Ann: Appendix 4E and Annual Report, page-5

My previous ROE calculation was indeed incorrect, it should be NPAT/shareholder equity; $57.14m/ $346.59m = 16.5% v 16.8% last year.

Also that should have read $50m+ in the franking account, so for ARB to distribute all those franking credits to shareholders at a 30% rate they would have to find around $116.6m in cash. Maybe a special dividend with a DRP at 0% discount would be a way to distribute the franking credits to shareholders while giving them the option of reinvesting the proceeds in ARB shares or taking the cash.

$116.6m in additional borrowings would give ARB a manageable D/E ratio of 48.8% and, assuming an interest rate of 6%, EBITDA interest cover of 14x and given their borrowing costs would be about 10% less than their ROE/ROC, it should improve their overall ROC.

There is no value to anyone in all those franking credits just sitting there in the accounts deflating in value.