Noble Group provides supply chain management services globally for industrial and energy products. The document discusses Noble Group's business segments, key developments in 2015 including declining revenues and losses due to falling commodity prices, top shareholders, and recommends strengthening investor confidence through improved communication and highlighting their asset-light business strategy and cost controls amid the current economic environment. It also notes some positive signs for commodities in Q1 2016 and China's future infrastructure demands.

2. Agenda
1. About Noble Group
Macroeconomics & Global Financial Environment
3. Outstanding Loans & Securities
4. Top Shareholders
5. Recommended IR Strategy

3. Overview
Noble Group Investor Relations Plan
● Build investor confidence
Reason for New IR Strategy
● Current Macroeconomic environment
About the Commodity Supply Chain Industry
● Highly Competitive, seasonal industry, and profit can
be affected hugely by fluxes in energy prices or
economic downturns

4. Noble Group is an investment holding company that
provides supply chain management services for a
range of industrial and energy products to
commercial and industrial customers worldwide

5. IR Mission
“Noble Group’s mission is to become the preeminent
company in the world at moving the physical commodity
from the producer to the consumer and managing the
market, credit, and operational risks associated.”

6. Who We Are
•
••
52 Trading
Range:
0.27 - 0.95

7. Top 10 Global Commodity
Firms
1. Vitol
2. Glencore
3. Cargill
4. Koch Industries
5. Archer Daniels Midland
6. Gunvor International
7. Trafigura Beheer
8. Mercuria
9. Noble Group
10. Louis Dreyfus
Source: Singapore Management University, http://researchguides.smu.edu.sg/c.php?g=422042&p=2881476

8. Business Segments
Corporate
• Logistics
• Financial
Services
• Research
Metals &
Mining
• Metals
• Carbon Steel
Materials
• Non-Ferrous:
Aluminum
Energy
• Oil Liquids
• Energy Coal
• Record Op
Income,123%
growth
Gas &
Power
• Gas & Power
• Energy
Solutions
Revenue 3,240.6 11,710.8 51,004.0 757.0
Total
operating
income
(180.9) (114.9) 888.1 386.0
Profits
before
interest &
tax
(207.1) (228.7) 645.7 214.4

9. Business Strategy
• Asset light supply chain management strategy
• Focus on Consumer products (Energy Solutions)
and less on Industrials
• Geographic Diversity
• Associates & JVs
• Leverages operating expertise
• Creates secure access to commodities flows
• No burden of operating industrial assets or to carry these
assets on our balance sheet

10. Partner / JV companies
Other Major Associates and Joint Ventures
• Yancoal – Australia Limited – Australian coal producer & developer operating
open/cut ground mines
• X2 Resources Limited (JV) – Joint venture mining company
• Harbour Energy (JV) – portfolio of supply chain energy and commodity products
• Aspire Mining – Mongolia premium coking company (metallurgical coal deposits
• Resource Generation – South African coal mining company
• PT Atlas – Indonesian coal producer
• Cockatoo Coal – Australian metallurgical coal producer
• Watt Power - UK Power Generation
• Sundance Resources - International iron ore producer
• Xanadu Mines - Mongolia copper mining & exploration

11. 2015 Key Developments
• Record 1.95BN USD cash balance, net debt continued to fall
• Revenues fell by 20%, but it is a function of broader price declines
• Sale of Noble Agri for $750M USD
• First loss since 1998, loss of $985M USD
• Debt rating change end of 2015 & in Feb 2016*
• Moody’s : Ba1 to Ba3
• S&P: BBB- to BB-
• Shares lost 65% of value in 2015
• Impairments of $1.2 BN USD, excluding the sale of Noble Agri
• No dividend will be paid for 2015
• Iceberg Research Report “Iceberg” attack criticizing accounting practices

13. 2015 Key Economic Drivers
Economic Drivers● Global Interest rates
● Economy Slowing
○ Softening of China Infrastructure spending
○ Energy markets
● Depressed Commodities markets - 25% decline in 2015
○ Drop in coal created a $1.2B non-cash impairment in 2015
○ Coal was 85% of revenue in 2014
○ Low oil price - pushes LNG down with it

14. Factors Affecting Commodity Values
• Global interest rates, market liquidity, U.S. Dollar value, capital flows, and trade
balances.
• ECB and Japan have negative interest rates and we have seen mainly stagnant
interest rates across the world.
• China reported a USD 60.6-billion trade surplus in February 2015 – compared with a
USD 22.9-billion deficit a year earlier – as exports surged while imports dropped,
which alone is a hugely responsible for the move in commodity prices and from a
predictive standpoint.

15. Factors Affecting Commodity Values
• Inflation affects commodity values. Wall Street worried about inflation as Fed Chair
Yellen cautious about raising interest rates, supporting speculation she wants the
economy to pick up before tightening monetary policy.
• When spreads between long term and short term treasuries widen, good economic
indicator for next 4 - 6 Qtrs. If the real federal funds rate low (or negative) like it is
now, growth should pick up.

