Adacel On-Market Shares Buyback Updates

Adacel Technologies Limited (ASX: ADA) is a leading software technology company based out in Brighton, Australia. ADA is engaged in developing software technology and system integrators. It is one of the major suppliers of operational air traffic management systems in Australia. It is into the production of state-of-the-art training solutions, advanced ATC simulation, and speech recognition applications. It is also engaged in developing simulation and training systems for military and commercial use, with the aim of setting a higher standard of realism to the training environment.

On 17 May 2018, ADA announced to extend its on-market buyback of shares. The buyback of shares started from 31 May 2018, i.e., two weeks after the company declared the buyback program, and would continue for one year ending on 30 May 2019. The maximum number of shares to be bought back from the market was approx. 7,845,881.

The purpose of the buyback program for the company was its long-standing capital management program. The company is funding its share buyback program from its existing cash reserve. As per the management, the shares buyback would result in a growth in earnings per share and the ADA’s return on equity. Coupled with the company’s focus on various strategic growth initiatives the on-market buyback is an appropriate capital management option.

Before this, the company had earlier also done the buyback of its shares from the market from 17 May 2017 to 16 May 2018 with 845,058 shares bought back and the total consideration paid was $1,827,852.45. The highest price paid was $2.51 on 5 December 2017 and the lowest price paid was $1.72 on 18 April 2018. The current buyback was an extension to this buyback program.

Today, the company announced its daily share buyback update for yesterday, the details for which are as follows:

  • 12,492 shares were bought back yesterday making a total of 1,746,545 shares bought back till yesterday
  • The total consideration paid for yesterday’s buyback was $7,994.88, and the total consideration paid till date is $1,776,161.01
  • The highest price paid yesterday was $0.64 per share and the lowest price paid was also $0.64 per share
  • The highest price paid till date was $1.885 per share paid on 12 June 2018 and the lowest price paid till date was $0.6075 per share paid on 28 November 2018
  • The number of shares still pending to be bought back from the market is 6,099,336

Till November 2018, the company had bought back 1,280,498 shares with total consideration paid till date of $1,471,092.3. Shares pending for buyback were 6,565,383.

On 8 November 2018, the company declared its FY19 earnings guidance. It anticipated its profit before tax for 1H 2019 to be 65-70% lower than the previous corresponding period but expected a stronger 2H 2019 results with FY19 profit before tax to be 25-30% below FY18. The main reason for lower earnings was the loss from the FAA Tower Simulation Support Contract and related issues.

During the year, the scrip price has declined by 73.28% falling from $2.432 at the beginning of the year to $0.6 as of December 27, 2018. Today, the scrip price has soared by 1.54%. ADA’s shares traded at $0.665 with the market capitalization of circa $50.14 Mn as on December 28, 2018 (AEST 2:44 PM).


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