Simon Tse from Thomson Financial's Corporate Advisory Services group discusses European share buyback trends. Transcript: Hello and welcome to this video presentation, devoted to European share buyback trends. In essence, public companies initiate share buyback programs in order to acquire a proportion of their own outstanding shares via the open market at the prevailing market price or through a repurchase tender offer. On the plus side, share buybacks can drive a stock price higher as well as improve some key financial ratios, like earnings per share. They also have tax advantages and offer shareholders more flexibility than dividends. On the negative side, repurchasing at the prevailing market price rather than at a premium gives investors the impression that the market valuation was spot on, contrary to management's argument for undervaluation. So why initiate a buyback programme? They are used to support undervalued stocks during economic downturns and was notably effective during the technology rush of the 1990s. In addition buybacks can help to fend off M&A predators with the rapid use of excess cash as a defence mechanism. So the announcement can have the biggest effect on the share price and is designed to give a clear signal to investors. Meanwhile, financing a share buyback can have a significant effect on a company's share value. Focussing on the European market, in 2007, Germany had the highest % of share buyback volumes (30.4%%) but over a 5 year period, France posted the highest average (22.1%). At sector level, financials cane out on top in 2007, at 23.7% and likewise over a 5 year average at 26.5%. During the credit crunch we saw share buyback volumes rocket in August 2007 on the back of a downward market correction but in January of this year share buyback activity failed to live up to expectations as the downward market correction got larger. For me there were 3 mains reasons for this. (1) Cash preservation is key. (2) Funding a buyback programme through debt financing is increasingly difficult. (3) Focus in on maintaining dividends. So to conclude, share buybacks have been effective in the past but have not lived up to their reputation in the current climate. Corporates need to understand a stock's value and must have solid reasons for undervaluation. That brings us to the end of this presentation, thank you so much for watching and we look forward to seeing you soon