Final Results

Polo Resources Limited

Neil Herbert, Managing Director

+ 27 82 404 36 37 

Canaccord Adams Limited

Mike Jones/Ryan Gaffney

+ 44 (0) 20 7050 6500

Financial Dynamics

Ben Brewerton / Ed Westropp

+ 44 (0) 20 7831 3113

Year ended 30 June 2009

Period 23 May 2007 to 30 June 2008

Notes

$ 000's

$ 000's

Turnover

-

-

Exploration costs

(8,012)

(2,234)

Administrative expenses

(15,098)

(4,633)

Share options expensed

8, 21

(607)

(1,392)

Currency exchange gains/(losses)

11,200

(57)

Impairment of investment in Mongolia

14

(43,978)

-

Investment income

5

403

-

Gains on sale of available for sale investments

1,211

-

Group operating (loss)

3

(54,881)

(8,316)

Share of Joint Venture results

(3,519)

-

Share of associates results

(3,239)

(426)

Finance revenue

7

2,421

2,000

(Loss) on subsidiary disposal

26

(3,512)

-

(Loss) before taxation

2

(62,730)

(6,742)

Income tax expense

9

-

-

Retained (loss) for the period attributable to members of the parent Company

(62,730)

(6,742)

(Loss) per share (US cents)

Basic 

11

(3.20)

(1.12)

Diluted 

11

(3.20)

(1.12)

All of the operations are considered to be continuing.

Year ended 30 June 2009

Period 23 May 2007 to 30 June 2008

Notes

$ 000's

$ 000's

Turnover

-

-

Exploration costs

(534)

(2,881)

Administrative expenses

(13,339)

(4,043)

Share options expensed

8, 21

(607)

(1,392)

Currency exchange gains/(losses)

12,075

(57)

Impairment of investment in Mongolia

14

(43,978)

-

Group operating (loss)

3

(46,383)

(8,373)

Other income

6

(2,470)

3,099

Finance revenue

7

1,703

1,999

(Loss) before taxation

(47,150)

(3,275)

Income tax expense

9

-

Retained (loss) after taxation

(47,150)

(3,275)

All of the operations are considered to be continuing.

30 June 2009

30 June 2008

Note

$ 000's

$ 000's

$ 000's

$ 000's

ASSETS

Non-current assets

Intangible assets

12

-

72,161

Tangible assets

13

6

755

Interest in joint venture

15

19,505

-

Interest in associates

16

132,596

148,529

Available for sale investments

17

108,264

285

Trade and other receivables

18

2,813

-

Total non-current assets

263,184

221,730

Current assets

Trade and other receivables

18

4,560

4,356

Available for sale investments

17

32,395

-

Cash and cash equivalents

12,288

115,974

Total current assets

49,243

120,330

TOTAL ASSETS

312,427

342,060

LIABILITIES

Current liabilities

Trade and other payables

19

(8,821)

(8,259)

TOTAL LIABILITIES

(8,821)

(8,259)

NET ASSETS

303,606

333,801

EQUITY

Ordinary shares

20

-

-

Share premium 

305,359

338,861

Retained earnings

(69,472)

(6,742)

Available for sale investment reserve

56,553

(62)

Foreign exchange reserve

8,037

(285)

Share based payments reserve

21

3,129

2,029

TOTAL EQUITY

303,606

333,801

These financial statements were approved by the Board of Directors on 14 October 2009 and signed on its behalf by:

Stephen Dattels

Neil Herbert

Director

Director

 30 June 2009

 30 June 2008

Notes

$ 000's

$ 000's

$ 000's

$ 000's

ASSETS

Non-current assets

Tangible assets

13

6

-

Investment in subsidiaries

14

26,550

24,842

Trade and other receivables

18

221,914

199,021

Total non-current assets

248,470

223,863

Current assets

Cash and cash equivalents

12,288

113,674

Trade and other receivables

18

4,236

3,833

Total Current Assets

16,524

117,507

TOTAL ASSETS

264,994

341,370

LIABILITIES

Current Liabilities

Trade and other payables

19

(8,821)

(3,744)

TOTAL LIABILITIES

(8,821)

(3,744)

NET ASSETS

256,173

337,626

EQUITY

Ordinary shares

20

-

-

Share premium 

305,359

338,861

Retained earnings

(50,425)

(3,275)

Foreign exchange reserve

(1,890)

11

Share based payments reserve

21

3,129

2,029

TOTAL EQUITY

256,173

337,626

These financial statements were approved by the Board of Directors on 14 October 2009 and signed on its behalf by:

