Spot valuation 22c, page-11

I have to disagree with the consensus on here. I believe the best strategy for enhancing shareholder value while the share price remains under the estimated intrinsic value would be to continue the share repurchase program. Shareholders who want a return in capital can always sell a proportion of their shares.

For example, Say a company worth $200M has 1,000M shares trading at A$0.10 they would have a market capitalisation of A$100M. If the company spent say $50M on share repurchases while the trading around A$0.10, they would repurchase 500M shares. That would mean that the intrinsic value of the company would fall $50M to $150M and the no of shares on issue would fall to 500M shares. Effectively, the remain value of the shares would then be worth $150M/500M or A$0.30 per share compared to $200M/1000M or A$0.20 per share before the repurchase. The company is essential making money for shareholders by purchasing it own shares on the market while then are selling at a significant discount to its intrinsic value.

When the share price returns to estimated intrinsic value, the company should then consider return funds in the form of capital return or dividends>

That is my opinion anyway.

Regards

SP