|
Article 14
|
An expert shall adopt an appropriate appraisal or valuation method according to the purpose of engagement, nature of the object under review, and status of data collection, etc. to ensure the conclusion in the opinion is drawn from the appraisal or valuation method that best reflects the value of the object.
|
|
Article 15
|
When an expert evaluates the appropriateness and reasonableness of the appraisal or valuation method adopted, and where the adoption of two or more appraisal or valuation methods are required according to the Regulations on Real Estate Appraisal, Statements on Standards for Valuation, or international conventions it refers to, the expert shall have sufficient reasons for only using a single appraisal or valuation method.
|
|
Article 16
|
An expert shall make a comprehensive comparison of the results derived from different appraisal or valuation methods, re-examine those with a noticeable discrepancy in amounts, and consider the degree of similarity of pricing factors based on the reliability of the data collected from different appraisal or valuation methods and the differences in the purpose or conditions of transaction to draw a final conclusion of the evaluation, and shall detail the reasons for its determination.
|
|
Article 17
|
An expert shall evaluate the level of future operating income and profitability of the object under review and take at least the following into account when adopting the income approach:
- future benefit flow
- obtaining historical financial information and making the necessary routine adjustments thereto.
- considering the industrial prosperity, market conditions, and the past operation or use conditions of the object under review.
- analyzing the reasonableness of assumptions made in the analysis of key factors concerning prospective financial information, comparing projected values and historical values of the material financial information items on which the prospective financial information is based, and analyzing the reasons for and reasonableness of material discrepancies (if any) between those values, with relevant supporting material obtained.
- increased capital expenditure and financial cost to accommodate future operational needs.
- determination and basis of the number of periods(forecast period and perpetual period) for estimating future income.
- determination of the future benefit flow and final value and basis and reasonableness of the relevant parameters (such as growth rate, tax rate, inflation rate), which should be compared with the corresponding information of market participants.
- consistency between the growth or decline of the future benefit flow and the analysis of economic and market conditions and management’s anticipation of the future performance of the object under review, etc.
- discount rate
- parameters and basis used for the choice of the discount rate, and reasons therefor.
- consistency between the discount rate and basis of extrapolation of the future cash flow.
- the discount rate of an intangible asset is normally higher than the overall discount rate of the enterprise using said asset.
- provide data in support of a premium or discount, for example, obtain information of a professional database or professional study report or consult other experts, and, if a similar transaction is drawn on, evaluate the appropriateness and reasonableness of the information on the transaction used.
- conduct a sensitivity analysis of any change to an assumption of a key input value where necessary.
|
|
Article 18
|
An expert shall take the following into account if it adopts the market approach:
- a comparable company or comparable transaction selected shall share similar metrics and a high risk association with the object under review. Lack of sufficient comparability necessitates a necessary adjustment. Factors to be evaluated in the selection of a comparable case include:
- similarity to the object under review, including in terms of quality and quantitative.
- quantity, verifiability, time effectiveness, and relevance of the comparable data.
- the price of the comparable transaction shall be that of an arm’s length transaction.
- The following shall be factored in in the selection, calculation, and adjustment of a value multiple:
- apply valuation multiples which can reasonably estimate the value of the object under review.
- a consistent basis and calculation method shall be employed in regard to valuation multiples used for comparison.
- evaluate the appropriateness and reliability of the comparable company or comparable transaction.
- identify factors that may affect the value of the object under review, assess and analyze each of them against the comparable company or comparable transaction to be drawn on, and, where necessary, adjust the reference valuation multiples or transaction price by the features of the object under review.
- provide reasonable data in support of a premium or discount.
- conduct a sensitivity analysis of any change to an assumption of a key input value where necessary.
|