Stephen Dattels

Neil Herbert

Director

Director

Year ended 30 June 2009

For the period ended 30 June 2008

Notes

$ 000's

$ 000's

Cash flows from operating activities

Operating Loss

(54,881)

(8,316)

(Increase) in trade and other receivables

(204)

(4,356)

Increase in trade and other payables

562

8,259

Foreign exchange (gain)/loss 

(11,200)

57

Share options expensed

607

1,392

Share based payment charge - shares issued

8,021

-

Impairment of investment in Mongolia

43,978

-

Gains on sale of available for sale investments

(1,211)

-

Depreciation & impairment 

5,844

46

Net cash outflow from operating activities

(8,484)

(2,918)

Cash flows from investing activities

Interest Received

2,421

2,000

Investments in associates

(6,113)

(135,968)

Payments to acquire available for sale investments

(83,908)

(347)

Receipts on sale of available for sale investments

9,586

-

Payments to acquire intangible assets

(2,798)

(33,142)

Payments to acquire tangible assets

(3,858)

(801)

Loans to joint ventures

(2,813)

-

Net cash outflow from in investing activities

(87,483)

(168,258)

Acquisitions and disposals

Cash (derecognised)/acquired with subsidiaries

(231)

(58)

Payments to acquire subsidiaries

-

(17,389)

Net cash outflow from acquisitions and disposals

(231)

(17,447)

Cash flows from financing activities

Issue of ordinary share capital

10,172

325,586

Share issue costs

(704)

(21,617)

Net cash inflow from financing activities

9,468

303,969

Net (decrease)/increase in cash and cash equivalents

(86,730)

115,346

Cash and cash equivalents at beginning of period

115,974

-

Exchange gain on cash and cash equivalents

(16,956)

628

Cash and cash equivalents at end of period

22

12,288

115,974

Year ended 30 June 2009

For the period ended 30 June 2008

Notes

$ 000's

$ 000's

Cash flows from operating activities

Operating Loss

(46,383)

(8,373)

(Increase) in trade and other receivables

(403)

(3,833)

Increase in trade and other payables

5,077

3,744

Share options expensed

607

1,392

Share based payment charge - shares issued

8,021

-

Foreign exchange (gain)/loss

(12,075)

58

Impairment of investment in Mongolia

43,978

-

Depreciation

3

-

Net cash outflow from operating activities

(1,175)

(7,012)

Cash flows from investing activities

Interest Received

1,703

1,999

Purchases of tangible assets

(9)

-

Loans to subsidiaries

(82,280)

(185,785)

Loans to joint ventures

(2,813)

-

Net cash outflow from investing activities

(83,393)

(183,786)

Acquisitions and disposals

Payments to acquire subsidiaries

-

(2,000)

Net cash outflow from acquisitions and disposals

-

(2,000)

Cash flows from financing activities

Issue of ordinary share capital

10,172

325,586

Share issue costs

(704)

(21,617)

Net cash inflow from financing activities

9,468

303,969

Net (decrease)/increase in cash and cash equivalents

(75,100)

111,171

Cash and cash equivalents at beginning of period

113,674

-

Exchange gain on cash and cash equivalents

(26,286)

2,503

Cash and cash equivalents at end of period

22

12,288

113,674

Called up share capital

Share premium reserve

Available for sale investment reserve

Foreign currency translation reserve

Share based payment reserve

Retained earnings

Total equity

Group

$ 000's

$ 000's

$ 000's

$ 000's

$ 000's

$ 000's

$ 000's

As at 23 May 2007 

-

-

-

-

-

-

-

Loss for the period

-

-

-

-

-

(6,742)

(6,742)

Loss on revaluation of available for sale investments

-

-

(62)

-

-

-

(62)

Currency translation differences

-

-

-

(285)

-

-

(285)

Total recognised income and expense

-

-

(62)

(285)

-

(6,742)

(7,089)

Share capital issued

-

361,120

-

-

-

-

361,120

Cost of share issue

-

(22,259)

-

-

-

-

(22,259)

Share based payments

-

-

-

-

2,029

-

2,029

As at 30 June 2008

-

338,861

(62)

(285)

2,029

(6,742)

333,801

Loss for the year

-

-

-

-

-

(62,730)

(62,730)

Gain on revaluation of available for sale investments

-

-

56,841

-

-

-

56,841

Currency translation differences

-

(57,394)

(226)

8,322

(299)

