Noble Group

Noble Group: In a rebuttal to recent allegations made by short seller Iceberg Research, Noble argued that if Iceberg Research’s attention was to highlight supposed deficiencies in its accounting principles, it should have approached Noble to discuss their concerns, rather than publishing a report just before the group’s annual results announcement and a long holiday period.


Noble added that it reports its results in accordance with IFRS and its annual financial statements have been audited by Ernst & Young who issued unqualified opinions.


The carrying values of its associates, including Yancoal, are tested for impairment using discounted cash flow models that are updated every quarter, and these valuations are currently being audited as part of the FY14 audit.


The reasons why Noble categorizes investments such as Yancoal and others as associates have been clearly disclosed in its annual reports, and supporting factors include board representation, material transactions between the group and the investee as well as the provision of essential technical information are available.


Contrary to Iceberg’s allegations, Noble argued that it did not mislead the market in any way about the performance of its agri business, and had discussed the performance of the operating income from its supply chains in its quarterly published MD&A.


Finally, the allegations on the group’s palm assets are again factually incorrect. In Dec ‘14, Mimika, Papua Province issued a decree purporting to revoke PT Pusaka Agro Lestari’s (PT PAL) location permits and require PT PAL to cease logging activities and replant trees.


However, since then, the Ministry of Agriculture has confirmed PT PAL’s plantation business licence and a right of cultivation are in order, and supports PT PAL’s continued operation. Furthermore, PT PAL represents only 20%-25% of Noble’s total palm activity, at around US$43m (asset value), and any future profits or losses incurred upon the sale of the palm assets will be shared equally between the group and the COFCO led consortium of investors.

Analysts highlighted that the allegations raised by Noble are not new, with some calling the report as being “sensational bias”, and omitting any investment positives, while others drew reference potential scenarios based on the past, where white knights (large shareholders) emerged to the rescue of companies that had become prey of short sellers, in the case of Olam and China Min Zhong.