Company’s repurchase of their shares from the market is referred to as share buy-back. Companies opt for this route of accumulating shares for several purposes such as reducing the cost of equity, acquisition of more control and many others. CRH PLC, NMC Health PLC and Standard Life Aberdeen PLC are few FTSE 100 listed stocks which recently announced their intention for a share buyback.
Comparative stock price chart CRH, NMC, SLA
(Source: Thomson Reuters)
CRH PLC (CRH) is an Ireland-based leading global diversified building materials group, headquartered in Dublin, Ireland. It is the second-largest building materials company worldwide and largest in North America, the largest heavy side player in Europe as well as one having strategic operations in Asia and South America. The company's operations are now differentiated in three operating segments, from six previously, reflecting more simplified organisational structure: Europe Materials, Americas Materials, and Building Products. The business spans across 32 countries and, along with subsidiaries, has operations at around 3,700 locations around the world employing over 90,000 people.
On 23rd August 2019, the company announced its intention to continue buy-back with further €350 million worth of shares. The share buy-back programme which is slated to start on 26th August 2019 and will end by 3rd January 2020.
On 26th November 2019, the company will announce the trading Update.
Financial Highlights (H1 FY2019, €million)
In half-year ended 30 June 2019, the company’s reported revenue increased by 11 per cent to €13.217 billion as compared to €11.944 billion for half-year ended 30 June 2018, while on a like-for-like (LFL) basis, it increased by 3 per cent. This was because of an increase in all the three division. The EBITDA for the half-year ended 30 June 2019 rose by 36 per cent to €1.54 billion, whereas it was an EBITDA of €1.13 billion for the corresponding period ended 30 June 2018. EBITDA margin surged to 11.7 per cent as compared with the corresponding period of the last year. The operating profit for the half-year ended 30 June 2019 was €751 million, compared to an operating profit of €592 million for the prior-year period ended 30 June 2018. The group’s profit for the half-year ended 30 June 2019 was €555 million, whereas it was a profit of €1.461 billion for the half-year ended 30 June 2018. The earnings per share from continuing operations stood at 67.8 cents, an increase of 50.6 per cent against the same period in 2018. The company has proposed a dividend of 20.0 cents per share for the H1 ended 30 June 2019 whereas it was 19.6 cents for the half- year period ended 30 June 2018.
During the current period, divestments and asset disposals generated a total profit on disposals of €171 million, an increase from the previous year same period of €46 million. The company also announced its intentions to buy-back €350 million worth of shares by the end of the year, while it had already bought back €550 million worth of shares year to date (up to 30 June 2019).
Despite the company’s strong half-yearly performance, the worsening economic environment in Europe is a testimony of the high competence levels of the management. The company has expanded rapidly in the North American market with more than half of its revenues coming from that market. In the coming periods when the European markets are expected to be subdued on account of the uncertainty due to Brexit, the North American market is going to provide the required support to its bottom line.
In the second half of the financial year 2019, the company’s EBITDA is expected to increase in all three segments against the same period of 2018. The Board plans to continue the share buyback programme and will be completing it by year-end. Through the continued robust cash generation and financial discipline, the company anticipated that the year-end debt metric to be below the normalised levels.
Share Price Performance
On 27th August 2019, at the time of writing (before the market close, GMT 02:26 PM), CRH shares were trading at GBX 2,639.00, down by 0.18% against the previous day closing price. Stock's 52 weeks High and Low is GBX 2,768.00/GBX 1,960.56.
NMC Health PLC
NMC Health PLC (NMC) is an Abu Dhabi-based diversified health care company operating in the United Arab Emirates. The group is engaged in business sectors ranging from health care, trading, and information technology and is the largest private healthcare company in the United Arab Emirates and ranks amongst the biggest fertility service providers in the world. It was the first company from Abu Dhabi to list on the London Stock Exchange and is a constituent of FTSE 100 index. The group’s business is differentiated in two reportable segments, namely healthcare and distribution & services.
Post-approval from the shareholders, the company would initiate a share buyback amounting up to US$200 million. The management believes that the company has encountered few good opportunities and would like to capitalise on them in the midterm.
