Moore Stephens Envisages Increased Pressure for Incipient Impairment in Shipping

(Press Release)
Monday, July 30, 2012

Accountant and shipping industry adviser Moore Stephens says it expects to see an increase in the sort of pressure recently exerted on shipping companies by the US Securities and Exchange Commission (SEC) to make disclosure when the market value of their vessels is less than their carrying value.


The pressure for this type of disclosure, often referred to as ‘incipient impairment’, has been reflected in the 2011 filings of many SEC registrants. Moore Stephens partner David Chopping says, “The SEC has seen impairment charges in the accounts of a number of shipping companies in the last few years. But it has apparently not seen quite as many as it might have been expecting. It is easy to understand why the SEC, and others, might consider disclosure of market value to be useful information and want to see it more widely disseminated. It is more objective than valuations based on management estimates, it is more comparable across companies, and it sets benchmarks against which companies’ own policies can be assessed. Indeed, for some parties, the information might seem far more important than valuations based on projected future income streams.

“At the same time, it is equally easy to visualise objections to such disclosure. Values are to be determined on an unfixed basis, so are arguably of only limited relevance where vessels are fixed for fairly long periods with high-quality charterers. Similarly, while values may look comparable, if the fixture position differs significantly, then such comparability might be considered spurious. And even if a vessel is operating in the spot market, or a fixture is going to be ending shortly, whilst other objections might be less compelling, there are still concerns about the volatility of market values. How relevant is a valuation at a point of time in a volatile market where an asset might have many years still to operate?

“Nonetheless, it seems very unlikely that the SEC will change its mind and decide that such disclosure is not useful. It is far more likely that other bodies, and indeed investors, will start expecting to see such information. This can happen without any need for changes in the rules, and indeed the SEC has not explicitly changed the disclosure requirements. It seems to have relied more on the ‘Al Capone’ approach of a kind word; everyone already knows it has a gun!”

 

Maritime Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Russia's Shipping Major Reports Strong 1H 2014

OAO Sovcomflot (SCF Group), Russia’s largest shipping company and a global leader in seaborne energy transportation and offshore services, has announced its financial

Gibdock Rreputation Rises in German Market

Gibdock has continued to see its stock rise amongst the German shipowner community over the past year. Indeed the Gibraltar ship repair yard’s recent client list

Panama Canal Generates VER Carbon Credits

The Panama Canal Authority (ACP) informs it has certified Verified Emission Reductions (VERs) or carbon credits, within the framework of the Sustainable Forest

Government Update

EU Warship Provides Seychelles CG Training

EU Naval Force Warship 'FGS Berlin' has conducted local maritime capacity building in the Seychelles informs EUCAP Nestor. Three Local Maritime Capacity Building

FTA Approves WSF Ferry Terminal Plans

In the latest Washington State Ferries Weekly Update, Capt. George A. Capacci, Interim Assistant Secretary WSDOT/Ferries Division briefs as follows: "FTA approves

DoD Award Dredging, Ship Maintenance, Charter Contracts

US Department of Defense informs of placement of contracts for Chesapeake Bay dredging, dry-docking of USS Pearl Harbor, and charter of surface escort vessels. Details as follows: 1.

Insurance

MN 100: Gencorp Insurance Group

16 Main Street East Greenwich, RI 02818 Telephone: 401 336 2182 E-mail: rcarnahan@gencorp-ins.com Website: www.gencorp-ins.com CEO/President: Robert G. Padula Number

Panama Canal: The Billion Dollar Challenge

Panama Canal expansion will cost operators, insurers As the Panama Canal prepares to celebrate its 100th anniversary, insurers are warning of the increased risks

Pine Galaxy to Arrive SF Bay Wednesday

The disabled mixed-products tanker Pine Galaxy is expected to arrive in San Francisco Wednesday morning. The ship is being towed by commercial tug to San Francisco Bay.

 
 
Maritime Security Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Salvage Ship Electronics Ship Repair Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1219 sec (8 req/sec)