Noble gets PwC to conduct assurance review

The criticisms centre on the way Noble - headed by chairman Richard Elman (above) - values its 13 per cent stake in mining company Yancoal Australia, and allegations that it is concealing the true nature of its debt.
The criticisms centre on the way Noble - headed by chairman Richard Elman (above) - values its 13 per cent stake in mining company Yancoal Australia, and allegations that it is concealing the true nature of its debt.PHOTO: BLOOMBERG

SGX welcomes bid to boost transparency after flak over the way Noble values its assets

Noble Group, which has come under heavy attack over some of its accounting practices, has appointed leading consultancy PwC to review the way it values some of its assets.

PwC will "conduct an assurance review of Noble's mark-to-market models, valuations, and governance framework," Noble said in a filing with the Singapore Exchange (SGX) on Tuesday.

Asia's biggest commodity trader said it had set up an independent board committee that appointed PwC. The committee consists of four non-executive independent Noble board members - Mr Paul Brough, as chairman, Ms Irene Lee, Mr Richard Margolis, and Mr Christopher Pratt.

On completion of the PwC review, the committee will report to the board and a summary of the review will be released, Noble said.

The SGX said that it welcomes the company's initiatives to increase transparency.

Noble founder and chairman Richard Elman said in a public letter to shareholders on June 11 that the company is battling rumours and inaccurate statements, and pledged to "right the damage" to its share price.

"This will address and help bring closure to questions raised by the market on this issue," said the SGX in a statement yesterday.

The bourse operator added that it has been "in close communication" with Noble on "meeting the needs of its stakeholders".

However, this latest move was met with a muted market reaction as the share price of Noble closed flat at 71.5 cents yesterday.

"The move is just a step towards helping answer some of the questions over the valuation of its mark-to-market contracts," said OCBC Investment Research analyst Carey Wong.

He said the move will have little impact on the market for the investors will be waiting for the findings.

"Noble would continue to be subject to the volatility of the commodities market. Crude prices have fallen below US$60 a barrel, and with Noble's big exposure to the energy market, that may affect the company's profitability," added Mr Wong.

Criticism of Noble's accounting practices has taken a sharp toll on its share price which has crashed about 40 per cent since Feb 16.

Back then, an anonymous group named Iceberg Research published its first report attacking the way the company values its investments.

The Hong Kong-based group has since been engaged in an escalating war of words with other critics such as United States short-seller Muddy Waters and Mr Michael Dee, the former Morgan Stanley managing director.

The criticisms centre on the way Noble values its 13 per cent stake in mining company Yancoal Australia, and allegations that it is concealing the true nature of its debt.

Noble founder and chairman Richard Elman said in a public letter to shareholders on June 11 that the company is battling rumours and inaccurate statements, and pledged to "right the damage" to its share price.

A version of this article appeared in the print edition of The Straits Times on July 08, 2015, with the headline 'Noble gets PwC to conduct assurance review'. Print Edition | Subscribe