Australian-listed Donaco International Limited has announced the implementation of an on-market buy-back of up to 41.5 million shares, representing a maximum of 5% of its ordinary shares on issue.
The buy-back, which is expected to commence around 30 October 2017, is being undertaken as part of the company’s ongoing capital management program.
“The board considers that the introduction of an on-market buy-back is in the best interests of all shareholders, complementing our dividend payment,” said Managing Director and CEO Joey Lim.
“Our primary focus in assessing all potential uses of the company’s cash holdings is to ensure a strong return for shareholders. Buying the company’s shares at recent prices represents an excellent opportunity to generate strong returns.
“At current share prices, the buy-back will be earnings per share accretive, and will have no impact on current operating businesses. It is also consistent with our strategy of maintaining an efficient capital structure.”
Donaco said that prices paid for shares purchased under the buy- back will be no more than 5% above the average closing price of the company’s shares over the five prior trading days. The total number of shares to be purchased will depend on market conditions and volumes, it added.
The company announced in August that there are restrictions in place under Donaco’s debt facility with Mega Bank, with dividends and buy-backs combined not able to exceed 30% of the company’s net profit after tax for FY17.
Audited net profit after tax for FY17 was AU$30.99 million. The current dividend payment is for a total amount of AU$4.16 million, meaning the maximum dollar amount that can be spent on the buyback is AU$5.14 million.
