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jrlse, thanks for the informative answer.
I suppose the obvious question is what do TRMR bod intend to do with the shares in treasury? Or do we just have to accept that it's for 'flexibility'....surely cash is the most 'flexible' option available to a bod (especially with a recession looming).
Bald-Eagle,
Share buy backs have many purposes.
They can be cancelled straight away or later (e.g. see LLOY and RDSB).
They can be held in treasury, like here and be used later by the company for whatever purpose is agreed by the bod.
It can be re-issued, used for bonus, acquisition, reduce div payments, reduce shares in issue.
Mainly, it gives the bod flexibility to manage cash/capital of the company.
jr
Rricky_D, it would be interesting to know what they plan to do with the buy-back shares.
From what little I know, shares that are purchased from a buy-back are held in treasury....then they may be cancelled or used for some other purpose. I'm assuming that a company cannot buy-back a share and cancel it in one go. The share probably has to be held in a company account (treasury) and it is cancelled from there (using some process I know nothing about). Of course the shares in treasury may be used for other purposes - (guessing) employee share incentive scheme or an acquisition - but it seems a little counter intuitive to spend cash to buy shares and then to give them away.
I have assumed that share buy-backs are done to reduce the number of shares in circulation (or to keep it stable)....to increase the earnings per share figure & 'possibly' the dividend paying potential of the company (when it becomes profitable!!). Hence why cancellation of the shares (from treasury) seems the 'normal' thing to do....not that I understand what is 'normal' or not.
bald_eagle, I must have made a mistake in thinking you were once a company accountant, my apologies.
I do believe that if a company holds shares in treasury they have therefore not been cancelled at all.
Tremor stated that the 'buyback. shares are being held in treasury and therefore they must still be available to use at some later date.
"bald_eagle, as (I believe) a former company's accountant, since retired, would possibly be more able to explain the situation and the pros and cons?"
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Tricky_D, not sure I understand the above. Are you suggesting that I'm a 'former company's accountant'?....which couldn't be further from the truth. Or perhaps you meant yourself....or some other person?
PS. I would have thought that the shares in treasury from the buy-back would simply be cancelled.
The current share buyback (allegedly managed independently) seems rather paltry and intermittent compared to the previous one.
Also, I am not sure if any of the shares put into treasury have ever been used (cashed in) to pay for 'goodies' for staff remunerations.
That sort of thing is entirely permissible but raises a few alarm bells if it is happening as a convenient 'tax-free' way of funding director's perks instead of dispending cash to shareholders with tax consequences?
bald_eagle, as (I believe) a former company's accountant, since retired, would possibly be more able to explain the situation and the pros and cons?
Not sure if there is much chance of a dividend here given the current economic uncertainty & the possibility of another merger/acquisition...but I suppose IF they did post stellar results then anything is possible.
We do have the share buy back which seems to be proceeding (although I haven't paid much attention to it). I suppose if management believe that the SP is remarkably cheap then the buy-back makes sense...although investors would like to see some of the cash coming their way.
If we are all seen to be on a dodgy ride of twists and turns to nowhere, on a train that morphs at certain stations on the journey, negotiating hazards, burning too much fuel, and not generating good bottom-line profits, whilst always promising 'jam tomorrow' then you may be in the negative camp.
If other 'trains' have crashed through managerial incompetence or unforeseen external hazards, then you have to weigh up the consequences of any knock-on effect, plus the virus situation has unknown outfall across many industries.
It is undoubted that enormous profits are there for the taking if a company is nimble enough to adapt to changing circumstances.
Through 'thick and thin' investors love a dividend - even a small one - as a return for investing.
Most people buy/sell on the SP not of the advise on these boards,,in my opinion ignore the SP and boards and concentrate on the fundamentals