Noble dodges accounting queries at AGM

Noble dodges accounting queries at AGM


18 April 2015

Business Times Singapore

Shareholders voice concerns about group’s transparency and its valuation of Yancoal

AT Noble Group’s annual general meeting here on Friday, shareholders hoping to gain clarity on the recent Iceberg Research saga were disappointed During the one-and-a-half-hour meeting, Noble’s founder and chairman Richard Elman repeatedly dodged shareholders’ queries on the group’s accounting practices, and instead steered the AGM’s focus to the resolutions on Noble’s financial statements and the reports of its directors and auditors.

In mid-February, Iceberg Research launched a series of attacks on the accounting practices of Singapore-listed Noble Group, Asia’s largest commodity trader by revenue. Muddy Waters – the short-seller famed for its 2012 attacks on commodity group Olam International – followed suit in early April, issuing a “short” position on Noble.

Despite Noble refuting both allegations, coupled with an aggressive share purchase programme led by the group’s management, Noble’s shares have taken a beating. Since Feb 15, the day Iceberg launched its first attack, the firm’s share price has plunged about 27 per cent to S$0.885.

Mr Elman, 74, who founded Noble in Hong Kong in 1986 and is its largest shareholder, said at the AGM’s opening: “We consider the Iceberg matter finished. We have started legal proceedings and look forward to challenging their inaccurate, unreliable and misleading claims in a public court.”

He added: “We will not be revisiting details of these allegations at this meeting.”

But his demeanour repulsed more than a handful of shareholders, who described his attitude as “unnecessarily defensive” and “in denial mode”.

When a shareholder, who identified himself as Chua, asked Noble to elaborate on plans to be “more transparent”, Mr Elman said the management “will only answer questions that are relevant to the resolution at hand”.

Likewise, when another shareholder, Richard Lau, 66, queried Noble’s management on its methodologies of valuing its stake in Australian coal company Yancoal – a key feature in Iceberg’s allegations – Mr Elman once again avoided the question.

This prompted shareholder Mano Sabnani to intervene. He told Mr Elman: “I think it is in order to ask about Yancoal. Why are you not answering? . . . If you are not guilty of anything, why are you so uptight?”

Mr Elman relented in response. “Let’s have the Yancoal question,” he said.

In its reports, Iceberg had queried why Noble was valuing its 13 per cent stake in Yancoal at US$322 million, when the stake was worth only US$10 million. At Friday’s AGM, Noble’s CEO Yusuf Alireza said the group uses a very specific third-party cashflow model used by many mining companies to value its assets, which is all audited by Ernst & Young.

Mr Alireza’s response failed to convince Mr Lau, who told BT after the AGM that “(Noble’s management) weren’t very detailed in answering their methodologies”. But he intends to retain his stake in Noble for the long run. “They are in a good sector of the business. It’s just that, lately, they might have enemies trying to disrupt the company,” he said.

Having held Noble’s shares for over a decade, Mr Lau added that the firm’s share price is “so depressed now, it’s no point (to sell)”.

Some shareholders voiced their support for the company, and affirmed their trust in its management. With an improving US economy, 2015 has also been much better for Noble’s business than the year before, Mr Elman said. Meanwhile, Mr Alireza maintained that the company’s focus remains on improving profitability and transparency.

All 12 resolutions were passed at the AGM, including one that approved Noble’s FY14 audited financial statements.

MR ELMAN: ”We consider the Iceberg matter finished. We have started legal proceedings and look forward to challenging their inaccurate, unreliable and misleading claims in a public court. We will not be revisiting details of these allegations at this meeting.”


Sound bites from Elman

, Sound bites from Elman

18 April 2015

Business Times Singapore

On Yancoal

Mr Lau: Can I ask you a question on Yancoal?

Mr Elman: Does it have to do with the financial statement? If it does, I’ll answer it. If it doesn’t, we won’t. We have to stick by the rules and regulations that the meeting is being run by.

Mr Sabnani: I think it is in order to ask about Yancoal, why are you not answering?

Mr Elman: I said it –

Mr Sabnani: It has nothing to do with the short-sellers . . . I think you’re unnecessarily defensive and in denial mode . . . If you are not guilty of anything, why are you so uptight?

Mr Elman: I would like to repeat, we are talking about the order of the financial statement and the reports of our directors and auditors. If it’s relative to that, we will absolutely answer the question.

Mr Sabnani: Chairman, you have not even let him ask the question. I’m just getting this feeling that you walked in here just to get it over with.

Mr Elman: I remember you from the last meeting. The first criticism you had was the font on the screen were too small and you couldn’t see them. Do you remember that?

Mr Sabnani: Yes!

Mr Elman: Are they big enough now?

Mr Sabnani: Your annual report is very badly done . . . look at the typeface, look at the point-font –

Mr Elman: Thank you, moving on.

Mr Sabnani: See, you are not willing to listen to feedback.

Mr Elman: Let’s have the Yancoal question.

On independent directors

Mr Sabnani: Can I ask the directors to tell us how do they hope to contribute to the company going forward?

Mr Elman: Ms (Irene) Lee is a lawyer and an accountant. Mr (Robert) Chan has been a banker at UOB for his whole life, so their skill sets are very, very qualified and they are very useful to the board.

Mr Sabnani: I’m sure they are, but I would just like to hear what they would be looking at, how they will offer special value –

Mr Elman: I don’t think this is an appropriate forum.

Mr Sabnani: I don’t see why not, chairman, especially if you’re voting somebody, and you’re telling us, “please just read the CV and vote them in”? (It) doesn’t make sense. What’s the hurry anyway? You booked the ballroom, right? Are they going to charge you per minute or what?


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