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Noble Group pushes restructuring effort, disagrees with ACRA

12 Dec 2018

Singapore-listed commodities trading firm Noble Group on Tuesday (11 December) said in intends to carry on its restructuring plan by appointing an officer from the Bermuda court to oversee the process.

“Having consulted with its advisers and key stakeholders, including the Ad Hoc Group, the company intends to apply to the Bermudan court for a hearing on 14 December 2018 for the appointment of a court-appointed officer to the company in order to implement the Restructuring in accordance with the terms of the Schemes as already disclosed,” it states.

“The board wishes to highlight that the court-appointed officer will be appointed to the company only and not to any of the company’s subsidiaries, which will continue to trade in the ordinary course.

“The day-to-day operations of the Group will therefore be unaffected: the Group’s trade finance facilities will continue to be available to it and payments to customers and suppliers will be made as usual.”

It points out the course of action to be the only means available for it to implement the restructuring in the interests of all stakeholders.

“In the event that the company is unable for any reason to complete the restructuring in accordance with this approach, the company would be forced to enter into a full liquidation process.”

Noble, meanwhile, point out its disagreement to the Accounting and Corporate Regulatory Authority (ACRA) queries in relation to financial statements of Noble Resources International Pte. Ltd. (NRIPL) for the years ended 31 December 2012 to 31 December 2016.

Noble’s response to the ACRA Letter, in summary, are as follows:

  • ACRA has challenged the Group derivative treatment for variable marketing contracts.

The Group’s position is that there is both a strong technical basis for fair value accounting and this methodology aligns with the Group’s business model and risk management approach.

  • ACRA has challenged the Group’s derivative treatment of non-spot physical contracts on the basis that they fail the net settlement criteria.

The Group’s offtake agreements clearly qualify as derivatives, not only in respect of net settlement but also in accordance with other elements of the applicable accounting standard.

  • ACRA has challenged the initial recognition, on the basis that only the value of identical contracts can be recognised.

The basis applied by the Group to the recognition of gains and losses is well founded and albeit inherently complex it is fully compliant with International Financial Reporting Standards (IFRS).

  • ACRA has challenged the treatment of overhead costs and an assessment that they should be included in the fair value of derivatives.

All costs required by the accounting standards are included in the Group’s valuation models. It would be completely out of line with industry practice and IFRS to include overheads such as rent and salaries.

  • ACRA has expressed a view that the split between current and non-current assets is incorrect.

The classification is based on aligning the presentation with our risk management approach. Disclosure is augmented with maturity buckets for all fair value assets and liabilities.

“NRIPL disagrees with the positions taken by ACRA and intends to submit to ACRA a comprehensive response to the assessments and questions in the ACRA Letter. The company will make further announcements as necessary,” it states.

Related: Singapore: Noble Group under investigation by SPF, MAS, ACRA
Related: Singapore-listed Noble sells oil trading desk
Related: Noble Group disposing global oil trading desk

Published: 12 December, 2018

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