Letshego plans to extend share buyback
Isaac Pinielo | Friday March 10, 2017 15:30
The share buyback was introduced late last year as a result of a plunging share price, which saw the Botswana Stock Exchange (BSE)-listed company losing over 30% of its value during 2016. This led to the company proposing dipping into its capital and retaining earnings to buy back 10% of its issued shares to boost shareholder value through reduction of the number of listed shares.
Following the buyback, the microfinance firm’s share price managed to recover, reflecting excitement of shareholders on the buyback plan, which resulted in 53 million shares or 2.4% being repurchased at an average price of P2.26 per share.
At a recent presentation of the group’s financial results, managing director, Chris Low said they will request shareholders at the group’s upcoming annual general meeting (AGM) to extend the buyback mandate, albeit with amendments. He said the group’s strong funding pipeline allowed for the share buyback mandate to be exercised.
Letshego has over 2.1 billion ordinary shares listed on the BSE, and is the highest counter by market capitalisation amongst domestic companies. Earlier on the microlender stated that its share price is an important indicator of current and prospective value to those who have invested, and plan to invest in Letshego.
“We work hard at consistently delivering value to our shareholders and other stakeholders by growing the Letshego franchise through investment and diversification,” the MD said.
Through these measures and strong environmental, social and governance practices, Low said they have delivered strong growth, performance and returns, ensuring that the business grows in a sustainable manner.
Meanwhile, in the full year ended December 2016, the group said it has achieved a number of key milestones in its transformation agenda towards creating Africa’s leading inclusive finance group and continues to invest in expanding its African footprint and technology delivery platforms.
However, the MD said a difficult operating environment has meant that, the group has only delivered modest growth in loans to customers and that there was a decline in profitability.
The group’s total revenues exceeded P2.2 billion, a nine percent increase on the previous year. Yields on loans to customers and the cost of borrowings were maintained despite the difficult trading environment.
Low said the group is tightening its impairment methodology, which accounted for P33 million of the increase in the impairment charge during 2016.
Profit before tax was P948 million, which is a nine percent reduction from 2015.
Earnings per share of 30.8 thebe compared to 35.2 thebe (2015:) was achieved, a decline of 13%.