-

(49,597)

Total recognised income and expense

-

(57,394)

56,615

8,322

(299)

(62,730)

(55,486)

Share capital issued

-

25,364

-

-

-

-

25,364

Cost of share issue

-

(1,472)

-

-

-

-

(1,472)

Share based payments

-

-

-

-

1,399

-

1,399

As at 30 June 2009

-

305,359

56,553

8,037

3,129

(69,472)

303,606

Called up share capital

Share premium reserve

Foreign exchange reserve

Share based payment reserve

Retained earnings

Total equity

Company

$ 000's

$ 000's

$ 000's

$ 000's

$ 000's

$ 000's

As at 23 May 2007

-

-

-

-

-

-

Loss for the period

-

-

-

-

(3,275)

(3,275)

Currency translation differences

-

-

11

-

-

11

Total recognised income and expense

-

-

11

-

(3,275)

(3,264)

Share capital issued

-

361,120

-

-

-

361,120

Cost of share issue

-

(22,259)

-

-

-

(22,259)

Share based payments

-

-

-

2,029

-

2,029

As at 30 June 2008

-

338,861

11

2,029

(3,275)

337,626

Loss for the period

-

-

-

-

(47,150)

(47,150)

Currency translation differences

-

(57,394)

(1,901)

(299)

-

(59,594)

Total recognised income and expense

-

(57,394)

(1,901)

(299)

(47,150)

(106,744)

Share capital issued

-

25,364

-

-

-

25,364

Cost of share issue

-

(1,472)

-

-

-

(1,472)

Share based payments

-

-

-

1,399

-

1,399

As at 30 June 2009

-

305,359

(1,890)

3,129

(50,425)

256,173

Notes to the Financial Statements for the year ended 30 June 2009

1

Summary of Significant Accounting Policies

(a)

Authorisation of financial statements

The Group financial statements of Polo Resources Ltd for the year ended 30 June 2009 were authorised for issue by the Board on 14 October 2009 and the balance sheets signed on the Board's behalf by Stephen Dattels and Neil Herbert. The Company is registered in British Virgin Islands under the BVI Business Companies Act 2004 with registered number 1406187.  The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange.

(b)

Statement of compliance with IFRS

The Group has not yet adopted certain new standards, amendments and interpretations to existing standards, which have been published but are only effective for our accounting periods beginning on or after 1 July 2009 or later periods. These new standards are listed below:

- IFRS 8 "Operating Segments" (effective 1 January 2009)

- IFRIC 17 "Distributions of Non Cash Assets to Owners" (effective 1 July 2009)

- IFRIC 18 "Transfers of Assets to Customers" (effective 1 July 2009)

- Revision to IAS 1 "Presentation of Financial Statements" (effective 1 January 2009)

- Amendments to IAS 23 "Borrowing Costs" (effective 1 January 2009)

- Revision to IFRS 3 "Business Combinations" (effective 1 July 2009)

- Revision to IAS 27 "Consolidated and Separate Financial Statements" (effective 1 July 2009)

- Amendment to IFRS 2 "Share-Based Payment" (effective 1 January 2009)

- Amendment to IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" (effective 1 July 2009)

- Amendments to IAS 28 "Investment in Associates" (effective 1 January 2009)

- Amendment to IAS 32 "Financial Instruments: Presentation" (effective 1 January 2009)

- Amendments to IAS 38 "Intangible Assets" (effective 1 January 2009)

- Amendment to IAS 39 "Financial Instruments: Recognition and Measurement" (effective 1 January 2009)

The Directors are currently evaluating the impact of the adoption of these standards, amendments and interpretations in future periods.

(c)

Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis.

The financial report is presented in US Dollars and all values are rounded to the nearest thousand dollars ($'000) unless otherwise stated.

(d)

Basis of consolidation

The consolidated financial information incorporates the results of the Company and its subsidiaries (the "Group") using the purchase method. In the consolidated balance sheet, the acquiree's identifiable assets and liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. Inter-company transactions and balances between Group companies are eliminated in full. 

(e)

Business combinations

The acquisition of subsidiaries in a business combination is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 'Non Current Assets Held for Sale and Discontinued Operations', which are recognised and measured at fair value less costs to sell.

Where there is a difference between the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities and the cost of the business combination, any excess cost is recognised in the balance sheet as goodwill and any excess net fair value is recognised immediately in the income statement as negative goodwill on acquisition of subsidiary.

The interest of minority shareholders in the acquiree is initially measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

(f)

Interest in associates

An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. 

