Portfolio Management is one of our strategic solution set of Conso 123 which can support your end-to-end execution of Portfolio Strategy. You can control and automate sophisticated calculation rules of business contracts and related accounting treatments including initial recognition, measurable performance obligations, change in fair values and derecognition. Being a first product announcement within the product group, our Product Design Team has been investing an extended effort to design the app as a flexible standard package aims at minimising learning curve of system implementation as well as a maximising room of customisation by business users.

Fixed Rate Bond is one of very common investment for corporate and individual investors. It plays a key role of investment portfolio diversification. Comparing with floating rate debt instrument, fixed rate bond extend at least two more categories of risk. Firstly, bond prices will decline when interest rate increase. Secondly, when corporate investors hold a portfolio of fixed rate bond, they will expose a further risk of non-compliance of IFRS, local GAAPs, HKMA Regulations and Listing Rules. Management of authorised institutions, listed companies and investment fund vehicles will be concerned most of these matters.

Not only you are facing operational issues from day-to-day accounting and treasury operations to a monthly financial close of a company, but you may suffer from the accelerating problems due to frequent budgeting and rolling forecast exercises including some of critical reports to support risk and performance management. Extended problems will be arisen when some of your overseas subsidiaries they are also managing a unique bond portfolio using different accounting policies and systems from their headquarters, substantial works of GAAP adjustments are necessary in order to ensure the proper preparation of consolidated financial statements.

Thanks for the sophisticated accounting and calculation model of bond portfolio and your demand for advanced automation which motivate our LB Product Design Team to design the market unique apps in relation to the business domain areas of Asset and Liability Management.

The accelerating calculation rules of bond portfolio is due to accounting treatments and related disclosure requirements for local GAAPs and the IFRS which involve using different calculation rules for different stages of bond such as acquisition, monthly interest accrual, amortisation, interest received, maturity and early/partial disposal. So, the calculation shall be taking account of the following factors:-

a) trade, issue, settlement, maturity and disposal dates,

b) 28,29,30,31 days of a month, 365,366 days of a year,

c) 30 days of a month, 360 days of a year,

d) quantity for each acquisition and its full/partial disposal,

e) acquisition cost,

f) contract face value,

g) charging rate of dealer,

h) contract interest rate,

i) contract duration of interest distribution,

j) contract currency and daily exchange rate – IAS 21,

k) FIFO or average costing method – IAS 2,

l) amortisation method – IFRS 9,

m) credit rating of issuer – IFRS 7,

n) daily fair value – IFRS 13.

If your bond portfolio covers most of the above stages and factors, it shall not be a simple maths and accounting. Most of popular ERP software may not accept to follow the LBos approaches solving root computing issues in-depth.

Portfolio Management is designed for managing a diversified portfolio of business contracts which involve intensive calculation rules for better business management as well as IFRS compliance. In addition to fixed rate bond contract, following are other contracts relevant for your consideration:– 

> Insurance Contracts – IFRS 4

> Loan Contracts, Hedging Contracts – IFRS 7 & 9

> Construction Contracts – IFRS 15

> Lease Contracts – IFRS 16

> Employment Contracts – IFRS 2 & IAS 19