Ann: Resignation of Managing Director / Appointme, page-40

re: Ann: Resignation of Managing Director / A... lionel,

given your experience in the taxation area, I wonder if you could provide a reply to my thoughts below.

As the Cloncurry sale was settled 30/6, all the profit is assessable in the 10/11 financial year. Hence the company will have to pay the tax due whenever annual payments are due, as I do not think that the company was paying tax before. Thus we are going to get the benefit of franking on the dividend that has been expected (possibly 28c div).

Then there is the capital return (expected to be about 10c), and we need the tax office approval for that part of the payment.

BUT, given the profit that the company is making in the 11/12 year, some of the tax will be payable in the current year. So in my opinion there would be the capacity to pay another dividend closer to the end of the financial year.

So would it not be better for shareholders to get the benefit of two franked dividends, and abandon the idea of giving shareholders a capital return (as the second dividend would compensate for that payment being forgone).

If that process was adopted, in my opinion, there would be no need to wait for a tax office clearance and the first dividend could be declared without delay.

Other than IVA demanding that the full profit of the Cloncurry sale be distributed, I have never understood why there is the necessity for a capital return. Franked dividends are of greater value to most people over capital returns.