ESG Reporting

Financial Reporting

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CPA, FCCA, CIA, CISA, CTA (HK)
Ricky is responsible for Risk Management Advisory and Environment, Social and Governance (ESG) Advisory services in AVISTA.
Ricky has 20 years of experience in the fields of accounting, auditing, taxation, asset management, corporate finance and risk management. He has advised pre-IPO and listed clients in various industries, including property, financial services, TMT, manufacturing and licensed corporation, etc. Before joining AVISTA, Ricky had worked in Cheung Kong (Holdings) Limited, Ernst &amp; Young and KPMG in Hong Kong for a number of years.
Ricky has been invited to speak for the seminars and training of professional institutions such as, HKICPA, HKICS, HKiNEDA as well as those of various listed companies and professional training centers to share his valuable experiences in areas, including listing, risk management, internal control and ESG.

RICKY HO

Director

CPA, ACS, CTA(HK), CIA
Joey has profound experience in enterprise risk management, internal controls, financial due diligence and external audit.
Joey has more than 10 years’ experience in handling assignments of initial public offerings, resumption of trading and merger and acquisition exercises for listed companies. She has extensive experience in different industries including manufacturing and trading, property development and investment, financial services, money lending and provision of educational services.
Before joining AVISTA, Joey had worked for professional advisory firms and accounting firm with extensive experiences in providing accounting, auditing, risk advisory services for HK IPO listing companies and listed companies.

JOEY LEONG

Principal

CPA, CIA
Andrea has over 10 years experiences in the fields of corporate governance, due diligence, business consulting, risk management and internal control review. She has served clients in a range of industries, including garment and textile, licensed corporation, property, construction, automotive, pawn loan, travel and tourism, logistics, mining, energy, TMT, financial services, catering, healthcare, beauty and wastewater treatment etc.
Before joining AVISTA, Andrea had worked for professional advisory firms, accounting firm and multinational corporation with extensive experiences in providing accounting, auditing, risk advisory services for HK IPO listing companies and listed companies.

ANDREA KWAN

Sabrina has 6 years of substantial experience in environmental, social and governance / corporate sustainability, risk assessment and investor relations advisory for Hong Kong listed companies spanning a wide variety of industries including but not limited to information technology, healthcare, Internet finance, property development, investment &amp; management, luxury goods &amp; retail, video games &amp; entertainment, new energy, wastewater treatment, water supply, hospitality, food &amp; beverages, apparel &amp; textile, logistics and manufacturing across Hong Kong, Mainland China, Australia and other Asia Pacific regions.
Sabrina has been a reviewer for the Sustainability and Social Responsibility Reporting (SSR) award under the HKICPA’s Best Corporate Governance Awards (BCGA) since 2020, reviewing the ESG report of the selected listed companies based on her professional knowledge and insights in the ESG profession.

SABRINA LAM

Newly-Released ESG Guide Consultation Conclusions and ESG Disclosure Review by HKEX

With reference to a guidance document issued by the China Appraisal Society (“CAS”) in relation to discount rate calculation, the China Securities Regulatory Commission (“CSRC”) launched the Regulatory Guidance - Valuation (the “Guidance”) in January 2021 to standardize the parameters of discount rate calculation in the income approach.
 
The Guidance provides specific requirements for the parameters in Capital Asset Pricing Model (“CAPM”) and Weighted Average Cost of Capital (“WACC”), including risk-free rate, market risk premium, beta, capital structure, specific risk premium and expected return of debt.
 
With AVISTA’s experience in business valuation, the key points of the Guidance for the discount rate calculation are outlined below.
 
Background and Objective 
 
The discrepancies for the current valuation practices in the income approach have been prevailing among valuation entities (“Entities”), ranging from sample selection, parameters’ determination and calculation methodology. Meanwhile, the valuation process may also be influenced by complicated and subjective judgment, which would impact the reliability of company’s financial data and valuation result.
 
Accordingly, the CSRC formulates the Guidance in order to standardize the discount rate calculation, thereby enhancing the regulations in the valuation industry.
 
Fundamental Requirements 
 
The Guidance enumerates 3 fundamental requirements to the Entities highlighting the consistency and reasonableness in the discount rate calculation.
 
<ol>
<li>The Entities must formulate a set of consistent principles and methods for discount rate calculation. Upon formulation, the principles and methods could not be revised at discretion afterward to ensure the consistency of valuation projects. </li>
<li>The Entities must ensure the reasonableness of discount rate calculation on multiple valuation dates. The Entities should clarify any significant changes of parameters from the previous valuation date in the valuation report. </li>
<li>The Entities must ensure the alignment between discount rate and expected return, which requires CAPM in line with the Free Cash Flow to the Equity (“FCFE”) and WACC in line with the Free Cash Flow to the Firm (“FCFF”). </li>
</ol>
Instructions on Parameters
 
The Guidance provides instructions for 6 parameters typically used in the discount rate calculation. In general, the Guidance requires the Entities to disclose parameter-related methods, analytical processes and data sources in the valuation reports. The details of the instructions to each parameter are specified below.
 
