Ann: Announcement of buy-back - Appendix 3C, page-5

Bryan,
Basically IMO it should be at worst neutral and more likely positive. I bought $10K worth this morning (as along term investment) but prompted by the buyback. If I had acted quicker I could have gotten more of today's upside - a dollar short and not quite a day late as usual.

Typically the price appreciates on the few days surrounding the announcement, but a buyback also tends to support the price longer term. It reduces the number of shares on issue and so makes the remaining shares entitled to a bigger slice of future profits. It is also confirmation that they have the cash available to do it, which is no bad sign.

Instead of distributing the money as dividends, or buying some other asset, they are buying their own stock, presumably because the management reckons that it is undervalued compared to other alternative investments available to them. We hope that the management are in a position to know. Of course there can sometimes be perverse incentives to institute a buyback in the way that the management is remunerated - I doubt that this applies in this case. If the money that will be used in the buyback was distributed in dividends it may not be franked, whereas this way, ceterus paribus, the remaining shareholders should receive the benefit via an appreciation of the share price - a potential eventual capital gain. Obviously the tax implications vary depending on the individual shareholder's circumstances.

It is not a particularly big buyback at potentially up to about 4.1% of the stock on issue at current prices. 10% is the normal maximum.

Here is just a sample of literature on the subject by pointy headed academics - all available on the internet.

There are arguments about whether and in what circumstances the buyback effects persist.

The Nature and Persistence of Buyback Anomalies
Urs Peyer and Theo Vermaelen

The timing and source of long-run returns following repurchases
Leonce Bargerona, Alice Bonaimeb, and Shawn Thomasc

Stock market anomalies: What can we learn from repurchases
and insider trading?
John E. Core, Wayne R. Guay, Scott A. Richardson & Rodrigo S. Verdi