Rex International braces for massive impairment loss in FY14

Due to its investment in FRAM.

Catalist-listed Rex International Holdings today warned its shareholders that the group is expecting a significantly bigger loss for FY2014.

The loss is mainly attributable to the group’s additional investment in US-based FRAM Exploration ASA. Rex International has increased its stake to 30.29% from 22.29% following FRAM’s second fund-raising round.

“The Company has decided to take the prudent step of addressing impairment effects on the book value of its equity stake in FRAM in its fourth quarter 2014 financial statements. The decision has taken into consideration the lower implied valuation of FRAM in this fund-raising round, the effect of the current downward trend of oil prices on the pay-back of the concessions, as well as the increased difficulty in getting further investments in the short term, when a full drilling programme is being developed. The aforementioned impairment may result in the Group recording a significantly bigger loss for the financial year ended 31 December 2014 as compared to the losses recorded for the financial year ended 31 December 2013,” the company stated.