16. Current Yield Curve
• If the term premium tightens, the yield curve will flatten. The inverse is currently happening. Term
premiums are presently widening as the slope of the treasury yield curve goes up. In addition, the
fed funds rate is low. The fact that term premiums are widening and the fed funds rate is low
indicate future economic growth.
The
Current
Treasury
Yield
Curve

17. Value of the U.S Dollar
• Commodities typically have an inverse relationship with the dollar - general depreciation of
the dollar, will increase the dollar denominated commodity prices. If USD continues to rise
against other commodities, prices will remain low or fall even further in the near future.
• However, an appreciating US Dollar and a higher supply would tend to mean-revert
commodity prices to long-term equilibrium level, which in theory is the cost-of-production.
Prices are based on what it costs to produce. Prices will go up slow and steady.

18. Demand Will Return
• In the long-run, decreases in demand in a competitive market will cause decreases in
output and increases in demand in a competitive market.
• Therefore, we should see an increase in the value of oil & other commodities long
term.

19. Metals and Mining
• Our carbon steel business negatively affected by pullback in Asia, as it focuses on
Asian steel mills.
• Current environment of Chinese carbon steel demand slowing down has led to a
75% decline in the price of the key ingredients of steel, which are iron ore and hard
coking coal.
• These declines can’t help but negatively impact our steel business and all of our
other businesses,
• However don’t own any production assets, asset-light strategy. Gives us advantage
to competitors, as we can swiftly capitalize on opportunities as appear and it
strengthens our balance sheet.
• Future demand in aluminum will be a source of future growth and increased cash
flow.

20. Commodity Prices Turn Positive Q1 2016
● In Q1 ‘16 the energy sector moved higher in Q1 by 2.37%. Leader was
gasoline futures, which moved 13.8% higher.
● Heating oil posted a 5.5% gain and Brent and WTI crude oil rose by
around 4%-5% for Q1.
● Ethanol rose 2.6%, even though the price of corn registered a loss for the
three-month period.
● The only big loser was natural gas, which closed the quarter at $1.959
per MMBtu, down 16.17%. That was after a recovery rally from lows at
$1.6110, the lowest price since 1998.
● Energy and base metal prices moved higher as sectors, but the results
were tepid at best.
● What is holding commodity prices back from recovering are mainly China
and oil glut.

21. Product & Geographic Diversity
•
•
•

22. Product & Geographic Diversity(Cont.)

23. Next Decade CHINA Infrastructure
Construction Prospects
●
●
●
●

24. • The Group’s focus on managing leverage resulted in a reduction of net debt
as of 31 Dec 2015, Adjusted net debt position at year end of US$2.26 BN,
representing a decline of US$248M from Sep 2015
• Record US$1.95BN Cash at year end
• Pro-forma Net debt to capitalization ratio at 54.50%, within targeted 45%
-55% range

25. Noble Group Debt Securities Summary

26. Top Holder Date of Record Shares % Held
Eastspring Investments (Singapore)
Ltd.
31 Aug 2015 590.97m 8.77%
Orbis Investment Management Ltd. 18 Dec 2015 392.30m 5.82%
Invesco Asset Management Ltd. 31 Jul 2015 294.78m 4.37%
Dimensional Fund Advisors LP 29 Feb 2016 100.17m 1.49%
Other Holders 5.066b 79.55%
● Eastspring Investments (Singapore) Ltd. is an Asian asset management business of Prudential who
provide investment solutions across a wide variety of asset classes. Their holding of 8.77% means
Eastspring Investments is a substantial shareholder and has a board seat.
● Orbis’ core competencies are their ability to buy shares that are out of favor or misunderstood. Their
large holding in the company may demonstrate their trust in the Noble Group to be undervalued or
have the potential to yield higher returns in the future.

27. Investor Relations Strategy Recommendation
#1 Build Investor and Stakeholder Confidence
Communication on-time (or ahead of schedule), transparent, and clearly communicate
our current financial situation
KEY STAKEHOLDERS
● Customers
● Key Investors
● Associates, JVs & Partners
● Shareholders
● Fixed Income
● Employees

28. ● We adjusted our business for the current commodities environment - asset
light strategy & internal cost controls
● We are in the process of securing our new Credit Facility
● Commodity prices finally posted gains in the first quarter of 2016. The
overall commodity sector consisting of 29 of the major commodities that
trade on U.S and U.K. exchanges rallied by just 1.63% YTD

29. ● Our forecast for the balance of 2016 is positive, weaker USD & improved
commodity prices
● The China slowdown continues through 2016, but government mandates
for higher quality infrastructure and raw materials are on the horizon
● Address Iceberg Research

30. ● Most recent 10K showed a 1.2 billion dollar write down in commodity contracts. Write down
creates fear in investors. Noble must gain confidence back. Entering future/forward contracts will
mitigate future risk and provide known cash-flow to be used to finance future expansion, and
inform investors of liquidity going forward. We believe this will give investors peace of mind and
stabilize the stock price, as the company will have the cash to grow the company. These hedges will
provide investors provide some assurance that a future write down will be avoided. Additionally, a
hedge will lock in prices if the prices should happen to fall even more.
● Closing some oil and gas storage facilities that are close in proximately and consolidating them: The
last quarterly call we discussed how gas demand has been strong, however, the up scaling of volume
has resulted in heavy storage costs. Oil inventories are at record highs. The consolidating of storage
facilities create a savings in man hours, and storage costs. We can close facilities and either sell the
assets or move them to another location. The one time moving costs will be steep but over the
course of a few quarters we will absorb the cost and we will be left with a more nimble operation
that will be in a position to incur less storage costs in the future.

31. Noble Group is an investment holding company that
provides supply chain management services for a
range of industrial and energy products to
commercial and industrial customers worldwide