Ann: FY25 Half Year Results & On-Market Share Buy Back, page-33

Here's a more detailed explanation:

• What it is:

  A company uses its cash to purchase its own shares from the open market or directly from shareholders.

  
  
• Why companies do it

  • Return Capital to Shareholders: Buybacks are a way for companies to return cash to shareholders, similar to dividends.
  • The proposed buyback is targeted with the boards intention to placate the Institutions and traders without any consideration for the rest of the shareholders.
  • It amounts to these entities as being the best practises to minimise tax obligations. There is no real fairness when it comes to dispersing excess capital for the rest of the shareholders. The sugarcoating wording for getting it approved by the ATO is basically the following, “no shareholder is disadvantaged because they’ve the right to participate in this buyback”

  
  

  • Increase Share Price: By reducing the number of outstanding shares, the value of each remaining share can increase. There is no guarantee that it will rise or remain higher than what the share was purchased for! Just a theoretical concept.
    
  • Improve Financial Statements: Buybacks can improve key financial metrics like earnings per share (EPS). As above….it improve the chance of the CEO getting their rewards
  • Signal Confidence: Companies may buy back shares when they believe their stock is undervalued and are confident about their future prospects. Open to abuse…
• Impact on Shareholders:

  • Increased Ownership: Remaining shareholders have a larger percentage of ownership in the company. Could be only short term….
    
    
  • Potential Tax Implications: Share buybacks can have tax implications for shareholders, depending on the type of buyback and their individual circumstances. Check out the other tax implications with other return of capital that would benefit a great number of individual shareholder’s!
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