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting except when classified as held for sale. Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group's share of the net assets of the associates, less any impairment in the value of individual investments. Losses of the associates in excess of the Group's interest in those associates are not recognised unless the Group has an obligation to fund such losses.

Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment.

(g)

Interest in joint ventures

A joint venture is a contractual arrangement whereby the group and other parties undertake an economic activity that is subject to joint control; that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

These consolidated financial statements include the Group's share of the total recognised gains and losses of joint ventures using the equity method, from the date that significant influence or joint control commences to the date that it ceases, based on present ownership interests and excluding the possible exercise of potential voting rights, less any impairment losses. When the Group's interest in a joint venture has been reduced to nil because the Group's share of losses exceeds its interest in the joint venture, the Group only provides for additional losses to the extent that it has incurred legal or constructive obligations to fund such losses, or where the Group has made payments on behalf of the or joint venture. Where the disposal of an investment in a joint venture is considered to be highly probable, the investment ceases to be equity accounted and, instead, is classified as held for sale and stated at the lower of carrying amount and fair value less costs to sell.

(h)

Revenue

The Group had no revenue during the year ending 30 June 2009.

(i)

Foreign currencies

The Company's functional currency is Sterling (£). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. As at the reporting date the assets and liabilities of these subsidiaries are translated into the presentation currency of Polo Resources Ltd, which is US Dollar ($), at the rate of exchange ruling at the balance sheet date and their income statements are translated at the average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate component of equity. 

All other differences are taken to the income statement with the exception of differences on foreign currency borrowings, which, to the extent that they are used to finance or provide a hedge against foreign equity investments, are taken directly to reserves to the extent of the exchange difference arising on the net investment in these enterprises. Tax charges or credits that are directly and solely attributable to such exchange differences are also taken to reserves.

(j) 

Goodwill and intangible assets

Intangible assets are recorded at cost less eventual amortisation and provision for impairment in value. Goodwill on consolidation is capitalised and shown within fixed assets. Positive goodwill is subject to an annual impairment review, and negative goodwill is immediately written-off to the income statement when it arises.

(k)

Exploration and development costs

Exploration and development costs are carried forward in respect of areas of interest where the consolidated entity's rights to tenure are current and where these costs are expected to be recouped through successful development and exploration, or by sale. Alternatively, these costs are carried forward while active and significant operations are continuing in relation to the areas of interest and it is too early to make reasonable assessment of the existence or otherwise of economically recoverable reserves. When the area of interest is abandoned, exploration and evaluation costs previously capitalised are written off to the Income Statement.

In accordance with the full cost method, all costs associated with mining development and investment are capitalised on a project-by-project basis pending determination of the feasibility of the project. Costs incurred include appropriate technical and administrative expenses but not general overheads. If a mining development project is successful, the related expenditures will be written-off over the estimated life of the commercial ore reserves on a unit of production basis. Impairment reviews will be carried out regularly by the Directors of the Company. Where a project is abandoned, or is considered to be of no further commercial value to the Company, the related costs will be written off.

The recoverability of deferred mining costs and mining interests is dependent upon the discovery of economically recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production or proceeds from the disposition of recoverable reserves.

(l)

Significant accounting judgments, estimates and assumptions

(i) Significant accounting estimates and assumptions

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: 

(ii) Impairment of goodwill and intangibles with indefinite useful lives

The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating units to which the goodwill and intangibles with indefinite useful lives are allocated. 

(iii) Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model.

(m)

Finance costs/revenue

Borrowing costs are recognised as an expense when incurred.

Finance revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

(n)

Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(o)

Trade and other receivables

Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. 

An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

(p)

Available for sale Investments

Equity investments intended to be held for an indefinite period of time are classified as available-for-sale investments. They are carried at fair value, where this can be reliably measured, with movements in fair value recognised directly in the available-for-sale reserve. Where the fair value cannot be reliably measured, the investment is carried at cost.

Any impairment losses in equity investments classified as available-for-sale investments are recognised in the income statement and are not reversible through the income statement, and are determined with reference to the closing market share price at the balance sheet date. Any subsequent increase in the fair value of the available-for-sale investment above the impaired value will be recognised within the available-for-sale reserve.

Available-for-sale investments are included within non-current assets unless the carrying value is expected to be recovered principally through sale rather than continuing use, in which case they are included within current assets. On disposal, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had previously been recognised directly in reserves is recognised in the income statement.

