Ann: Share Buy Back , page-19

To my knowledge corporate tax is paid by instalment based on the previous years assessment. Therefore it is unlikely for MPO to be doing so, and hence they will not be required to pay the tax on profits for the year ending 30th June until well into the next financial year.

To my knowledge tax cannot be paid in advance in order to obtain a franking account credit, therefore no franked dividend could be paid until the financial year in which the tax is going to be paid i.e. 2009-10

I am happy for someone to correct me if I am wrong.

Returning to the discussion about the benefits of actually paying a dividend, if the company did so, the share price would be expected to fall for a time, and in this current market the share price could come underr further pressure from forced sellers ex div, and therefore the value of your investment would be less. Far better to buyback stock that is coming onto the market at a price that is less than asset backing of the share, so that the remaining shares on issue increase their asset backing, and presumably (eventually) the share price.

The share buyback might even cause other buying to come in and cause the share price to rise to a much more realistic value, and that differential would be far greater than any dividend that would be a one-off.

One should also conclude from the announcement that directors have faith in the value of their own company that they are prepared to buy their own shares rather than forming the opinion that there is nothing worthwhile to do with the money, hence opt to give it back to shareholders.