Ann: 2015 AGM Chairman and Managing Directors Address, page-14

Rambo, those are very good points you raise and, while I maintain a spreadsheet schedule of the asset composition, including capex, depreciation and writedowns of both tangible and intangible assets, it was a remiss of me to not include an analysis of the various asset writedowns for the sake of completeness.

My excuse is that the bulk of the writedowns of tangible assets hit the PP&E account, and not the Assets Held For Sale (AHFS) account, and AHFS writedowns have - over time - approximated the subsequent profit realised on the sale of those assets, anyway.

But you are right, I shouldn't have included just one information set, and not another equally relevant one.

So here follows ,hopefully, the more comprehensive exercise:

Essentially, over the 10-years that I have reviewed BOL's balance sheet and capital flows, writedowns have totalled $178m, which was split as follows:

Goodwill: $92.4m
PP&E: $67.4m
AHFS: $17.7m

Because this is an asset play, goodwill is not relevant to this discussion, so let's ignore the goodwill writedown (ordinarily, we shouldn't, under going concern conditions, but this is as much an exercise in non-going concern assessment, as it is in a going concern one).

Then, for context, the $67m value of PP&E writedown plus the additional $18m writedown of AHFS (i.e.,total impairments of $85m) offset by the $16m in subsequent profit on asset sales (as detailed in an earlier post), results in a Net Impairment Figure - all things duly considered - of around $70m.

This $70m figure compares with a depreciable asset base that was valued at around $370m at the start of the asset sale process, and averaged around $340m over the course of it, i.e. assuming that no one can say that PP&E was overstated by some 20%.

(Incidentally, this 20% writedown ratio is reasonably consistent for both the rate of PP&E writeoff (i.e, $67m off an average PP&E base of $330m, i.e. 20%), as well as the writedown of AHFS (18m on total asset sales of $92m, i.e., ~20%, too)

This means that, if history is anything to go by, in any monetisation process, shareholders can expect to see 80 cents in the dollar.

So, NTA might end up being 30c, and not 40, as it is currently reported.

That doesn't really change the investment proposition too much for me, because remember all of this discussion assumes the improbably conservative (*) scenario that no operating surpluses are generated going forward.

For the market value to reflect the fundamental value of the company's asset base, I think requires not so much full value of the asset base to be realised; rather, the critical parameter is the pace at which the asset base is realised.

Put another way, as long as whatever portion of NTA is ultimately going to be monetised, does so at an acceptable rate, then that I think is the most important thing for share price performance.

I note that I am now some 35% down on my first purchase price and with Invesco clearly haven given up, presumably in exasperation, and now seemingly re-loading on the sell side every day, it doesn't look like my shortfall is going to be made whole any time soon.


(*) I say improbably conservative because we know that the company's cost base is finally being addressed, and the company's cheque book has been effectively confiscated. What is not lost on me is the fact that the company last year generated roughly the same revenues as it did in 2005 when it reported EBITDA excess of some $55m, compared to $15m today.