Tuesday, May 7, 2013

Admin Escalation


1. Search the executable files of utility manager and command line console namely “Utilman.exe” & “Cmd.exe” in your windows’ system32 folder;
2. Backup and remove (or rename) your utility manager executable file;
3. Copy and paste and rename your command line executable file into “Utilman.exe”
4. Restart your computer and trigger the command line by pressing “Windows + U” before logging into the domain.
5. Launch the Computer Manager by typing “compmgmt.msc”
6. Adjust your current login into the Local Administrator group, done!
7. If, folder permission is limited, try another OS (e.g. Linux on a thumb drive) to start up the computer and edit the file mentioned in #3.

Tuesday, September 21, 2010

Valuation of business using DCF

Two most popular valuation methods:

1. Discounted cash flow (DCF) approach;

2. Comparables approach


We are talking about DCF in this topic.


DCF approach can be used to estimate the value of an equity stake either directly or indirectly.

1. Direct approach: Dividend discount model (DDM);

2. Indirect approach: Free cash flow to the firm (FCFF) model;


This topic focuses on the indirect approach.


Constant Growth Model: A variant of the discount cash flow model. An assumption that cash flows grow at a constant rate (g) forever yields the constant growth model. Note that the shareholders' reuquired return re must exceed g for this model to give a positive value for the share price.



It's employed to calculate the terminal value (next firm's value) in the calculation of firm's value using FCFF method;

Monday, September 20, 2010

Weighted Average Cost of Capital (WACC)

WACC = Ke x (E/V) + Kd x (1 - T)

Ke = Cost of equity
Kd = Cost of debt
E = Equity (e.g. total amount of share outstanding)
D = Debt (interest-bear debt)
V = E+D
T = Corporate tax rate

Ke = Rf + Risk Premium x Beta
CAPM model adopted
Rf = Risk free return (treasury bill, government bond)
Risk Premium = Rm (Market return) - Rf

Sunday, September 19, 2010

HK Profits Tax - Deductible/Non-deductible expenses

General section:
S.16(1), expenses incurred in the production of asseable profits, and
S. 17(1), expenses must NOT be capital in nature or for domestic or private purpose:

Exchange gain/loss: depends on whether the transaction giving rise the exchange difference is a revenue transaction or a captital transaction. *Deposit is treated as capital nature for normal company, while F.I. is treated as trading nature.

Payment to dimiss a director: The compensation payment made to dismiss a director is deductible. Although it is an "once-and-for-all" payment, there is no asset or enduring benefit created by the payment.

Interest payment: interest paid to bank (F.I., doesn't matter its interest income taxable or not) S16(2)(d), not secured by another deposit or loan, unless the interest from such deposit/loan is taxable to HK profits tax, or the borrower is not an associate or the borrower S16(2A), and the interest paid does not flow back to the borrower or its associate;

Interest income: It was taxable under Section 15(1)(f) and (g) if the interest income is derived from Hong Kong. The "provision of credit" test is used to determine whether the interest income is derived from Hong Kong. Since 22 June 1998, interest received from a hong kong F.I is exempt from payment of profits tax, except the deposit is used to secure a loan under Section 16 (2A);

Rent paid for the purpose of producing assessable profit: Paid to partner/partner's spouse under a Partnerhsip, deductible under S. 16(1)(b). *Paid to the proprietor is not deductible under a Sole-proprietorship business, paid to the spouse is deductible **No restriction (whoever is paid) under a corporation, as long as satisfy S.16(1) general section;

Bad debt - S.16(1)(d): Only specific trade debts which have been included as trading receipt, and proved to be bad to the satisfaction of the assessor are deductible. *general provision for doubtful debt is not deductible. **recovery of bad debt which has been allowed previously is assessable in the year of assessment when the bad debt is collected S16(1)(d)(ii);

Repair - S.16(1)(e): repairing expenditure is deductible as it is revenue in nature. "Repair" is to reinstall an asset back to its original status.