Income from available for sale investments is accounted for in the income statement on a accruals basis.

(q)

Financial instruments

The Group's financial instruments, other than its investments, comprise cash and items arising directly from its operation such as trade debtors and trade creditors. The Group has held overseas subsidiaries in BVI, Mongolia and Australia whose expenses are denominated in US Dollars, Mongolian Tugrik, and Australian Dollars respectively. Market price risk is inherent in the Group's activities and is accepted as such.

There is no material difference between the book value and fair value of the Group's cash.

(r)

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the tax computations, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case it is also dealt with in equity.

(s)

Available for sale investment Reserve

This reserve is used to record the post-tax fair value movements in available for sale investments. 

(t)

Share Based payments Reserve

This reserve is used to record the value of equity benefits provided to employees and directors as part of their remuneration and provided to consultants and advisors hired by the Group from time to time as part of the consideration paid.

(u)

Foreign Currency Translation Reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

(v)

Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Land is measured at fair value less any impairment losses recognised after the date of revaluation. 

Depreciation is provided on all tangible assets to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:

Land (including option costs) - Nil

Plant and Equipment - between 5% and 25%

All assets are subject to annual impairment reviews.

(w)

Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. 

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Income Statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(x)

Trade and other payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. 

(y)

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. 

(z)

Share-based payment transactions 

(i) Equity settled transactions:

The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using a Black-Scholes model.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Polo Resources Ltd (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group's best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The Income Statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see Note 11).

(aa)

Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;

• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

2

Segmental analysis - Group

The Group has not commenced production and therefore recorded no revenue.

The analysis of the operating loss before taxation and the net assets employed by geographical segment of operations is shown below;

By geographical area

2009

BVI/Parent

Mongolia

Australia

Total

$ 000's

$ 000's

$ 000's

$ 000's

Result

Operating loss

(48,251)

(6,582)

(248)

(54,881)

Share of joint venture results

(3,519)

-

(3,519)

Share of associates results

(3,239)

-

-

(3,239)

Investment revenue

1,703

714

-

2,421

(Loss) on disposal of subsidiary

(3,512)

-

-

(3,512)

Loss before & after tax

(62,730)

Other information

Depreciation and amortization

3

105

-

108

Capital additions

9

6,647

-

6,656

Assets

Segment assets

292,766

-

-

292,766

Financial assets

7,373

-

-

7,373

Cash

12,288

Consolidated total assets

312,427

Liabilities

Segment liabilities

-

-

-

-

Financial liabilities

(8,821)

-

-

(8,821)

Consolidated total liabilities

(8,821)

2

Segmental analysis - Group (continued)

By geographical area

2008

BVI/Parent

Mongolia

Australia

Total

$ 000's

$ 000's

$ 000's

$ 000's

Result

Operating loss

(7,725)

(411)

(180)

(8,316)

Share of associates results

(426)

-

-

(426)

Investment revenue

1,999

1

-

2,000

Loss before & after tax

(6,742)

Other information

Depreciation and amortization

-

1,473

-

1,473

Capital additions

-

74,389

-

74,389

Assets

Segment assets

148,815

72,444

471

221,730

Financial assets

745

3,550

61

4,356

Cash

115,974

Consolidated total assets

342,060

Liabilities

Segment liabilities

-

-

-

-

Financial liabilities

(3,744)

(4,456)

(59)

(8,259)

Consolidated total liabilities

(8,259)

3

Operating loss

2009

2009

2008

2008

Group

Company

Group

Company

Operating loss is arrived at after charging:

$ 000's

$ 000's

$ 000's

$ 000's

Auditors' remuneration - audit 

109

42

64

50

Auditors' remuneration - non audit services

-

-

-

-

Directors' emoluments - fees and salaries

1,228

1,011

1,017

1,017

Directors' emoluments - share based payments

3,721

3,721

1,890

1,890

Foreign exchange (gain)/loss

(11,200)

(12,075)

57

57

Depreciation

108

3

46

-

Auditors remuneration for audit services above includes $65,000 (2008: $13,420) charges by KPMG (Malaysia), relating to the audit of the subsidiary companies.

