Effect of Ratchaburi Australia fair value reassessment of Loy Yang A on Transfield Services
Transfield Services today announced that its full year 2011 statutory result will be affected by its share of a one off non-cash downward assessment of the fair value of the Loy Yang A Power Station relating to Ratchaburi Australia Corporation Limited (’Ratch Australia’ – formerly known as TSI Fund) on its 14.03% investment in that asset.
This was approved by the Board of Ratch Australia in their 30 June 2011 annual statutory accounts.
As Transfield Services owned a 20% equity interest in Ratch Australia at 30 June 2011, it is obliged under Australian Accounting Standards to take up its share of this change in fair value.
This share will affect Transfield Services’ statutory NPAT by $12.2 million to be booked in the profit and loss statement under share of net profits from associates and joint venture entities.
As a result of this adjustment, the value of Transfield Services’ equity accounted investment in Ratch Australia will be reduced to approximately 75 cents per security. This value is below the 85 cents per security that was paid by Ratchaburi in June to acquire 23.8% of TSE’s holding in Ratch Australia under the recent schemes of arrangement.
The relevant accounting standard prohibits the revaluation upwards of Transfield Services equity accounted investment to this recent market price.
The effect of this adjustment will be included in non-recurring items in Transfield Services’ full year 2011 results announcement on the 25 August 2011.
This is in addition to write-downs relating to the transaction when announced on 2 May 2011. On that date the book value (including the 23.8% sold to Ratchaburi and the remaining 20% holding) exceeded the 85 cents sale price by $16.6 million. There were also $7.7 million of transaction costs.
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