”. From 1989 to 1999 he was a partner in GVA Grimley, specialising in Taxation, Rating and Compulsory Purchase and latterly in PFI and PPP schemes.
He now practices on his own account offering a range of specialist, mainly taxation, or public sector valuation, based, consultancy services to a variety of clients including Diageo.
He is a member of the RICS Taxation Policy Panel, [Chairman 1992 to 1999], and currently Vice Chairman. He is involved, for the RICS’, in detailed consultations with HMRC and the VOA on the impact and drafting of primary legislation. He is RICS representative on the HMRC, Land and Property Consultative Group, an RICS spokesperson on PGS, its subsequent replacement and SDLT. He also lectures extensively on property taxation matters.
He was primary author of the RICS’s Valuation for Taxation purposes guidance paper, now UK GN 3 in the RICS “Red Book”. He is co-author of a ‘Handbook on Stamp Duty Land Tax’ together with Tony Johnson, published by the Estates Gazette, a contributor to ‘Principles into Practice’, ‘The Landlord & Tenant Review’, Taxation and other publications.
Mark Butler, PwC and Malcolm Berryman, LECG
"Pension Accounting and Valuation",
October 2007
Mark Butler, PwC - Mark is a Director in PwC's Integrated Corporate Pensions Solutions team. He specialises in advising on the valuation implications of pension schemes, including in transactions, where he draws on his background in Corporate Finance. Mark has spent time on secondment to the Pensions Regulator.
Malcolm Berryman, LECG - Malcolm is an affiliate at LECG and a qualified actuary. Malcolm was formerly the Group Chief Executive of Liverpool Victoria Group, and prior to that was CFO at Crown Financial Management. Malcolm was the appointed actuary at these companies.
David Cairns, director of the ICAEW-run project for the European Commission on the implementation of IFRS: "The Use of Fair Values in Financial Reporting under IFRS", June 2007
- Required, preferred and optional use of Fair Value in IFRS reporting
- What is, and what is not, Fair Value
- Entry prices and exit prices
- Use of Fair Value on the initial measurement of assets and liabilities
- Use of Fair Value in impairment tests
- Use of Fair Value for subsequent measurement of assets and liabilities
- Fair Value in practice: the use of Fair Vales in the IFRS financial statements of EU entities
Speaker Details: www.cairns.co.uk
David Cairns is a Chartered Accountant who has specialised in international financial reporting since 1978. He advises companies, accounting firms, government agencies and standard setting bodies on the application of IFRS and provides extensive IFRS training. He is the director of the project on the evaluation of IFRS financial statements of EU companies which the ICAEW is carrying out on behalf of the European Commission. He was the secretary-general of the International Accounting Standards Committee from 1985 to 1994.
David Cairns is currently a member of the following professional committees:
- Financial Reporting Review Panel (UK FRC);
- Financial Services and Other Special Industries Committee (UK ASB);
- Working Group on Accounting Standards for Small and Medium-sized Entities (IASB); and
- International Advisory Board (Institute of Chartered Accountants in England and Wales).
Ian Lewis, Chief Executive of SAMIAN Underwriting Agencies Limited:
"Intangible Asset Insurance - A new insurance paradigm",
March 2007
Ian Lewis addressed the development of IP Insurance from its roots as part of a combined legal expenses insurance, through its establishment as a product class providing both offensive and defensive solutions, up to the present day offerings including first party exposures.
Ian discussed some of the issues that effect how underwriters view risks, including patent validity (statutory vs. commercial), freedom to operate and dispute mitigation planning. Ian will also be able to provide some insight into a new generation of insurance products aimed at insuring the value of the asset itself and other securitisation or credit enhancement solutions.
Nick Bertolotti, Managing Director, Head of Media Equity Research CSFB:
"The approach taken in the City to valuation and differences from traditional valuation theory",
November 2005
Nick's talk included:
- analysing the excessive valuations of the Internet boom
- the role of momentum and trends
- the focus on relative rather than absolute value
- the various valuation techniques preferred by the City
- the impact of supply and demand for stock.
Kimberley Crook, Senior Project Manager, International Accounting Standards Board:
"IFRS 2: Share-based payment", April 2005
Kimberley was the Senior Project Manager at the IASB who developed and wrote the accounting standard IFRS 2, Share-based Payment. The requirements of the standard have a direct impact on valuation practitioners who are being called upon to assist clients with valuations of employee share options and other equity-related rewards.
Kimberley's talk covered the follow areas:
- overview of IFRS 2 requirements
- background to Board's decisions - e.g. re selection of "modified grant date" approach
- differences between IFRS 2 and US GAAP
- research undertaken in drafting the standard
- comments re valuation inputs/ models to be used
- problems anticipated.
Click here to see the slides for this presentation.
Mike Pilgrem, Valuations Director at Deloitte:
"The Use of Intellectual Property as Security for Debt Finance", June 2005
Mike is a Director in the Valuation team at Deloitte. Mike spoke about a survey undertaken by his firm into the use of intellectual property as security for raising debt. His talk covered the use of IP rights such as brands, copyrights and patents to obtain debt facilities.
Mike explained that this was an important consideration for small, fast-growing and large, established businesses alike. He addressed legal and market issues and reported on developments since the launch of the "Bowie bond" in 1997.
Rawle Parris, Executive Director, ABN Amro:
"The Basics of Valuation and Risk Management of Financial Derivatives", September 2005
Rawle is Head of the newly-formed property derivatives team at ABN Amro. He and his team have responsibility for monitoring the bank's exposure to various types of derivatives, which includes "marking them to market" on a regular basis. Rawle's talk covered:
- examples of financial instruments including equity and credit derivatives
- features and purposes of different instruments
- valuation principles
- risk management overview
- impact of IAS 39, 'Financial Instruments: Recognition and Measurement', including restrictions on "Day 1" profit recognition
Click here to see the slides for this presentation.
