Polo Res.(See LSE:POL) Share Discussion Threads

[marben100] 17/10/2009 13:39

Doji Star,

'fraid not: both types of instrument involve the issue of new shares - when the COMPANY issues them.

I can understand your confusion. For large cap. stocks etc, entites other then the company itself can issue options - eg a stock holder can write call options. In that instance no new stock is issued when the call is exercised but the stock holder is obliged to sell the requisite number of shares to the holder of the calls, at the strike price.

However, when a company issues options, eg as part of a share option scheme, it HAS TO issue shares when those options are exercised (unless shares are held in an independent entity like an employee benefit trust, specifically to satisfy such awards). Even if shares have been bought back into treasury to satisfy option awards, whilst they are in treasury they do not count as part of the issued capital for EPS/NAV per share/dividend purposes but when they are issued to satsisfy the exercise, they do. In this instance, there is little difference between options and warrants.

Consider this: when and if Polo's option holders decide to exercise, where will the shares come from?

HTH,

Mark

[venture traveller] 17/10/2009 10:48

There is obviously going to be a loss in the investment stage. These aren't 'true' losses, as the company is not fully operational yet. Once the investments start to pay off, then POLO will enjoy good growth, and profits.

The sector of energy is a burgoining one, and Dattels seems to have hedged his bets by betting on Coal, aswell as Uranium.

There are discussions with governments around the world as what to do with the increase in energy consumption - as the worlds population continues to expand at an unstoppable rate. Do they burn the fossil fuels until its all gone, and risk upsetting the green lobby, or pile efforts into Nuclear (a hell of a lot cleaner), which is cheaper to produce, and has more longevity. The downside to nuclear is the radiactive disposal problems. There are issues either way, but the fact is wind power, and the like is not going to be the solution to the Peoples greed for more.

I see the Uranium price edging ever higher, as more Nuclear power plants come on line over the next year or so. Coal has a way to go before we run out, so the price should stay steady, and rise, and fall with demand.

I think we can bank on Dattels knowing what he is doing, and this little company will come on leaps and bounds.

GL

[humbugg] 17/10/2009 09:20

kerrie,barry,
fully concur.
marben,
remuneration?
one might say that if you dont let the pigs feed at the trough how will they bring home the bacon?

[barryrog] 16/10/2009 21:45

2bozmo,
shareholder value in real terms is 5p per share thats what you would get for selling your shares today.
shareholder value in realisable asset terms is over 7p per share, thats what you would get tomorrow if the Company sold all it's assets at todays book value and shut up shop.
you invest in Company's like Polo simply because you believe the value per share in asset terms will continue to grow and that will be reflected in a rising share price. of course a take out of any one of these assets at a hefty premium is a real bonus in that it gives you a substantial profit and the opportunity to re-invest the cash.
however,as an earlier poster said you rate an investment company based on the strength of its Balance Sheet not on its P & L. the big advantage of recording a paper loss is that when you do eventually sell an asset at a major profit you mitigate/eliminate your tax liability by using the c/f losses on the Balance Sheet.
therefore i would agree that the loss reported is of no concern particularly when the major part of this loss was a $44 mill impairment cost which was a write down of asset worth.
this wasn't actually necessary but very prudent as they have reduced the value of the Mongolian assets down to the value of their jv when in real terms it is likely to be worth far more than the revised book value.
but even after they have done this, the total portfolio asset value is still approaching 50% more than the share price.
in summary an excellent year (particularly the build up of the Extract share holding) but in essence its just a reconfirmation of what investors here already knew.

have a good weekend.

[tadska] 16/10/2009 21:32

Bossman are you still here or have you sold out?

[2bozmo] 16/10/2009 21:19

Kerrie, increasing assets doesnt always mean increasing shareholder value

[doji star] 16/10/2009 21:16

marben100,

I seem to recall that Warrants come from a placing of new shares and options are on shares that already exist.

I thought that was the main difference between Warrants and Options.

I guess it doesn't really matter. Just trying to explain the 7p.

[hoveactually] 16/10/2009 20:56

well i would also question why anybody would have a concern over a paper loss.
it is the Balance Sheet that measures the value of an investment company not the P & L. the only way investment companies make money is to sell assets they have acquired for more than they paid for them.
In Polo's case, they have built a portfolio that is now worth considerably more than it cost them to acquire the investments.
if the intention was to make a profit they could easily have done that by selling some of the assets but it is patently obvious that they will not do that until such time they feel that any have exhausted their shelf life and are unlikely to grow further in the future.
that clearly is not the case for any of their major investments.
unless there is a major hike in the share price this discount to assets is likely to get even wider.

