| Help...FULLER SMITH & TURNER PLC - Buyback Programme - I Would Be Grateful If Someone Could Shine Some Light On This Practice.

18th Oct '16 by JFK

4 comments 2400 reads

Hi,

Be gentle as I am a newbie and would welcome some help from the community.

I have bought a decent chunk of FSTA shares for my SIPP and after getting the wide spread/commission reduced. I have noticed how illiquid these shares are! Now I am holding these for long term /8 years plus but wondered what this buyback entails.

I would be grateful for a response and any feedback on the company as a whole.

many thanks

James

FULLER SMITH & TURNER PLC - Buyback Programme
20/09/16 06:00PM by ukcitymedia.co.uk about : - 0 Comments - 211 words

FULLER SMITH & TURNER PLC - Buyback Programme
PR Newswire
London, September 20
Fuller, Smith & Turner P.L.C. (“the Company”)

Share Buyback Programme

The Company today announces its intention to utilise part of its general authority to make on-market purchases of ‘A’ ordinary shares, with the objective of putting shares into Treasury for use in meeting future obligations arising from share-based rewards to employees.

The programme is irrevocable and non-discretionary and purchases may be made during close periods. The Company confirms that it has currently no unpublished price sensitive information.

Any purchase of ordinary shares effected pursuant to this programme will be carried out on the London Stock Exchange and executed in accordance with, and subject to limits prescribed by, the Listing Rules and in accordance with the authorisation granted to the Board by shareholders at the Annual General Meeting held on 21 July 2016. The Company has appointed Numis Securities Limited to manage the programme on its behalf.

Enquiries:

Séverine Garnham

Company Secretary

020 8996 2073

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Nicowilson

18th Oct '16

A buyback means that Fuller Smith & Turner (LON:FSTA) will spend its own money buying shares on the open market.

JFK

19th Oct '16

Thanks NW

I was looking for the rationale for why have FSTA done this - they state it is for director compensation but I am interested what it means for a PI.

Benefits of a Share Repurchase
A share repurchase shows the corporation believes its shares are undervalued and is an efficient method of putting money back in shareholders’ pockets. The share repurchase reduces the number of existing shares, making each worth a greater percentage of the corporation. The stock’s earnings per share (EPS) increase while the price-earnings ratio (P/E) decreases or the stock price increases. A share repurchase shows investors the business has enough money set aside for emergencies and a low probability of economic troubles.

Drawbacks of a Share Repurchase
A share repurchase can give investors the impression that the corporation does not have other profitable opportunities for growth, which is an issue for growth investors looking for revenue and profit increases. A corporation is not obligated to repurchase shares due to changes in the marketplace or economy. Repurchasing shares puts a business in a precarious situation if the economy takes a downturn or the corporation faces financial issues it cannot cover.

Read more: Share Repurchase Definition | Investopedia http://www.investopedia.com/terms/s/sharerepurchase.asp#ixzz4NUKU1MnE
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PS - I have emailed their investor relations for a response

thanks again

JK

dfs12

Hi
I haven't looked at the specifics of this but lots of companies do this sort of thing and its not a massive positive or negative. Directors/senior mgt are usually issued shares as part of their remuneration package. If these are constantly issued fresh from the company the number f shares in circulation rises by the number of shares issued. So each person already holding is slightly diluted. What some companies do is when they issue shares to Directors they also buy a similar number from the open market and take them out of circulation. That way the number of shares is effectively unchanged. The numbers aren't usually significant - check the number of shares being purchased against the number already issued (you can get this from the stockopedia stock ranks page). Companies will also do bigger buybacks - if they have lots of cash and nothing much to do with it. But from the sounds of it this is just a straightforward balancing out exercise. Had Fullers in my portfolio many many years ago and wish I'd never sold them. At that time they seemed a very sensible group. Your time frame sounds very sensible. Good luck.

Help...FULLER SMITH & TURNER PLC - Buyback Programme - I would be grateful if someone could shine some light on this practice.

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JFK

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