New | Noble clears the air with PwC endorsement
Commodities trader makes elaborate disclosure to fend of criticism over accounting practices that has been bleeding the stock for months
Noble Group on Monday went into overdrive to fend off criticism of its accounting practices that has been bleeding its stock for months, detailing its accounting procedures and producing an endorsement by PricewaterhouseCoopers.
Asia's biggest commodities trader by revenue, the Hong Kong-headquartered and Singapore-listed Noble made elaborate disclosures on some of the gravest allegations against it, including its valuation of its Australia-listed associate Yancoal. It also provided a breakdown of its net fair value on commodity and financial derivative contracts, and the readily marketable inventory.
"I'm hopeful that with this substantial, additional disclosure, no credible market participant can claim we are not being transparent around our valuation methodology," chief executive Yusuf Alireza said in a conference call.
Noble has been mired in a crisis since February, when little-known Iceberg Research published reports alleging it manipulated accounting rules by inflating values of its associates, engineering profits from fair value gains and disguising debt levels with readily marketable inventory, or inventories that are highly liquid and can be immediately sold for cash. The attacks were followed by Muddy Waters and Hong Kong's GMT Research, who made similar allegations. Noble has since seen its market capitalisation plunge by half.
The carrying value of Yancoal, in which Noble holds 13 per cent along with other associates, differs vastly from the market value indicated by Yancoal's share prices.
Noble, for the first time, on Monday detailed the measure it used to calculate Yancoal's worth, which it argues should be benchmarked against the enterprise value rather than the share prices reflected in an illiquid stock.