[tadska] 16/10/2009 20:30

Kerrie3
are you talking to me-plank? Because i mentioned the loss earlier.

[kerrie3] 16/10/2009 20:21

thats brilliant - a significant discount to assets and more cash than i thought.
who was the plank that mentioned the loss earlier?
to whoever it was, they have no income! the whole purpose of the Co. is to increase it's asset value and sell/ exchange assets to produce cash and increase the size of it's investment portfolio.
just look at what the Company is now worth vs it's current stock market value - .
they could liquidate themselves tomorrow at around 10p per share.

[tadska] 16/10/2009 20:18

rovers2
I am not expecting a big fall, but we never know...I was a big optimist in my live, now i am becoming a pessimist because my optimistic thoughts cost me a lot of money.

[marben100] 16/10/2009 20:14

"I can't believe that this company operates like the House of Commons with regard to expenses"

I can. ;0) It isn't a surprise that this Board does like to remunerate itself rather generously. Can't say I like it but if it delivers results, I won't complain overmuch.

The remuneration is probably even worse than it appears, as so much was in shares issued @ low prices. It's a bit hard from the results to figure out exaclty how many were issued to Directors. If I could be bothered I could go back through RNSs & figure it out.

The 110.75m options @ 3.75p most certainly ARE dilutive!

[tadska] 16/10/2009 20:00

Richard
agree with you its a big question.I am not deramping this share, i am a long term investor, but some things are here are getting me nervous.

[rovers2] 16/10/2009 19:55

Very good point tadska, not really expecting a major fall in markets tho. A slight retrace is very possible after such a good run. Equities for the moment are in a sweet spot.

[rbf] 16/10/2009 19:52

Agree the big loss is pretty irrelevant and clearly the overall picture looks very positive..... my only concern in the results are the more than trebling of;
Exploration Costs (from $2.2m to £8.0m)
Administrative Expenses (from $4.6m to $15.1m)

Can anyone explain the reasons....I can't believe that this company operates like the House of Commons with regard to expenses :-)

Richard

[tadska] 16/10/2009 19:43

rovers2
time will show,but i wouldn`t exclude fact,that market may retrace and what efect it may have to Polo?

[rovers2] 16/10/2009 19:19

The big loss is not a concern, this was just some poor investments which is now history. If you look at the current portfolio it is very interesting with plenty of upside / possible takeover targets (EXT,RIO have been muted as interested).

They are in the right companies at the right time. IMHO.

[doji star] 16/10/2009 19:18

marben100, I think the 7p is including just the warrants, as options are not dilutive.

nice to get a detailed update anyway. Even if it is a late one.

[tadska] 16/10/2009 19:07

rovers2
agree with you, why announce final results then market is closed?

[rovers2] 16/10/2009 19:04

Very strange to announce final results after the close on a Friday, given the low volume (6 million) traded today, I don't think many investors were expecting them.

Anyway all looks very positive to me and am expecting a nice rise at the open on Monday.

[marben100] 16/10/2009 19:02

Yeehaaa! Allowing for the extra Extract purchases & US$8m of admin/operating expenses, my figures now reconcile. (but I make the diluted NAV 7.55p - slight increase on 14th Oct figure)

[tadska] 16/10/2009 18:47

marben100
aposse ad esse:from possibility to reality

[marben100] 16/10/2009 18:47

The 22.4m Extract shares figure implies that Polo must have bought 1.01m shares in the market, in addition to the 0.65m it picked up through the entitlement offer & shortfall take-up.

[marben100] 16/10/2009 18:21

Now I've corrected my miscalculation in the above post, maybe Polo just rounded 7.51p down to 7p :0)

[marben100] 16/10/2009 18:16

The "loss" is simply due to writedowns of old investments - irrelevant to current valuation. However, the numbers - esp cash balance of $16.9m and NAV of 7p/share differ significantly from my own estimates, so I guess I'm going to have a bit of a nightmare attempting to reconcile them.

Overall the "The combined value of cash and listed equity investments at 14 October was US$319.2 million" is US$18.5m lower than my own estimate, as at today. What's really odd is that 319.2/2,346.65m shares in issue = US$0.136 = 8.32p - not 7p, using current exchange rates. Even with dilution from exercise of warrants & options, I doubt the figure would be that low (considering the extra cash that would arise as a result of the exercise).

...Just checked, allowing for the exercise of 110.75 options & 415.46m warrants @ 3.5p & 4p respectively, I still get [correction]7.51p/share.

Any ideas?

Cheers,

Mark