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Monday 29 February 2016

Shipping & offshore maritime sectors must be alert to implications of new US lease accounting standard

Shipping & offshore maritime sectors must be alert to implications of new US lease accounting standard

The Financial Accounting Standards Board (FASB) in the United States has issued a lease accounting standard update following the release in January 2016 of an International Financial Reporting Standard (IFRS) dealing with the same subject. Although it had been expected that the FASB and IFRS standards would be identical, there are instead now two standards which, although similar in many respects, contain significant differences. International accountant and shipping adviser Moore Stephens says the shipping and offshore maritime sectors will need to assess the effect of these changes on their balance sheets.

The FASB standards update, ASU 2016-02, Leases (Topic 842), applies to all companies which follow US accounting standards. As is the case with IFRS 16 (Leases), leases currently treated as off-balance-sheet operating leases will now be appearing on lessee companies’ balance sheets. While net assets may not be greatly affected, gross assets and gross liabilities will increase significantly for companies which currently have major leasing arrangements treated as operating leases.

The IASB has adopted a single lease accounting model, broadly similar to that previously used for finance leases, for all leases from the perspective of the lessee. But the FASB has retained a dual accounting model. Where a lessee is party to a capital or finance lease, the accounting treatment will remain unchanged, as it largely will under IFRS 16. But, where a lease was previously an operating lease, then under the new US standard the lessee will:

record a right-of use-asset representing its right to use the underlying asset for the lease term and a liability to make lease payments (lease liability), on a similar basis to under IFRS 16;

measure the right-of-use asset and lease liabilities at the present value of lease payments in the same way as under IFRS 16, except that variable lease payments will not be reassessed on every reporting date;

recognise a single lease expense, usually on a straight-line basis over the lease term, unlike IFRS 16 which will lead to the recording of higher expenses in the earlier years; and

classify cash payments in the statement of cashflows within operating activities, unlike under IFRS 16 where they will often be classified as financing.

Michael J Halkias, a principal with MSPC New York, an independent member firm of Moore Stephens North America, which is a regional member of Moore Stephens International Limited (MSIL), explains, “On inception of a lease, the balance sheet entries prepared under the two new standards will usually be similar, but would then diverge as the basis of charging expense differs. Expenses under the US standard will remain flatter than under IFRS and may be unchanged from current standards. There are also differences of detail dealing with matters such as subleases, and sale and leaseback transactions.”

Michael Simms, a partner in the shipping and transport group at Moore Stephens London, says, “Neither the FASB nor the IASB have felt the need to significantly change their lessor accounting models, and have largely carried forward their requirements into the new standards. But, just as there were some differences between the two models before, those differences remain.

“The new standards have been a long time coming, and it will be a few years yet before the first financial statements are published which have to comply with them. Nevertheless, many companies in the shipping and offshore maritime sectors will need to consider the effect on their financial statements quite soon. Some will see major changes to their balance sheets, and a certain amount of change to their reported profits. Companies will also need to consider the effect that the changes will have on compliance with the terms of financing which includes covenants. And where breaches of covenant are likely, or reasonably possible, talking to lenders before the change hits the accounts will be crucial.”

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 657 offices of independent member firms in 106 countries, employing 27,613 people and generating revenues in 2015 of $2.7 billion. www.moorestephens.co.uk


For more information:
Michael SImms
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
michael.simms@moorestephens.com


Michael J Halkias
MSPC
Tel: +1 (212) 682 1234
mhalkias@mspc-cpa.com



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Wednesday 24 February 2016

Solid renewal for London P&I Club

Moving into the new P&I policy year, the London P&I Club has seen further growth in its owners’ tonnage, in addition to strong growth in its charterers’ book of business.

Ian Gooch, chief executive of the club’s management team says, “The recent renewal was particularly challenging for a number of reasons, including the depressed trading conditions in many sectors.

“A key part of our strategy involves work to strengthen the club’s long-term technical performance, and the renewal saw some especially intense dialogue and detailed analysis of loss records and risk exposures with members and brokers. It was also the case that, for various reasons, terms were not agreed with some members. But there were also good opportunities to attract additional entries from existing members, and we were pleased to welcome a number of new members to the club as well.

“The overall result is that the club achieved further controlled growth in its owners’ entry of around 1.5 per cent on the position twelve months ago. We were also pleased to see growth in the club’s charterers’ entry during the 2015/16 year and especially at the recent renewal, including new entries from a number of European and Far East-based charterers.”

www.londonpandi.com

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Monday 22 February 2016

Moore Stephens alerts shipping employers to High Court decision on UK pension rules

International accountant and shipping adviser Moore Stephens has warned that shipping sector employers need to take action to ensure that they meet their compliance obligations following a recent ruling by the High Court in London that peripatetic ships’ crew living in the UK, who start and finish their voyages from a UK port, have automatic pension enrolment rights.