4

Employee information - Group

2009

2008

Staff Costs comprised:

$ 000's

$ 000's

Wages and salaries

643

37

Average Number of employees

Number

Number

Exploration

125

9

Administration

10

2

135

11

5

Investment income

2009

Group

2009

Company

2008

Group

2008

Company

$ 000's

$ 000's

$ 000's

$ 000's

Dividend income on investments

90

-

-

-

Interest income on convertible loan notes

313

-

-

-

403

-

-

-

6

Other income

2009

Group

2009

Company

2008

Group

2008

Company

$ 000's

$ 000's

$ 000's

$ 000's

Management fees 

(re-payable)/receivable

-

(2,470)

-

3,099

The management fees originally charged in 2008 were cancelled and reversed in 2009, in conjunction with the terms of the Joint Venture agreement with Peabody.

7

Finance revenue

2009

Group

2009

Company

2008

Group

2008

Company

$ 000's

$ 000's

$ 000's

$ 000's

Bank interest receivable

2,421

1,703

2,000

1,999

8

Directors' emoluments

Group

2009

2008

$ 000's

$ 000's

Directors' remuneration

4,949

2,907

2009

Directors Fees

Shares

issued

Net Options

Issued (*)

Total

$ 000's

$ 000's

$ 000's

$ 000's

Executive Directors

Stephen Dattels 

258

1,547

(38)

1,767

Neil Herbert 

258

1,547

(92)

1,713

Tony Bainbridge 

319

40

124

483

Paul Ingram 

279

40

(60)

259

Non-Executive Directors

Guy Elliott

35

311

(92)

254

Harald Van Hoeken (#)

31

10

-

41

Danny Sun (#)

25

10

278

313

Suresh Hiremath (#)

17

-

-

17

Bryan Smith (#)

3

-

48

51

James Mellon (#)

3

-

48

51

1,228

3,505

216

4,949

2008

Directors Fees

Consultancy Fees

Shares &

Options

Total

$ 000's

$ 000's

$ 000's

$ 000's

Executive Directors

Stephen Dattels (#)

100

116

116

332

Neil Herbert (#)

195

-

855

1,050

Tony Bainbridge (#)

133

-

116

249

Paul Ingram (#)

167

102

279

548

Non-Executive Directors

Guy Elliott

33

76

182

291

Harald Van Hoeken (#)

33

-

113

146

Danny Sun (#)

21

-

116

137

Suresh Hiremath (#)

33

8

113

154

715

302

1,890

2,907

(*) During the year, the company cancelled various options issued in 2008, and issued new options. The net charge to the income statement in respect of these directors options is highlighted here. (See Note 21 for full option details).

(#): These Directors were not employed during the full financial period.

No consultancy fees were paid in the year to 30 June 2009.

No pension benefits are provided for any Director.

9

Taxation

2009

2008

Analysis of charge in period

$ 000's

$ 000's

Tax on ordinary activities

-

-

No taxation has been provided due to losses in the year.

The British Virgin Islands under the IBC imposes no corporate taxes or capital gains. However the Company as a group may be liable for taxes in the jurisdictions where it is developing mining properties.

In Mongolia, the Company provides for income taxes on the basis of its income for financial reporting purposes, adjusted for items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the tax authorities. The tax rate is 10% for taxable profits up to MNT3 billion and 25% for taxable profits in excess of MNT3 billion

No deferred tax asset has been recognised because there is insufficient evidence of the timing of suitable future profits against which they can be recovered. No deferred tax liability has been recognised as a result of the losses in the period.

10

Dividends

No dividends were paid or proposed by the Directors. (2008: $Nil) 

11

Loss per share

The calculation of loss per share is based on the loss after taxation divided by the weighted average number of share in issue during the period:

2009

2008

Net loss after taxation ($000's)

(62,730)

(6,740)

Weighted average number of ordinary shares used in calculating basic loss per share (millions)

1,962.85

603.26

Basic loss per share (expressed in US cents)

(3.20)

(1.12)

Diluted loss per share (expressed in US cents)

(3.20)

(1.12)

As inclusion of the potential ordinary shares would result in a decrease in the loss per share they are considered to be anti-dilutive, as such, a diluted earnings per share is not included.

12

Intangible assets 

Group

$ 000's

Cost

At 1 July 2008

73,588

Additions

2,798

Disposals on derecognition of subsidiary

(80,975)

Currency translation differences

4,589

As at 30 June 2009

-

Amortisation

At 1 July 2008

1,427

Amortisation & write-off charges for the period

5,736

Eliminated on derecognition of subsidiary

(9,181)

Currency translation differences

2,018

At 30 June 2009

-

Net book value

At 30 June 2009

-

At 30 June 2008

72,161

The cost is analysed as follows;

2009

2008

$ 000's

$ 000's

Deferred exploration expenditure

-

6,044

Mining & exploration licences

-