European Plant, Machinery & Equipment Valuation Standards (EVS-PME)

by Konstantinos P. Pallis MEng DEA REV, Chairman of the European Plant, Machinery & Equipment Valuation Standards Board and Member of the Board of TEGOVA

In this book, concepts such as ‘fixed assets’ and ‘in situ’/’ex situ’ values, scrap value and the three types of obsolescence (technological, functional and economic) and many more particular to PME are defined and standardised, in order to set a common language for valuation practice in the European Union, the European Economic Area, candidate EU member states and EU-associated and Neighbourhood countries.

This book also serves the many practicing valuers throughout Europe who are asked to assess the value of both real estate and PME for lending purposes, financial reporting, and business purposes, helping bridge both fields of practice to deliver quality valuations to the highest standard.

These Standards, like all Blue Books, are in lock step with the EU regulatory framework. Environmental protection, energy conservation, health and safety in particular are becoming drivers for the depreciation of assets; valuers need uniform guidance in dealing with such issues.

EVS-PME 2022 was conceived and designed to foster convergence in PME valuation across Europe, providing common ground and best practice regarding methodology, reporting and valuation approaches to a fast-mutating industrial landscape.

PREFACE

It is a euphemism to call this Book ‘timely’. It’s a perfect conjunction of right time, right place, right industrial and geopolitical context.

When TEGOVA decided to develop the standards in the spring of 2020, the motivation was the high demand from European practitioners who wanted standards tailored to the European manufacturing context and to the general principles of valuation in TEGOVA’s European Valuation Standards. To that extent, it was the same as for the first ever European Business Valuation Standards, launched that year: filling a gap and not having to rely on whatever non-European norms and training were out there.

The European Plant, Machinery & Equipment Valuation Standards Board was already at work when the world changed, with the hydra of climate, pandemic and war and the sickening realisation that Europeans had gravely compromised their prosperity, health, safety and security – and raised their carbon footprint – by extending their supply lines to far away authoritarian or rogue regimes.

To the surprise of many sceptics, the European Union rose to the challenge with a massive and comprehensive legislative agenda for the repatriation, regeneration and greening of European industry and even more surprisingly, with a common EU budget to back it up.

Good and timely regulation has a way of kick-starting change even before it hits the statutes, and it’s happening now. This puts an absolute duty on the valuation profession to undergo its own transformation and learn to put a value on the components of the industrial transformation as it happens.

So it is that EVS-PME 2022 is at once steeped in the tradition and culture of all Blue Books – it has the same format and enunciates the same central valuation principles – and yet is also very different, driven by the nature of PME and because it is the child of economic and political forces that had not yet erupted during the gestation and development of EVS 2020 and EVS-BV 2020.

With this third pillar, TEGOVA’s valuation standardisation work now covers the entire European real estate, business and industrial economy with significant synergies between the three Blue Books.

Krzysztof Grzesik REV FRICS
Chairman of the Board of TEGOVA