Legal expenses: Look at the nature of the transaction. *Lease - expenses incurred incurred in connection with the first letting of an immovable property are not deductible, capital in nature. Expenses incurred for the renewal of leave is deductible.

Audit fee: Deductible

Special deductions:
Initial contribution - S. 16A: initial contribution is deductible by five equal annual instalment (although is of a capital nature, "once-and-for-all payment" and an enduring benefit being created);

Research & Development - S.16B: expenditure on research and development related to a trade or a business, including capital expenditure (except to the extent that is an expendure on land or buildings or on alternations, additions or extensions to buidlings) are deductible;

Donation - S.16D: a person liable to profits tax may deduct the his/her approved charitable donation in a year of assessment from his/her assessable profit. It must be a cash donation;

Purchase and sale of patent rights - S.16E: Capital in nature and non-deductible under S.17(1)(c), however, the Purchase of patent rights or know-how rights for use in Hong Kong in the production of assessable profits is deductible as long as not purchased from an associate.

Expenditure on buidling refurbishment - S.16F: notwithstanding anything in Section 17, capital expenditure incurred on the renovation or refurbishment of a building or structure other than a domestic building or structure may claim the expenditure as an outgoing or expense incurred in the production of assessable profit. Alloed in 5 equal annual instalment.


Non-deductible:
Tax paid - S. 17(1)(g): Property tax and profits tax paid/payables are not deductible. Salaries tax paid/payable to partner/sole-proprietor/their spouses are not deductible. Salaries tax paid/payable for the remuneration of an employee or a director is deductible;

Improvement - S. 17(1)(d): cost of any improvement is not deductible. Purchase and decorate an office is an example of improvment. Re-decorate an office which has been used for few years is an example of repair S.16(1)(d). However, decoration of an office is subject to specific deduction under S.16(F).

HK Profits Tax - Change of intention, Revenue vs Captial in nature

Captial asset to trading stock:
When a company reclassifies the fixed asset to current asset in the balance sheet, it is a change of intention on the use of the asset;

At the date of change of intention, the fixed asset is no more captial asset, but a trading stock, and the market value of the asset would be at the date of change of intention;

The business is deemed to have sold a capital asset and purchases a trading stock on the date of change of intention;

The asssible profit on the sale of the asset is the excess of the sales proceed of the trading stock over the market value on the date of change of intention;


Trading stock to capital asset:
The business is deemed to have sold that particular trading stock and purchase a capital asset on the date of change of intention, although there has not been any receipt of sales proceed;

The taxable amount is the excess of the market value on the date of change of intention over its historical cost according to the rule of Sharkey v. Wernher;

HK Profits Tax - Consititute to a "Trade"

Six badgets of trade:
- Subject matter of realization;
- Length of ownership;
- Frequency of simiar transactions;
- Supplementary work done on the asset disposed;
- Circumstance leading to the sale;
- Profit-seeking motive;
None of the above factors is by itself conclusive, all the relevant factors have to be considered.

Methoid of acquisition of the asset is important to IRD to determine the existence of a trade;

If the asset is not acquired through purchase, but an involuntary acquisition such as inheritance from family member, it's like that the profit made from such transction is exempt from profit tax.

HK Profits Tax - Source of trading profits

DIPN 21 applies to determine the source of profit;

Contract effected test applies to determine the source of trading profit;

Both purchase and sales contracts effected outside Hong Kong would be exempted from Hong Kong Profits Tax;

There is no apportionment exemptions under contract effected test of DIPN 21. Either purchase or sales contract effected in Hong Kong, the profit arising from that that trade is fully taxable in Profits Tax;

"Effected" is interpreted as not just executing or signing a contract, it includes the process of negotiation to conclude the contract. Any activity occured in Hong Kong to conclude the contract is regarded as partly effected in Hong Kong. Thus, the profit from that trade transaction is fully taxable in Hong Kong.