The majority of Noble’s profit comes from capitalising, or front loading, the income streams from future off-take and supply contracts. Since 2009, the nature of these cashless profits has been hidden by an US$4bn rise in payables. Worse, Noble’s black box not only builds the risk/valuation models but it self certifies the results. Blind faith in their reliability has been undermined by questionable valuations attached to financially distressed investments. We also worry that future profits have been booked on projects with a low chance of survival; hence, the reluctance to make write-downs. Capitalised profits mean earnings multiples are inappropriate; instead,…
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