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NOBLE Group responded to queries received from the Singapore Exchange after trading hours on Thursday with regard to its US$428 million losses in exceptional items in its third-quarter results.
The group provided a breakdown of the US$428 million loss from exceptional items, primarily related to non-cash losses on non-current assets. This includes a non-cash loss resulting from the significant dilution of the group's shareholding in Yancoal Australia following Yancoal's capital raising exercise.
Exceptional items include non-operational items in the group's operating income from supply chains from continuing operations, along with other non-operational items such as impairment losses on supply chain assets from continuing operations.
Impairment of non-current assets stood at US$149.9 million, while losses on deemed disposal of an associate was US$257.8 million. Losses on supply chain assets was US$415.3 million. (see amendment note)
Noble also said that its US$411.9 million loss on supply chain assets comprised the US$415.3 million loss on supply chain assets classified as exceptional items, partially offset by profit on supply chain assets of US$3.4 million not classified as exceptional items.
The group also elaborated on how Yancoal's capital share raising resulted in significant dilution.
Its investment in Yancoal was previously accounted for on the consolidated balance sheet as an investment in an associate under the "equity method of accounting".
Following Yancoal's capital raising exercise and the significant dilution of the group's shareholding in Yancoal, which reduced the group's shareholding from 13.2 per cent to 0.3 per cent, the group deemed that the "equity method of accounting" which it used was no longer appropriate.
Thus, the investment is now accounted for as a long-term equity investment and carried on the consolidated balance sheet, said Noble.
Following the change in accounting method, along with the recycling of accumulated foreign exchange losses previously recorded in other comprehensive income, the non-cash loss associated with the significant dilution of the group's shareholding in Yancoal was US$257.8 million.
The loss was recorded as a "deemed disposal of an associate", said Noble.
As at Sept 30, the group's investment in Yancoal was carried at US$11.6 million on the balance sheet with reference to the market price of its shares listed on the Australian Stock Exchange.
In response to SGX's query for elaboration on its liquefied natural gas (LNG) business, Noble said that the trading performance for the LNG business was profitable during the three and nine months ended Sept 30 as the business continued to service its existing contracts, via LNG deliveries to customers primarily in the Europe, the Middle East and Africa region.
It said: "However, the business has been unable to add profitable new business flows given the group's constrained liquidity and access to trade finance lines."
Amendment: An earlier version of this story wrongly stated the values of Noble's impairment of non-current assets, its loss on deemed disposal of an associate and its loss on supply chain assets.