The Development of European Valuation Standards EVS 2003

The Development of European Valuation Standards & EVS 2003 – The New Standards 29/10/04

TEGo. VA Status Report TEGo. VA (TEGOVOFA) Formed in 1977 Now 40 Professional Associations in 27 European countries 1997 Edition of European Valuation Standards translated into 12 European Languages European Certification of Valuers introduced 26 January 2000 EVS 2000 Publication 8 November 2000 EVS 2003 Publication 29 April 2003 (following exposure on www. tegova. org) 29/10/04

Why European Standards? Cultural affinity/recognising diversity “subsidiarity” EU and national laws, customs and regulations/ similarities with USA Implementing the Single Market in the European Union Facilitating cross border business Contributing a coherent European position to assist the process of achieving best international practice Looking beyond financial statements 29/10/04

EU Treaties Directives & Regulations Treaty of Rome Directive on mutual recognition of diplomas Human Rights Accreditation Tax Harmonisation Development Grants Environment Competition Law Company Law Insurance Banking The EURO 29/10/04

EVS 2003 – What is new? Complete new chapters Amendments and additions to existing chapters Available on the web 29/10/04 Ease of interrogation

New and Amended Chapters New: Corporate Governance Market Shock Securitisation Substantially amended: 29/10/04 Agricultural chapter completely re-designed and re-written Valuation Methodology Country- specific section Business Valuations

Valuations of Agricultural Property for Loan Purposes Completely re-written In three parts: 29/10/04 farmland generally, together with relevant buildings and alternative uses crops and other agricultural assets which may be valued separately from the underlying land farmland committed to perennial crops.

Valuation Methodology Revised and updated throughout Important new section on Valuation of Freehold. Apartments (Condominiums) 29/10/04 Text provided by Germany Based on the method used in Germany Wide application throughout Europe

Country-Specific Chapter Critical for prospective investors and clients All country sections revised and new sections: Albania -Hungary-Italy-Romania Spain & Turkey Important new feature in the German section setting out and explaining the special German valuation methodology involving ‘Public Expert Committees’ 29/10/04

Available on the Web EVS 2000 on CD EVS 2003 on the Web Ease of interrogation Moving about the book – links between cross-references Ease of including extracts in valuation reports 29/10/04

Mortgage Securitisation Bank (Originator) (Servicer) Sale Mortgage Loans Placement Agent 29/10/04 SPV (Special Purpose Vehicle) Rating Agency Sale MBS I N V E S T O R Credit enhancer

Tasks of a Valuer in a Securitisation Transaction Drawing up a chances and risks profile Valuer Calculation of the market value 29/10/04 Calculation of the sustainable net asset value

Market Shock! 29/10/04

The Valuers’ Fiduciary Responsibility – Market Shock The immediate impact & aftershock Medium & long term effects Systemic risk, political, economic, social, technical, environmental, legal Sector impact – geographical impact 29/10/04

Corporate Governance & Code of Ethical Practice A new approach 29/10/04

Corporate Governance The Context The Enron Debacle & the crisis of confidence Sabanes-Oxley Act Globalisation The OECD Principles of Corporate Governance 29/10/04

Corporate Governance & the Valuer Corporate Governance & Valuation Standards - The Nexus (Integrity of Capital Markets) Fiduciary & Audit Responsibilities of the Valuer – Evolving Liabilities (New Protocols) 29/10/04

European Commission Comparative Study of Corporate Governance Codes The principle of “comply or explain” Codes across Europe are similar but difference result from national company law and securities regulation EU Action Plan: To strengthen the role of the non-executive directors and supervisory boards To strengthen the independence of audit committees To enhance checks and balances on executive salaries The role of the valuer 29/10/04

Business Valuations EVS 2003 - A revision of the existing standard Key elementsrevised definitions : 29/10/04 Enterprise Value Equity value Purpose of Valuation: M&A Winding-Up Sale of Part Finance Tax Transactions involving Share Holdings

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