PricewaterhouseCoopers has concluded that Noble’s individual contract valuations and overall mark-to-market valuation comply with the relevant requirements of international financial reporting standards and standard industry practices.
Noble’s board had appointed PwC to review its accounting practices to draw a line under the
problem after after Iceberg Research in mid-February first accused the company of inflating its assets by billions of dollars by using accounting techniques to mislead markets. The commodity trader has rejected the claims.
“The individual valuations and overall valuation of the contracts included in the Group’s consolidated balance sheet as at June 30th 2015 comply, in all material aspects, with the relevant criteria,” says PwC in its report.
PwC adds that its review was not restricted to an examination of the governance, organisation and policies that govern the valuation models.
“In the case of each contract reviewed by us, we also obtained the detailed valuation model and checked the application of the relevant criteria to the construction of the model. This included an examination of all the inputs as well as the construction of the model itself. We supplemented this with detailed discussions with the various teams that play a role in this process, to clarify our understanding of the inputs and relevant assumptions,” says the auditor.
However, PwC did admit that Noble has an approach which is “more sophisticated than that of many non-financial companies”. But it also notes a strong segregation of duties between the different teams that provide key inputs into the models.
PwC says overall, 81% by value of derivative contracts with a maturity of over two years and 98% by value of level three net assets were examined. This equates to US$2.6 billion ($3.6 billion) of net fair value gains on commodity contracts and derivative financial instruments recorded on the balance sheet at 30 June 2015.
For the six months to June, Noble reported a 22% drop in group earnings to US$169 million, compared to US$218 million a year ago due to "tough trading conditions". Revenue for the half-year fell 16% to US$35 billion.
For the 2Q ended June, earnings fell 5% to US$62.6 million while revenue fell 22% to US$18.4 billion.
The group says it has undertaken a thorough review of its cost base and has started the implementation of various cost initiatives, including, a reduction in total headcount of more than 15%.
Shares of Noble closed 2.7% higher at 58 cents on Aug 6.
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Noble’s board had appointed PwC to review its accounting practices to draw a line under the
problem after after Iceberg Research in mid-February first accused the company of inflating its assets by billions of dollars by using accounting techniques to mislead markets. The commodity trader has rejected the claims.
“The individual valuations and overall valuation of the contracts included in the Group’s consolidated balance sheet as at June 30th 2015 comply, in all material aspects, with the relevant criteria,” says PwC in its report.
PwC adds that its review was not restricted to an examination of the governance, organisation and policies that govern the valuation models.
“In the case of each contract reviewed by us, we also obtained the detailed valuation model and checked the application of the relevant criteria to the construction of the model. This included an examination of all the inputs as well as the construction of the model itself. We supplemented this with detailed discussions with the various teams that play a role in this process, to clarify our understanding of the inputs and relevant assumptions,” says the auditor.
However, PwC did admit that Noble has an approach which is “more sophisticated than that of many non-financial companies”. But it also notes a strong segregation of duties between the different teams that provide key inputs into the models.
PwC says overall, 81% by value of derivative contracts with a maturity of over two years and 98% by value of level three net assets were examined. This equates to US$2.6 billion ($3.6 billion) of net fair value gains on commodity contracts and derivative financial instruments recorded on the balance sheet at 30 June 2015.
For the six months to June, Noble reported a 22% drop in group earnings to US$169 million, compared to US$218 million a year ago due to "tough trading conditions". Revenue for the half-year fell 16% to US$35 billion.
For the 2Q ended June, earnings fell 5% to US$62.6 million while revenue fell 22% to US$18.4 billion.
The group says it has undertaken a thorough review of its cost base and has started the implementation of various cost initiatives, including, a reduction in total headcount of more than 15%.
Shares of Noble closed 2.7% higher at 58 cents on Aug 6.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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