Financial Highlights (1H FY 2019, in $m)
The top-line performance of the company was in line with the expectations of the management, with revenue in the first half of the year increasing by 32.6% to $1,236 million, against $932 million reported in the corresponding period of the last year. In the 1H FY2019 EBITDA of $323.5 million (post-IFRS 16) and $276.3 million (pre-IFRS16), represented a growth of 22.5% (for pre-IFRS 16), while the EBITDA margin declined by 180 bps, reflecting the increased contribution from several assets that are in early stages of ramp-up and contribution from the low-margin business of Aspen Healthcare. Profit from operations amounted to $228.1 million, against $179.7 million in the prior year, while profit before tax was $140.6 million versus $118.7 million last year. Adjusted net income to equity holders stood at $137.5 million, while net income to equity holders stood at $138.1 million (post-IFRS 16) and $151.0 million (pre-IFRS16). Reflecting reduction in financial leverage and greater operational leverage, EBITDA/net income to equity holder conversion ratio was 55% vs 52% for H1 2018 (pre-IFRS16), while net debt/EBITDA remained flat at 3.4x. Free Cash Flow for the period was $77.8 million.
The company has continued to enhance its vertical framework to cater to the local market, which is characterised with a favourability towards a demand for high-quality healthcare access. The healthcare market remains highly predictable, and the company is focused on improving utilisation and efficiencies of existing assets. As opposed to 3.1x at the end of 2018, the company recorded net debt/EBITDA (excluding the impact of IFRS 16) ratio of 2.7x in H1 2019, as the group seeks to deleverage its balance sheet. Post IFRS 16, guidance for revenue for the year was $2,500-2,540 million, while guidance for EBITDA was $665-675 million. The company, through both organic and inorganic means, can identify new potential markets and sees many more opportunities for leveraging growth.
Share Price Performance
On 27th August 2019, at the time of writing (before the market close, GMT 02:30 PM), NMC shares were trading at GBX 2,299.00 and surged by 6.58% against the previous day closing price. Stock's 52 weeks High and Low is GBX 4,010.00/GBX 1,773.50.
Standard Life Aberdeen PLC
Standard Life Aberdeen PLC (SLA) is a Scotland, United Kingdom-headquartered financial services company with operations spread across 54 locations worldwide. The group manages and administers over £577 billion of assets and offers a wide range of developed and emerging market financial assets across Europe, the Americas, Asia, the Middle East and Australia. The company has two operating segments, namely Asset management & platforms and Insurance associates & joint ventures.
The company has entered into an agreement with Citigroup Global Markets Limited to buy SLA shares for an amount, not more than £200 million. All the buyback shares will then be cancelled. The notion behind this move is to reduce the share capital.
Financial Highlights (H1 FY 2019, £m)
Reflecting a positive market movement and investment performance, assets under management and administration increased to GBP 577.5 billion (H1 FY2018: GBP 551.5 billion), while gross inflows remained strong at GBP 36.5 billion down from GBP 37.4 billion reported in H1 2018. Net outflows during the period continued but slowed to GBP 15.9 billion from GBP 16.9 billion in H1 2018, reflecting weak market sentiment and lower gross inflow. Due to adverse market movements in H2 2018 and continued net outflows in 2018 and 2019, fee-based revenue declined by 16% to GBP 815 million (H1 2018: GBP 966 million), while adjusted operating expenses decreased by 5% to GBP 673 million (H1 2018: GBP 712 million). Even though cost declined because of lower staff costs and cost control, a fall in revenue led to an increase in cost/income ratio to 72% from 69% in H1 2018. The group reported diluted earnings per share of 27pence while adjusted diluted earnings per share were 6.2 pence. Interim dividend per share remained unchanged at 7.30 pence, and the company held cash and liquid resources of GBP 1.9 billion at the end of the period.
Even though the company continued to report net outflows, the rate decelerated during the period, and overall investment performance improved steadily. The outlook for the risk profile of the group simplified significantly with the sale the UK and European insurance business to Phoenix in 2018, although the risk to business from macro factors continues to persist. The group has ensured that it would address areas of concern with key suppliers, maintain continuity of personal data flows, and other preparations to deal with Brexit. While macroeconomic and political uncertainties continue to impact investor sentiment and the current business environment for asset management remains tough, the group with its broad and diverse range of capabilities is well placed to take advantage of the opportunities and to deal with the challenges.
Share Price Performance
On 27th August 2019, at the time of writing (before the market close, GMT 02:33 PM), SLA shares were trading at GBX 251.30 and surged by 4.40% against the previous day closing price. Stock's 52 weeks High and Low is GBX 379.43/GBX 208.85.
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