Ann: Scheme of Arrangement and Demerger, page-14

We have never been able to establish the cost of depreciation and amortisation, corporate administration, sale, royalties, ocean freight, interest and financing costs, because this has never been disclosed.

Operating profit after tax was $42.256m to 31 Dec 2017 as you have stated.

Two scenarios:
a. did they pay tax: if yes then nett profit was then $60.3m

b, No tax nett profit $42.256. My view would be b. No tax paid.

My analysis on the KML costs and sales reported as at Dec 2017 was as follows:-

	Sales	Sales/t	tonnes	Total sales	Margin	Total margin
1	Mar-17	$131.78	2066	$272.26	$115.15
2	Jun-17	$95.30	2093	$199.46	$55.96
3	Sep-17	$105.12	1851	$194.58	$43.86
4	Dec-17	$98.21	2095	$205.75	$54.98	$269.95

It would appear then that the cost of depreciation and amortization, corporate administration, sale, royalties, ocean freight, interest and financing costs is $269.95 less margin $42.256m equal $227.694m. Total tonnes exported is 8.047m tonnes.

Therefore cost per tonne = $28.30 for the cost of depreciation and amortization, corporate administration, sale, royalties, ocean freight, interest and financing costs.

But price of iron ore 62% grade now $US87.05 or $AUD124.16 but KML ore about $AUD144.73 or $US101.47, so $US30 per tonne better than Dec 2017 financial accounts. Based on 8m tonnes exports KML $AUD240 better off now.

The debt level of KML is $3.1b as per GBG financial accounts.

On my analysis KML has not paid down much debt,

BUT KML is making a profit if it paying tax.

My analysis for 2018 calendar year is $AUD290.43m margin excluding for the cost of depreciation and amortization, corporate administration, sale, royalties, ocean freight, interest and financing costs.

If all things being equal and assume same cost as per 2017(Dec), margin 2018(Dec) equals $AUD290.43 less $227.694m equals $62.73m.

The Board of GBG should be asked to confirm or deny these figures.