Noble Group has thrown some light on the exceptional losses it booked last year after being queried on the issue by the Singapore Exchange (SGX).
It said it recorded an exceptional loss of about US$2.15 billion (S$2.83 billion) after applying additional non-cash reserves and making valuation adjustments to its net fair value gains on commodity contracts and derivative financial instruments.
Noble told the SGX on Thursday night that its change in reserving approach was the result of a board-mandated detailed reassessment of its balance sheet reserves, as part of the strategic review commenced in May last year.
It said it had to make the adjustments after it posted a loss in the first quarter last year, which caused lenders to react and hurt its access to funding.
It gave a breakdown of the US$2.15 billion exceptional loss.
This comprised US$600 million of reserves and valuation adjustments recorded in the second quarter, including applying additional reserves to certain contracts as a result of adverse back testing results and the impact of credit rating downgrades on discount rates.
A further US$600 million of reserving adjustments were made in the second quarter following a "dislocation" in coal markets that reflected a significant change in observable valuation inputs.
In the fourth quarter, Noble booked a US$650 million loss from increases in the discount rate used in the group's valuations, including the impact of further credit rating downgrades on its funding costs.
It recorded a further US$300 million of reserves and valuation adjustments in the fourth quarter for certain contracts. These amounts were determined based on changes in the assessment of recoverability under certain contracts, including due to non-performance, dispute or commercial re-negotiation.
Last year, Noble also recorded a US$903 million non-cash loss on impairment and disposal of non-current assets. Of this, impairment losses of US$169 million related to property, plant and equipment , owing mainly to a US$80 million write-down of Noble's palm plantation assets held for sale.
Under property, plant and equipment, Noble also booked a US$44 million impairment for its dry bulk carrier vessels, taking into account increased discount rates and projections of future operating costs.
It also wrote off US$37 million in capitalised information technology costs under property, plant and equipment, largely relating to divested or contracted business units.
Last year, Noble also took a US$113 million impairment on investments in associates, which it broke down into four parts.
About US$32 million came from the full impairment of Australian-listed Baralaba Coal, which went into voluntary administration last July, following an unsuccessful attempt to raise adequate funds to re-start the Baralaba North Mine.
Another US$19 million came from the full impairment of Australian-listed East Energy Resources, which requested a voluntary suspension of its securities in September 2017.
Noble also reduced the carrying value of its investment in Australian-listed Aspire Mining by US$28 million to reflect a lower quoted market price, after raising its stake in Aspire last year from 10.4 per cent to 19.9 per cent.
It also took a US$35 million impairment on PT Atlas Resources to its market price after reclassifying Atlas from an associate to a long-term equity investment as Noble no longer exercises significant influence over Atlas.
Noble shares closed 1.5 per cent down at 13.3 cents yesterday.