Under the 2008 Pensions Act, employers have a legal duty to automatically enrol into a pension scheme those employees who are working - or ordinarily working - in Great Britain under workers’ contracts. And, as Stuart Stroud, Director of Employee Benefits in the Wealth Management team at Moore Stephens, points out, “The key issue is whether the term ‘ordinarily working’ cover workers at sea outside UK waters.”

In the dispute before the High Court, Fleet Maritime Services (Bermuda) Limited (FMSB), which employs staff for cruise ships, challenged the UK Pensions Regulator’s guidance on peripatetic workers – employees who travel from place to place and work in various locations abroad, such as seafarers or airline pilots. The employer argued that its UK workers were not covered by the auto enrolment legislation because they worked in international waters and so could not be considered to be ordinarily working in Great Britain. In contrast, the regulator argued that a worker’s base was the key factor to consider when deciding whether he or she is covered by the auto enrolment rules.

Stuart Stroud says, “The High Court has backed the regulator. The judge concluded that a seafarer who lives in the UK and works on a ship that begins and ends its voyage at a port in the UK should be regarded as a UK worker with a UK contract. Even if such workers spend the majority of their time outside UK waters, they still quality for auto enrolment. However, the judge came to a different conclusion for workers on ships that spend most of their time outside the UK and whose tours of duty habitually begin and end outside the UK: these workers can be excluded from auto enrolment, even if they live in the UK.

“In the light of this ruling, shipping businesses should review their position on auto enrolment. Employers who thought their employees were excluded may now need to take urgent action. Some areas of uncertainty remain, however. Clarification is awaited from the regulator, for example, about whether seafarers employed by the overseas subsidiary of a UK business are covered by the auto enrolment regulations.”

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping, offshore maritime and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 657 offices of independent member firms in 106 countries, employing 27,613 people and generating revenues in 2015 of $2.7 billion. www.moorestephens.co.uk


For more information:
Stuart Stroud
Moore Stephens LLP
Tel: +44 (0)20 7334 9191
stuart.stroud@moorestephens.com

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Thursday 11 February 2016

OSD designs IMT2001 Scientific Research Vessel for TORI

Offshore Ship Designers (OSD-IMT) has signed a new contract for an IMT2001 Scientific Research Vessel for the Taiwanese Ocean Research Institute (TORI).
 
The vessel will be used to support long-term oceanographic observation programmes, including the operation of unmanned ROVs, terrain survey and mapping, seismic pattern detection, long-core sampling, compiling diagrams of topology and stratum, and performing real-time data processing and sampling within its onboard laboratory facilities.
 
The IMT2001 will be fitted with two ‘A’ Frames, two deck cranes, an ROV launch and a recovery ‘A’ Frame with umbilical winch, streamer winch and gun array and an MEBO200 seabed drilling rig which can conduct core drilling down to 200 m below the sea floor and can be fitted with a range of different deck equipment spreads.
 
The 76 m x 16 m vessel will have accommodation for 43 persons (crew and scientists) and will be classed with Taiwanese Classification Society (CR) for worldwide operation. It will be equipped with diesel-electric power generation, two main azimuth propulsion thrusters and two bow tunnel thrusters with the dynamic position notation DP-1
 
The vessel will be built by Triyards Shipyard in Ho Chi Minh City and is scheduled for delivery in August 2017.
 
Artist impression
Offshore Ship Designers Group (OSD) is a global one-stop resource delivering naval architecture and marine engineering skills to the shipping and offshore energy industries. It draws on an experienced global workforce to provide high-quality feasibility studies, conceptual and detailed designs for tugs and offshore support vessels of all types. OSD is based in IJmuiden, The Netherlands, and has offices in Dundee, York, Appledore, Shanghai and Singapore. www.offshoreshipdesigners.com
 
For more information:
Merijn Brusselers
Offshore Ship Designers
+31 (0)255 54 50 70
 

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Tuesday 9 February 2016

OSD develops new series of multipurpose tractor tugs

Netherlands-based OSD (Offshore Ship Designers) has designed a new series of high-performance tractor tugs which can be used for a wide range of functions, including escort operations, harbour towage, ship handling, offshore mooring and berthing.

 

The basic model tug has a LOA of 33 metres and a beam of 13.5 metres, but the tug design can be tailored to various sizes.  The high forecastle deck ensures good sea-keeping performance. The hull is shaped with side wings to reduce drag, enhance stability and to improve roll-damping. This makes the vessels perfectly suited for offshore towing and salvage. 

 

The wheelhouse design gives an excellent overview of the work-deck during escort operations and optimum visibility over the bow during transit modes.

 

A broad tow-staple on the aft-deck reduces moment of inclination caused by tension on the wire, while the spacious aft-deck itself accommodates the towing winch. The aft bulwark structure is outfitted with an integrated tow-pin arrangement. A knuckle-boom crane is outfitted with outreach over the aft-deck area.

