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Singapore Regulator To Review Iceberg Report On Noble
Corporate Digest | 26 February 2015

Singapore’s financial regulator said it’s assessing a report by Iceberg Research that alleged accounting irregularities at Noble Group.

The Monetary Authority of Singapore will review the report and “take appropriate action if there are breaches” of the Securities & Futures Act, it said in an e-mailed response to questions from Bloomberg News. Noble has denied Iceberg’s allegations. Directors and management are “comfortable” that the company’s balance sheet “fairly presents its book value” under International Financial Reporting Standards, Hong Kong-based Noble said in a statement on 17 February.

Noble shares gained 1.9 percent to $1.07 at the close of shortened trading in Singapore on 18 February. The stock plunged almost 13 percent over the past two trading sessions on 16 February and 17 February after the report by previously-unknown Iceberg alleged the value of stakes in companies including a 13 percent interest in Yancoal Australia were inflated on Noble’s balance sheet.

“The carrying value of our associates, including Yancoal, are tested for impairment using discounted cash-flow models that are updated every quarter,” Noble said in the statement. Valuations for Yancoal and other investments are “currently being audited” as part of the 2014 fiscal-year audit, the company said.

Iceberg, which provided no telephone number or street address in its 15 February report, said the gap between Noble’s balance sheet carrying valuation for Yancoal and the market value differs by US$600 million.

Iceberg Allegations

Noble “exploits the accounting treatment of its associates to avoid large impairments and fabricate profit,” Iceberg said in the report.

Iceberg’s website contains no analyst names or links to research notes, apart from the 17-page report on Noble. Iceberg said it doesn’t have any position in Noble’s securities and doesn’t work in tandem with funds.

Noble, which trades metals, coal and other commodities, said it has “interests in associates on its balance sheet at levels that may be higher or lower than that which is observable from the market-traded price.”

Iceberg alleged Noble misled investors regarding the performance of its agriculture unit, Noble Agri (NAL). The report said Noble’s 2014 sale of a 51 percent stake in that business to China’s COFCO and a group of investors will result in proceeds lower than the US$1.5 billion reported by the company.

Sale Proceeds

Noble said it has received US$1.5 billion in sale proceeds for the 51 percent stake sale and a loan repayment from NAL of US$1.8 billion in October.

“Contrary to Iceberg’s allegations, we did not mislead the market in any way about the performance of NAL,” Noble said in the statement.

Noble also said allegations regarding its palm-oil assets are “factually incorrect.” Licenses and permits for palm assets in Mimika in Indonesia’s Papua Province are in order and supported by the Director-General of Plantations at the Ministry of Agriculture, the company said.

Iceberg had said that Noble will have trouble selling its palm-oil business after an Indonesian local government revoked the license for one of its subsidiaries there.

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