Notification of Preliminary Decision Received by Lighthouse Caledonia ASA
Reference is made to the announcement of the annual report for 2008 for Lighthouse Caledonia ASA on 21 June 2009 and the restatement of the 2007 accounts therein, reports www.megafishnet.com with reference to LHC.
In November 2009 the Company received a letter from Finanstilsynet requesting certain information in relation to the 2008 accounts, which the Company responded to on 1 December 2009. The Company also provided Finanstilsynet with additional information during the first quarter of 2010 that it felt relevant to the formulation of the 2008 accounts.
On 22 March 2010 the Company received a notification of a preliminary decision from Finanstilsynet which concludes that Finanstilsynet considers making certain resolutions with respect to the 2008 annual report.
In the restatement of the 2007 accounts, the directors were of the opinion that the business combination of Lighthouse Caledonia Ltd ("LHC Ltd"), the Fjord Seafood businesses within Scotland and certain sites of Marine Harvest (Scotland) Ltd from Marine Harvest ASA was not a business combination under common control, and therefore such combination was within the scope of the International Financial Reporting Standards ("IFRS") 3. Within the 2007 restatements, the Company then restated the business combination from the pooling method into the acquisition method. Under advice, the board of directors believed that this was the proper method of accounting for the business combination, and that it also gave a true and fair reflection of the transactions.
Finanstilsynet has in its letter of 22 March 2010, in relation to the business combination, inter alia stated that "LHC ASA shall account for the acquisition of LHC Ltd as a business combination under common control. For such transactions the company must develop and apply an accounting principle in accordance with IAS 8.10-12. The pooling method which the company originally applied, is such a principle. The company may only apply an alternative principle if such alternative gives reliable and more relevant information of the transaction, cf IAS 8.14b. Applying the acquisition method with LHC ASA as the acquirer, will not be a viable accounting principle."
Furthermore, in the 2008 accounts, the Company's DnB NOR loan was classified by LHC ASA as long term debt.
In the letter of 22 March 2010, Finanstilsynet has stated that it considers making the following resolution: "The company shall also classify debt to DnB NOR as short term debt as of 31 December 2008."
According to the notification of the preliminary decision, Finanstilsynet is considering imposing on the Company to make corrections as mentioned above by way of adopting a new annual account and board of directors' report for 2008.
Finanstilsynet's position as stated in the notification was unexpected and the Company will seek further advice on this matter. The Company maintains its belief that the appropriate accounting method was applied in the restatement of the 2007 accounts as regards the business combination described above and will provide any additional information requested by Finanstilsynet in relation to the accounting principles applied.
Due to the uncertainty following the receipt of the notification, the Company has decided to postpone its planned process of restructuring. The initial plan was to complete the restructuring by the end of April 2010 and the Company foresees a temporary delay in this regard.
Lighthouse Caledonia continues its commitment to provide full transparency and accountability to its shareholders and the market consistent with sound corporate governance principles.