Ann: Exercise and Expiry of Options, page-5

OK Plext, I'll do my best !

(All, please note I only venture on here to deal with "facts" not to express an opinion about sentiments expressed, etc....otherwise a man could be on here all day!)

I'll start by saying that there will only be a potential CGT liability at the time of an actual disposal of the shares.  Moving SOLG from AIM to LSE, and dual-listing SOLG on TSX will not trigger a "disposal" in itself, so no problem there.

So, onto Einstein's General Theory of Capital Gains Tax.....

Essentially, where DGR disposes of any listed shares that it holds, it would pay 30% corporate tax on the “profit” made on the sale (proceeds less cost of investment).  Admittedly, for companies like SOLG and IRR, the cost base of the shares is substantially below their value and any disposal would result in a profit / capital gain being realized.

Again from a general perspective, income or capital gains tax paid by a company gives rise to “franking credits” which are passed on to shareholders as a tax credit when the company pays a dividend.  This is a system to essentially avoid double-taxation of the same underlying profit (once in the hands of the company and again in the hands of the shareholder).  So whilst the initial payment of the tax by the company is a "negative" (ie. cash out the door) it's more or less parked in a "bank" and will ultimately be of benefit to shareholders when cash and / or income provide the company with the ability to pay dividends through to shareholders.

In my view the latent tax liability is part of (but not the whole) reason as to why DGR is discounted heavily against the NTA backing.

K