 

The tugs can be fitted with either Voith Sneider cycloidal propellers (the Cyclotrac 3270 model) or azimuthing thrusters (the Azitrac 3270 design). The propulsion drive configuration can be adapted to client specification – diesel-electric, hybrid with or without batteries etc. Depending on engine and propulsion configuration, a bollard pull of 90 tonnes can be achieved.

 

OSD’s MLC-compliant tugs can be delivered with a FiFi1 class notation. They have accommodation for 8 to 12 persons, with individual sanitation facilities.

 

Artist impression

Offshore Ship Designers Group (OSD) is a global one-stop resource delivering naval architecture and marine engineering skills to the shipping and offshore energy industries. It draws on an experienced global workforce to provide high-quality feasibility studies, conceptual and detailed designs for tugs and offshore support vessels of all types. OSD is based in IJmuiden, The Netherlands, and has offices in Dundee, York, Appledore, Shanghai and Singapore. www.offshoreshipdesigners.com

 

For more information:

Merijn Brusselers

Offshore Ship Designers

+31 (0)255 54 50 70

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Monday 8 February 2016

Liberian Registry reaches 4,000-ship milestone

The Liberian Registry has reached a historic milestone with the registration of its 4,000th vessel – the 50,000 dwt chemical / product tanker newbuilding High Trust, owned by d’Amico Tankers Limited, Dublin (d’Amico International Shipping S.A. group).

 

Scott Bergeron, CEO of the Liberian International Ship & Corporate Registry (LISCR), the US-based manager of the Liberian Registry, says, “The Liberian-registered fleet continues to grow at a rapid pace with the planned addition of quality tonnage under quality ownership and management. The High Trust is an appropriate name for our 4,000th vessel, since it symbolises the ongoing faith shown in the Liberian flag by the international shipping community.

 

“Size may not be everything. But ship registries which continue to build on their market share in a tightly regulated and safety-conscious sector by adding quality tonnage are clearly providing the service and expertise which today’s shipping industry demands.”

 

The Liberian Registry is one of the world’s largest and most active shipping registers, and has long been considered the world’s most technologically advanced maritime administration. It has a long-established track record of combining the highest standards of safety for vessels and crews with the highest levels of responsive service to owners. Moreover, it has a well-deserved reputation for supporting international legislation designed to maintain and improve the safety and effectiveness of the shipping industry and protection of the marine environment.

 

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Sunday 7 February 2016

Bureau Veritas classes world’s largest specially-built asphalt carrier

Leading classification society Bureau Veritas is classing the 37,000 dwt asphalt carrier Asphalt Splendor, recently delivered to US-based Sargeant Marine. The vessel was built at Avic Dingheng, China and is one of a series of two designed by Chinese design institute SDARI in co-operation with Sargeant.

The hot asphalt can be carried liquid at temperatures up to 170 deg C in sixteen independent tanks with a total capacity of 35,666 cu m.

Philippe Donche-Gay, Executive Vice-President and Head of the Marine & Offshore Division, Bureau Veritas, says, “The high cargo temperatures in asphalt carriers place special demands on structure, construction quality and equipment. Bureau Veritas is a world leader in this sector and currently classes a large number of these ships. The Asphalt Splendor will be a state of the art vessel, with excellent environmental and operational performance. We welcome this project, which builds on our strong relationship with Sargeant Marine”.

Dan Sargeant, President, Sargeant Marine, says, “It is imperative to stay ahead of the game, thinking innovatively when it comes to economics, as well as operations. We are looking forward to the second of these new vessels, also BV classed, which give us a distinct advantage in the marketplace, as there is truly nothing like this out there.”

Key dimensions:
DWT 37,000 tonnes
Length overall: 179.90 m
Breadth: 30.60 m
Depth 16.80 m

Cargo arrangement/systems: 16 independent tanks with a total cargo capacity of 35.666 cu m.

Three cargo pumps 500 cu m/h each

Propulsion plant: 1 x Wartsila 5RT-flex 6.400 kW at 99 rpm

For a picture of the Asphalt Splendor e mail john@merlinco.com


l Bureau Veritas is a world leader in laboratory testing, inspection and certification services. Created in 1828, the Group has more than 66,000 employees in around 1,400 offices and laboratories located all across the globe. Bureau Veritas helps its clients to improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility. Bureau Veritas is listed on Euronext Paris and belongs to the Next 20 index.

Compartment A, ISIN code FR 0006174348, stock symbol: BVI.

www.bureauveritas.com  for corporate information                              

www.veristar.com   for marine information

For more information:
Carlos Guerrero
Business Development Manager

Oil Tankers & Gas Carriers
Bureau Veritas
 +33 155 24 7235
carlos.guerrero@bureauveritas.com

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