Noble Says Report Finds Accounting Practices In Line with Rules

By Anshuman Daga and Rujun Shen

SINGAPORE, Aug 10 (Reuters) – Noble Group’s Chief Executive Yusuf Alireza sought to attract a line below a long-running accounting dispute after a report by board-appointed auditor PricewaterhouseCoopers (PwC) discovered no wrongdoing within the firm’s accounting practices.

Noble printed the accounting overview along with second quarter outcomes. The firm mentioned its web revenue fell almost 5 p.c from a yr earlier and that it will minimize employees by 16 p.c by yr finish in gentle of a world commodities downturn.

Shares in Singapore-listed Noble have misplaced 50 p.c and bonds have weakened since February, hit by claims from blogger Iceberg Research that the corporate didn’t pretty signify the worth of its commodity contracts. Noble has rejected the claims.

A world rout in commodities costs has additionally put Asia’s largest commodities dealer below strain.

“The combination of the PwC report, the second quarter results and the Investor Day in Singapore on Monday hopefully will put to rest any questions and concerns about how we run our business, how we make money and the accounting around it,” Alireza informed analysts throughout a convention name on Monday, a public vacation in Singapore.

PwC, which was employed by Noble a few month in the past in response to calls from some buyers for extra accounting transparency, mentioned its overview of how the corporate performed the honest worth evaluation of contracts was consistent with related accounting requirements and practices.

It additionally really helpful that Noble strengthens the position of compliance or inner audit with the intention to enhance the best way it values a few of its commodity contracts.

Noble’s board mentioned in an announcement it will start implementing these suggestions instantly to make sure the Hong Kong-based firm stays a frontrunner in its business with regard to mark-to-market (MTM) valuations of contracts.

The firm’s accounts are at present audited by EY.

Analysts welcomed quarterly outcomes and the report though it was not instantly clear if this is able to imply the tip of Noble’s woes.

“There may be some way to go,” mentioned Roger Tan, chief government of Voyage Research. “In the accounting policies, there is enough flexibility to manoeuvre. So it’s a question of which side of the coin you are arguing on.”

Standard & Poor’s minimize its outlook on Noble to ‘negative’ from ‘stable’ in June and mentioned its principal concern was over Noble’s valuations of long-term provide contracts.

WAR OF WORDS

To enhance help for its inventory, Noble spent S$131 million ($94.56 million) to purchase again its shares 11 instances in June and July.

Short sellers that search to revenue from declining inventory costs in a market-listed firm have additionally elevated their exercise in Noble, knowledge from Markit confirmed.

Iceberg Research, whom Noble has mentioned was arrange by a former worker, mentioned the report was not sufficient to dispel buyers’ doubts.

“PwC merely answered the question: are Noble’s MTM formally in compliance with accounting rules, which is what EY has been doing for years,” a consultant from Iceberg mentioned in an e-mail to Reuters.

In its quarterly report, Noble mentioned web honest worth good points on commodity contracts and by-product monetary devices – a goal of criticism – declined by almost $490 million or 10.7 p.c to $4.1 billion by the tip of June from December 2014.

Richard Elman, Noble’s chairman and founder, is the agency’s largest shareholder with a few fifth of its shares. China Investment Corp is Noble’s second-largest shareholder with a 9 p.c stake.

“Noble has put up a decent set of results and the fact that PwC examined each contract to check valuations should provide comfort,” a Singapore-based analyst mentioned. ($1 = 1.3854 Singapore {dollars}) (Reporting by Anshuman Daga and Rujun Shen; Editing by Muralikumar Anantharaman and Lisa Jucca)