Noble Group has the symptoms of schizophrenia. Their delusion and demise were never “their” fault or caused by the actions of “their” traders.
Caught in-between and dancing on losses, the high rollers have painted it as because of : “liquidity constraint impacting trading and earnings generation”. For Noble Group “the problem” must be the exact solution, they have punted for working capital everywhere from the MD&A to the Press/Investor Communication and Strategic Review…
In the financial statements* for the six months ending on 30 June 2017 eloquently sums up the financial substance of Noble Group:
- Noble presents itself as a $2B net equity company with an $1,45 MtM unaudited Gains on Derivatives company*
- The trader has -$763 million negative OCF with a net debt increased by nearly $1B to $3.81B.
The Energy Segment accounts for 90% of Noble Revenues in 1H-2017.
Noble Group Limited Revenues by Segment, 1H-2017
The Energy Segment traded at a loss of $226 million during 1H-2017 (excluding financing costs and salaries).
That’s more than -$1.25 million per business day… Monday to Friday but the business is run smoothly. Of course no.
But in the world of Noble shortlisters rush on a “bargain” 🙂
“Sale of Global Oil Liquids Sales process commenced with shortlist of bidders–bids expected in Q3 2017”
-Strategic Review Update–26 July 2017
Investor Presentation Q2-2017 P.6
Out of Control
The Non-Performance of Global Oil Liquids should not be that shocking knowing the “Book now, think later” at the company. It lacks the management to impart performance.
Noble had two or three large take-of-pay deals in the U.S but the wind has changed as it always does in the physical energy markets.
The burden of Karma is heavy as Noble crosses the gates of death:
The hostile work environment includes daily vulgar and disgusting comments from male employees about vaginas, sex, male genitalia, and verbally abusive language using the word ‘f—‘ explicitly. constant abuse.”*
During 2012-2016, at the office in Stamford, Plaintiff’s seat was next to the gasoline traders which includes video conference cameras connecting with London and Houston offices.
The commentary back and forth on the Stamford desk for everybody within earshot to hear, frequently became vulgar and disgusting. This created a hostile work environment.
It is the last tango act of an unprincipled trader-assaillant.
Noble did the financial engineering for years and years and then the show–game broke. The typical assumption of a 40% recovery rate may indeed be too optimistic.
PwC has signed Noble’s Financial Statements but performance has inevitably caught up the accounting gimmicks.
Noble Group has generated negative cash-flows from the operations to the tune of
-$1600M in 2014
-$600M in 2015
-$900M in 2016,
-330M for Q-1 2017
and -433M for Q2-2017
As of Q1-2017, Noble Group incoherently booked $3,4B of Marked-to-market Fair Value gains on toxic derivatives and commodity contracts.
“In order to produce $3.4B of MtM gains one would have to buy nearly 958 million metric tons -the equivalent of 6937 Capezize cargoes Richards Bay-Qingdao, China or 5 voyages per week for the next 13 years”.
“Back-of-the-envelope calculations suggest that the $3.4B MtM mark used by Noble Group translates to coal hedges at 479 USD/MT !”“The Argus APi2 CIF Rotterdam futures is in the $60s/mt..“
As of Q2–2017, this MtM mark has been impaired by $1.2B. Paul Braugh did by necessity what Elman, emotionally attached, and Alireza, accelerating the Noble train course to a financial bottomless pit, couldn‘t do.
A Toxic Legacy
Net fair value gains now stands at $1.455 billion as of end-Jun 17.
A fair–to–arrive net equity of $2B* is still rather delusional for a company not producing any plus-value -Noble is losing operating cash–flows at a rate between -3.5 and -$6.5M per business day in the recent quarters.
*unaudited financial statements.
Noble’s position is irreparably compromised.
Noble group has no intrinsic value (by Discounted Cash-Flows).
The firm offers no viable future for patient capital.
Their leverage futures-physical trading model has too much impediments to break-even.
The Noble Files 贵族档案