Keppel Corp's Floatel conducts independent review

This follows after Floatel performed an impairment assessment of its vessels.

Keppel Corporation has put its associate Floatel in an independent review of the assumptions used in the conduct of its impairment assessment, an SGX filing revealed. The review will focus on the reasonableness of market outlook assumptions and parameters used in the valuation of its vessels.

The move follows after Floatel had performed an impairment assessment of its vessels and recognised an impairment of $42.65m (US$30.3m) to the book value of its vessels. In calculating the valuation-in-use (VIU) of its vessels, Floatel had made certain assumptions in respect of the charter rates, utilisation, operating expenses, capital expenditures and discount rate of its vessels. This came out in its Q4 results announcement.

Furthermore, in its 23 February announcement, Keppel stated that no further impairment was required on the carrying value of the company’s investments in Floatel of approximately $477m as at 31 December 2019. Its share of loss in Floatel amounted to $51m and faced a fair value loss of approximately $11m in respect of its investment in Floatel preference shares.

“It has recently come to the [Keppel Corp]’s attention, from a review of the consolidated financial statements of Prosafe SE for the first quarter of the financial year ending 31 December 2020 that Prosafe had made an impairment of US$810.5m to the book value of its vessels following a re-assessment of the market outlook and its assumptions used in the calculation of the VIU of its vessels,” the filing stated.

“Prosafe, which is a major competitor of Floatel in the same industry, has adopted different assumptions from that disclosed in its annual report for the financial year ended 31 December 2019 dated 14 April 2020, which were also significantly different from Floatel’s assumptions used in the calculation of the VIU of its vessels,” it added.