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Noble Group reports 2017 loss of US$4.94b; auditor warns uncertainty over "going concern" status

2018-02-26T062720Z_2039803978_RC1F736951E0_RTRMADP_3_NOBLE-GROUP-RESULTS.JPG
Noble Group's auditor warned about the group's ability to continue as a going concern as the struggling commodity trader announced a loss of US$4.94 billion for 2017.

NOBLE Group's auditor warned about the group's ability to continue as a going concern as the struggling commodity trader announced a loss of US$4.94 billion for 2017.

The group recorded a net profit of US$8.7 million in 2016.

Full-year revenue tumbled 26 per cent to US$6.43 billion, from US$8.67 billion in 2016, as traded volumes dropped due to constraints in trade finance and liquidity.

Noble's auditor EY said in the financial statements that the 2017 losses, the group's current liabilities of US$1.19 billion of bank debt and US$378.8 million of senior notes due in March this year, as well as its net deficiency of US$800.9 million, "indicate the existence of a material uncertainty which may cast significant doubt over the group's ability to continue as a going concern".

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But Noble's board said it is satisfied the group can continue as a going concern until the restructuring is completed, given the state of its restructuring discussions with the ad hoc creditor group representing about 36 per cent of its senior debt instruments, and trade finance facilities currently provided by its banks.

The huge 2017 loss includes a US$1.053 billion loss from discontinued operations, and US$3.24 billion of exceptional items recorded from its continuing operations.

The latter comprises US$2.15 billion in adjustments to net fair value gains on commodity contracts and derivative financial instruments, and US$1.04 billion in impairments on some current and non-current assets, as well as a non-cash loss resulting from a significant dilution of its shareholding in Yancoal Australia.

Still, volumes in the coal business remained "fairly stable" with a 7 per cent decline from 2016, as it was able to increase its marketing volumes which does not require trade finance support, said Noble.

Volumes in the metals, minerals and ores division declined due to a significant long-term iron ore contract ending in end-2016, and a focus on profitability over volumes in its freight business

Noble's shares closed 0.5 cent, or 2.83 per cent, lower at 17.2 Singapore cents before the results announcement.