Road Town, Tortola, 25 February 2013. FLEX LNG (Oslo Axess: FLNG) is pleased to announce that the Q4 2012 financial report was approved by the Board of Directors on 22 February 2013.
In December 2012 the Company announced that it had not reached agreement on the amount of capital to be redeployed with Samsung. Given this the Company requested that the remaining capital be refunded. The refund amount requested was after credit being given for costs properly and reasonably incurred by Samsung on the Company’s behalf. To date no refund has been made, with Samsung disputing the Company’s position and arguing that no refund is due. Following the completion of certain contractual requirements for meetings between the parties’ representatives prior to the commencement of arbitration proceedings, the Company has commenced the steps required to initiate arbitration proceedings to secure the repayment of the paid-in funds. The Company has appointed the leading international law firm Pinsent Masons LLP to assist in this regard.
In the 2011 statutory accounts, the Group recognised an impairment write-down on the new build assets under IAS 36 (Impairment of Assets), of $112.3m. IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) covers the recognition criteria and measurement applied to contingent assets. It is the view of the Company that the valuation basis for the new building assets now falls within the definition of a contingent asset, given the initiation of the arbitration proceedings. Contingent assets are only recognised where realisation is virtually certain. Where the realisation of the asset is probable the asset should not be recognised in the statement of financial position. In Q4 2012 the new building assets have therefore been written down by $285.0m. The final valuation will either depend on the arbitration process or a possible agreement between the parties. Once the outcome of the position with Samsung is virtually certain the resultant asset value will be reinstated in the financial statements. In addition a calculation of the recoverable amount for the Topside capitalised costs has been completed under IAS 36 and a further $16.4m impairment write down has been incurred. Given the above the loss before tax was $292.0m in the quarter and $298.7m year to date, which includes the 2012 impairment adjustment of $301.4m. Additional details are contained in the Q4 report.