<ol>
<li>Risk-free rate
<ul style="list-style-type: square;">
<li>China 10-year or above government bond and its yield to maturity should be adopted under the assumption of going concern. </li>
</ul>
</li>
<li>Market risk premium
<ul style="list-style-type: square;">
<li>If the primary business of the target company to be valued (the “Target”) is within China’s territory, the historical risk premium data of China Securities Market index should be adopted as a priority. </li>
</ul>
</li>
<li>Beta
<ul style="list-style-type: square;">
<li>The Entities should take into account the enterprise size, profitability, growth, etc. in their consideration of comparability of comparable company to determine the beta, as well as select the beta with the appropriate time horizon. </li>
</ul>
</li>
<li> Capital structure 
<ul style="list-style-type: square;">
<li>The Entities must conduct analysis for the discrepancies between the Target and comparable company as well as the development stage of the Target with reference to the adopted capital structure, alongside disclosure and clarification. </li>
<li>The debt-to-equity ratio should be measured by market value. Clarification should be provided in the valuation report if book value is used. </li>
</ul>
</li>
<li>Specific risk premium 
<ul style="list-style-type: square;">
<li>The Entities must evaluate the Target’s risk characteristics, enterprise size, core competitiveness, etc. when determining the specific risk premium. </li>
</ul>
</li>
<li>Expected return of debt 
<ul style="list-style-type: square;">
<li>The Entities must assess the Target’s operating performance, capital structure, credit risk, etc. if Loan Prime Rate (“LPR”) is taken as reference. </li>
<li>The Entities must assess the Target’s financing options, cost of debt, solvency, etc. if non-market interest rates are adopted. </li>
</ul>
</li>
</ol>
To read the full Regulatory Guidance released by CSRC, please click <a href="http://www.csrc.gov.cn/pub/newsite/ztzl/jggzsyzy/202101/t20210122_391113.html" target="_blank" rel="noopener">here</a>. (Available in Chinese version only) 
AVISTA’s Professional Services for Business Valuation
 
As a professional valuation and financial advisory firm, AVISTA provides reliable business valuation services and accommodates the valuation needs in various transactions, including merger and restructuring. Our valuation experts are ready to advise you on asset valuation in compliance with the latest regulatory guidance.
 
For further information or enquiries regarding the potential valuation impact of the CSRC’s regulatory guidance on discount rate calculation, please feel free to contact us.

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CSRC Regulatory Guidance on Discount Rate Calculation in Income Approach

A growing concern of sustainability has been emerging in the investment community over the past decade. It was an old thought that considering sustainability for society implied sacrificing financial returns of investment. The development of Environmental, Social, Governance (ESG) investing, however, has demonstrated a different story.
 
This publication introduces the engagement of PRI from investor community, various ESG assessments in capital market such as MSCI ESG Ratings, the shift in focus on ESG issues due to the preferences of younger generation’s investors and COVID-19, and also the prevalence of green investment in the global investment community.
 
Please <a href="../../../../../uploads/The_Emergence_of_Sustainability_Agenda_to_Investment_ESG_Investing_a014243ea9.pdf" target="_blank" rel="noopener">click here</a> to read the full publication.
 
<a href="../../../../../uploads/The_Emergence_of_Sustainability_Agenda_to_Investment_ESG_Investing_a014243ea9.pdf" target="_blank" rel="noopener"><img src="../../../../../uploads/cover_dea6ff8687.JPG" width="600" /></a>

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The Emergence of Sustainability Agenda to Investment—ESG Investing

The effectiveness of COVID-19 vaccines and the control measures are still the key for the future movement of the Hong Kong office market. The policy shift with the advancement of the investors and the office operators play a role in supporting the office market and there is a growing demand for co-working office space in Greater Bay Area due to asset enhancement and strategic connectivity between cities.
 
Click <a href="../../../../../uploads/AVISTA_HK_Office_Market_Insights_Q4_2020_EN_e3f1cdd9df.pdf" target="_blank" rel="noopener">here</a> to read the insights.
 
<a href="../../../../../uploads/AVISTA_HK_Office_Market_Insights_Q4_2020_EN_e3f1cdd9df.pdf" target="_blank" rel="noopener"><img src="../../../../../uploads/cover_en_a613654089.jpeg" width="600" height="852" /></a>