LONDON (Alliance News) - Natural resource investment company Polo Resources Ltd on Monday reported a huge pretax loss in it last financial year after making a series of impairments against its investments due to falling metal and oil prices.
Polo's pretax loss tripled to USD61.2 million in the year ended June 30 from the USD19.1 million loss reported a year earlier, driven by large amounts of impairments that were not booked in the previous financial year.
Polo booked impairments totalling USD54.6 million against its investments in AIM-listed GCM Resources PLC, Signet Petroleum Ltd, Ironstone Resources Ltd and Equus Petroleum PLC, plus a USD3.5 million impairment against the evaluation and exploration assets of its 90% owned Nimini gold project in Sierra Leone.
"This headline figure (the USD61.2 million loss) is not necessarily indicative of a weakening financial performance as such variances are in the very nature of a natural resource investment company whose strategic focus extends beyond a single reporting year," said Polo.
As of last Friday, the company had cash, receivables, payables and equity investments totalling USD73.1 million, compared to USD77.1 million at the end of June. Its investments had a total value of USD53.6 million as of last Friday, compared to only USD49.5 million at the end of June.
The company had a net position of cash, receivables and short-term investments of USD22.3 million compared to USD30.8 million at the end of June. Investments at marked to market value, cost and valuation amounted to USD53.6 million, up from USD49.5 million.
Its net asset value as of last Friday stood at 16.09 pence per share, down from 17.70p at the end of June.
"The resources sector has faced much market volatility over the last 12 months, but our healthy balance sheet and exposure to near-term cash generating investments has allowed us to stay strong through what has been a challenging period for many companies," said Polo Chairman Datuk Michael Tang.
"We continue to follow our strategy of supporting near-term producers with proven reserves and inherent upside potential offering investors a balanced exposure to the resources sector," he added.
Polo said the highlight of its portfolio over the period was Blackham Resources, after that company completed the pre-feasibility study for its Matilda gold project in western Australia, which is targeting first gold in the second quarter of 2016.
Polo added that although the oil and gas industry is currently going through a tough time due to the fall in oil prices, it is upbeat about its investment in Hibiscus Petroleum as it continues to move to positive cashflow from its assets in Australia and the UK North Sea.
Polo shares were trading up 20% to 2.44 pence per share on Monday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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GCM Resources (GCM)