Noble pledges more disclosure, starting with Q1 2015 results

Singapore

NOBLE Group pledged greater transparency on Wednesday, announcing plans to increase disclosures commencing with its first quarter 2015 results.

The move came after the company's annual general meeting (AGM) last Friday, where some shareholders felt that chairman and founder Richard Elman had tried to avoid some questions on its plans to improve transparency, as well as its methodologies for valuing its stake in Australian coal company Yancoal.

On Wednesday, Noble said it will increase its disclosures with consideration given to the net fair value gains/losses by region and product. It will also be updating the segmental disclosures to reflect its ongoing businesses after the 2014 Noble Agri transaction with Chinese state-owed firm Cofco.

"The nature, format and frequency of the disclosures are being carefully considered to ensure that increased transparency is provided but commercial sensitivity is respected," Noble said in an announcement posted on the Singapore Exchange (SGX) website. The group is due to publish its first quarter results on May 7.

The group also posted minutes of its AGM, and said BT's earlier report that Mr Elman had "repeatedly dodged shareholders' queries on the group's accounting practices" was "not correct".

It said: "All shareholders' queries were answered, either by Mr Richard Elman, Mr Yusuf Alireza (Noble's CEO), or Ms Irene Lee (Noble's independent non-executive director). In addition, several directors stayed behind after the AGM and spoke to interested shareholders personally."

David Gerald, president and CEO of the Securities Investors Association Singapore (SIAS), said after speaking to Noble and reviewing the recorded AGM proceedings and the transcript that Mr Elman "was not dodging" shareholders' queries for 95-minutes as reported in the media. SIAS also deems the AGM was "generally orderly and the shareholders got their answers".

But Mr Gerald noted that Mr Elman, who did at first rule that the question on Yancoal was not relevant to the resolution at hand, could have conveyed the message that he would answer the Yancoal question a little later. "That may have avoided the unpleasant situation that followed," he said. SIAS, responding to the media reports, had earlier said that Noble could have given more assurances to shareholders at the AGM.

Mano Sabnani, one of the shareholders who were asking some of these questions, said he welcomed the group's decision to be more transparent. But he does not think that speaking to shareholders after the AGM is a replacement for the actual AGM. "I want them to put all their responses to shareholders on record," he said.

He also advised Noble to consider writing Yancoal down to the current market value, to take the uncertainty out of the equation.

In response to queries from Today newspaper on Noble's statement, The Business Times said: "BT stands by its reports. It also welcomes the fact that Noble has since pledged to improve its standards of disclosure."

In its statement on Wednesday, Noble said it determined the value of its 13 per cent stake in Yancoal at US$322.25 million based on several inputs, including foreign exchange (FX) assumptions, coal price assumptions and a discount rate of 9 per cent.

Noble said the FX curve is based on the forward curve as provided by Bloomberg, and the price curves it uses are more conservative than broker consensus curves. "More detailed public disclosure of these forward estimates would compromise our competitiveness," it said.

In response to Noble's pledge for greater transparency, Iceberg Research, the anonymous outfit which since mid-February has been criticising Noble's accounting practices, said: "Everybody would agree that Noble has repeatedly promised more disclosures since February ... They have not delivered."

To date, Noble has yet to respond to Iceberg's third report or to any of the questions which were posted on Iceberg's website before the AGM. Iceberg said some of them were very simple: Why did two chief financial officers leave the group a few months ago? Why were there five heads of risk in two years? Should Noble issue a profit warning for their exposure to Sundance Resources?"

Sundance Resources is an African iron ore mine project, which Iceberg believes Noble to have booked a very large contract with. Iceberg also reckons that Sundance may run out of cash in 2015 due to the latter's inability at raising the required cash to build its mine, railway and port during challenging market conditions.

Of Noble's valuation of Yancoal, Iceberg said Noble failed to mention Yancoal's high level of debt and its expensive take-or-pay contracts. It added that the forward curve of a commodity is public information, and that there was nothing that could compromise Noble's competitiveness. "Noble clearly acknowledges there is something wrong with their forward curves," it said.

Meanwhile, short-seller firm Muddy Waters, which has a "short" position on Noble, said of the commodity trader's latest announcements: "Noble's management has spent far more time and ink attacking their questioners than they have spent on substantive responses."

On Wednesday, Reuters also reported that Noble was barred from reporting agency Platts' oil pricing process. According to Reuters, Platts has temporarily barred firms from participation in its market-on-close process before due to market turmoil or concerns over individual companies or trading behaviour. It added that often the exclusion was brief.

When contacted, a Noble spokesman declined to comment on the matter. "We (Noble) buy or sell various oil products every day on Platts and our daily business around the globe is normal," he said.

On Wednesday, Noble closed trading up 1.15 per cent at S$0.88, but was still down 27 per cent since Feb 15 when Iceberg launched its first attack.