Valtech provides professional valuation of financial instruments to support financial reporting in relation to recognition and measurement, impairment, derecognition and general hedge accounting financial instruments.
The demand of financial instruments valuation in Hong Kong has been increasing steadily. The complexity of financial derivatives also increases along with the development of the financial markets.
Derivatives are widely used by listed companies for hedging and investment purpose (usually as a result of gaining protection while maintaining upside potential). On liability side, derivatives are usually involved as part of fund raising such as issuing convertible bonds and/or convertible preference shares.
The prosperity of private equity market bolstered by the PRC funds also contributes to investment in non-common equity, or specific class of equity, that leads to valuation needs for fair value reporting. Certain fund structure for fund raising purpose also creates class of debt, equity or hybrid interest that cannot be valued as a common equity or straight debt. Valuation of such derivatives require careful understanding on the contract terms.
Many companies do not have an active intention to gain exposure in derivatives. Their balance sheet still involves derivatives as a result of entering into various financing, business contracts and/or acquisition agreements. For example, profit guarantee provided by vendor will be a financial asset subject to fair value assessment. Depending on the mechanism of payouts, such guarantee contract can be a complicated financial derivative.
