Ann: Dividend/Distribution - GRR, page-112

The value of any stock is simply it's discounted dividend payments. Cash in shareholders pockets today is better than getting that cash in the future and the fact that they are delaying paying out shareholders profits lowers the discounted cash flows of the business.

Yes there are many examples of shares trading on the ASX and elsewhere that trade well below net asset value. This typically happens when you have a stubborn management that refuse to rectify the problem.

I said this yesterday. Do not be surprised when GRR falls below cash backing. There is no floor in the share price if there is no clear dividend policy.

Also, it is more useful to look at current net assets rather than simply cash. This number is adjusted for payables and receivables and inventories. The current net assets is 508m as at 30 June. As at 26 August it would be around 50m higher so 558m. Thats cash backing is effectively 48c per share right now.

Those that say the business is therefore only valued at 13c are wrong. The business is valued by the market much higher than that. But the market does not value the cash at 48c. The market heavily discounts the cash in the business because it correctly knows it is not getting paid any time soon.