Top Noble execs address concerns at Investor Day

Noble Group chief executive Yusuf Alireza speaking at the Investor Day event yesterday, where details were presented on the company's operations, earnings and financials. Mr Alireza said that contrary to the accusations made by Iceberg Research, Nobl
Noble Group chief executive Yusuf Alireza speaking at the Investor Day event yesterday, where details were presented on the company's operations, earnings and financials. Mr Alireza said that contrary to the accusations made by Iceberg Research, Noble does not have a cash-flow and debt problem.PHOTO: NOBLE GROUP

Hundreds turn out to hear top management put their case against accounting criticism

Hundreds of investors and members of the public turned out yesterday to hear Noble Group bosses put their case against the fierce criticism that has been rattling the firm since February.

The Investor Day, as the event was billed, involved top management - including chief executive Yusuf Alireza, president Will Randall, chief financial officer for Asia-Pacific Paul Jackaman and six business unit heads - presenting details on the company's operations, earnings and financials.

Their presentation at the Ritz Carlton hotel was followed by questions from the audience, with many voicing concerns over Noble's plummeting share price, in a lively exchange with the management.

Others asked how Noble planned to insulate itself from the likes of Iceberg Research, which has led the criticism of the firm and its accounting procedures.

Noble shares ended 7.14 per cent lower at 45.5 Singapore cents yesterday. The stock has lost around 67 per cent in the past 12 months, due partly to a string of reports by Iceberg Research accusing Noble of accounting and governance issues.

Noble shares ended 7.14 per cent lower at 45.5 Singapore cents yesterday. The stock has lost around 67 per cent in the past 12 months, due partly to a string of reports by Iceberg Research accusing Noble of accounting and governance issues.

Mr Alireza told the 450 or so people at the event yesterday: "The share price can be driven by one thing only - how the management responds to market challenges.

"The management has to focus on delivering results. We cannot decipher the share prices; we have to address the allegations head-on and get the market comfortable with the quality of our balance sheet."

He added that the company will always focus on strengthening its balance sheet, and it is the manage- ment's responsibility to consider all available options - including selling a stake or core business units - to ensure financial flexibility.

Mr Alireza was referring to recent speculation that Noble is looking for a white knight to take over the company. There have been several interested parties, he said, confirming reports that Noble has hired investment banker Michael Klein to explore these options.

Noble also provided details to illustrate that its fundamentals are healthy despite a prolonged commodity bear market. Net income from core operations was US$612 million (S$861 million) in the past 12 months, translating to an estimated 20 per cent return on equity.

Mr Alireza said that contrary to the accusations made by Iceberg, Noble does not have a cash-flow and debt problem.

The company received about US$3.3 billion in proceeds after disposing of a 51 per cent stake in Noble Agri, and it has around US$5.2 billion of liquidity headroom - including inventories that it can readily sell - to cover short-term debt maturities.

The company is also not losing its banking partners' confidence. The bank lines that Noble still has amount to around US$15.2 billion.

Several participants whom The Straits Times spoke to left the Investor Day event with more confidence in the company.

Retiree Richard Lau, 66, said: "I find this session much better than the AGM earlier this year. This time around, they are much more open and forthcoming. I have decided to remain a shareholder and keep supporting the company."

Mr Lau was referring to his experience at the earlier annual general meeting, when queries were cut off by chairman Richard Elman, resulting in a more heated session.

Another retiree, 70-year-old John Lim, said: "I do not believe in all those allegations at all. If there had been any real issues, the regulators here would have cracked down on the company already.

"I have been an investor for seven years. After today's presentation, I may decide to increase my holding in the company."

But Iceberg Research is unconvinced. In an e-mail to The Straits Times yesterday, it said: "Accounting offers loopholes (that allow you to) give a completely false representation of your balance sheet, and that is what many retail shareholders do not know. We think the conference did not bring any information to reassure shareholders."

A version of this article appeared in the print edition of The Straits Times on August 18, 2015, with the headline 'Top Noble execs address concerns at Investor Day'. Print Edition | Subscribe