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seller and the purchaser. The seller’s income will include Accrued Income as at the date of sale.

7. Examples

Example A

On 13 September 1997, OPALS are issued for $100 with rights to a variable Income Stream payable half-yearly in arrears. The OPALS will mature on 13 September 1998.

The market value of the share basket at issue date is $90.00. By conversion date this has risen to $150.00.

Both the issuer and the holder use a 31 March balance date.

The Income Stream payments are made as follows:

13 March 1998 $6.00
13 September 1998 $6.00

Year Ended 31 March 1998

On 31 March 1998 the Reuters financial information service page shows that to date the Accrued Income on the OPALS is $0.59.

The income derived in respect of the OPALS is to be calculated using the formula in subclause 6 (2):

a – b + c

a = $6.00 (amount received on 13 March 1998)
b = $0.00 (OPALS were only issued in the current financial year)
c = $0.59 (Accrued Income)

Income/Expenditure $6.59

The aggregate amount, if the OPALS run full term, attributable to the debt component of the OPALS and therefore to be taken into account under the accruals rules, is $12, comprised of the Income Stream Payments. All fluctuations in the value of the Underlying Shares relate to the equity component of the OPALS and should not be taken into account in calculating income or expenditure.

Example B

On 13 November 2002, OPALS are issued for $100 with a variable income amount payable half-yearly in arrears. The first period is only for 5 months. The OPALS will mature on 13 October 2004.

The market value of the basket of shares at issue date is $90.00. By conversion date this has risen to $150.00.

Both the issuer and the holder use a 31 March balance date.

The Income Stream Payments are made as follows:

13 April 2003 $4.15
13 October 2003 $5.00
13 April 2004 $5.00
13 October 2004 $5.00

(a) Year Ended 31 March 2003

On 31 March 2003 the Reuters financial information service page shows that to date the Accrued Income on the OPALS is $3.79.

The income derived in respect of the OPALS is to be calculated using the formula in subclause 6 (2):

a – b + c

a = $0.00 (no Income Stream yet received)
b = $0.00 (OPALS were only issued in the current financial year)
c = $3.79 (Accrued Income)

Income/Expenditure $3.79

(b) Year Ended 31 March 2004

On 31 March 2004 the Reuters financial information service page shows that to date the Accrued Income on the OPALS is $4.64.

The income derived in respect of the OPALS is to be calculated using the formula in subclause 6 (2):

a – b + c

a = $9.15 ($4.15 received 13 April 2003 + $5.00 received 13 October 2003)
b = $3.79 (amount of Accrued Income in previous Income Year)
c = $4.64 (Accrued Income)

Income/Expenditure $10.00

(c) Year Ended 31 March 2005

The aggregate amount, if the OPALS run full term, attributable to the debt component of the OPALS and therefore to be taken into account under the accruals rules, is $19.15, comprised of the Income Stream Payments. All fluctuations in the value of the underlying shares relate to the equity component of the OPALS and should not be taken into account in calculating income or expenditure. As $13.79 has already been taken into account in previous income years, when undertaking the base price adjustment, the holder will be left with $5.36 to be taken into account in the last year of the OPALS.

Example C

On 20 December 2002, the original holder of the OPALS described in Example B sells the OPALS for $120 to a new holder who holds the OPALS to maturity. The sale of the OPALS takes place part way through an interest period, so it is necessary to apportion the Income Stream Payment between the seller and the purchaser.

On 20 December, the Reuters financial information service page shows that to date the Accrued Income on the OPALS is $1.01. This amount of $1.01 is income to the original holder and acquisition price to the new holder and will have to be taken into account under the accruals rules. The original holder would be considered to have sold the equity portion of the OPALS for $118.99.

Income for the New Holder Year Ended 31 March 2003

On 31 March 2003 the Reuters financial information service page shows that to date the Accrued Income on the OPALS is $3.79.

The income derived in respect of the OPALS is to be calculated using the formula in subclause 6 (2):

a – b + c

a = $0.00 (No Income Stream yet received)
b = $1.01 (amount of Accrued Income as at the date of acquisition)
c = $3.79 (Accrued Income)

Income/Expenditure $2.78

Year Ended 31 March 2004

As for Example B.

Income $10.00

Year Ended 31 March 2005

The aggregate amount, if the OPALS run full term, attributable to the debt component of the OPALS, and therefore to be taken into account under the accruals rules, is $19.15 comprised of the Income Stream Payments. All fluctuations in the value of the underlying shares relate to the equity component of the OPALS and should not be taken into account in calculating income or expenditure. As $13.79 has already been taken into account in previous income years.