Diversified technology group 4Sight will buy back R16 million worth of shares, as the JSE-listed company moves to whet investor appetite and shore up its share price.
4Sight has received overwhelming backing from shareholders, who approved the share repurchase programme yesterday.
As a result, 4Sight says it will now buy back 125 521 898 ordinary shares of no par value in the company, at approximately 12.75c per share, which represents a discount of 41.83% for a total cash consideration of R16 million.
This represents 19% of the total 4Sight shares in issue at the time of purchase.
A shareholder majority of 99.98% passed the requisite special resolution at the general meeting of shareholders held at the 4Sight offices yesterday.
Following the conclusion of the share repurchase, the repurchased shares will be cancelled and the issued share capital of 4Sight will reduce by 125 521 898 shares, from 659 856 529 to 534 334 631 ordinary shares of no par value.
Share repurchase is an alternate and more flexible way of returning money to investors, and when used together with increased corporate leverage, buybacks can increase share prices.
In 4Sight’s case, the company says its directors determined that repurchasing shares at a material discount to the intrinsic value of 4Sight shares would uplift value for shareholders.
“The 4Sight board of directors determined that the company’s shares were highly undervalued in relation to its stated net asset value per share,” explains 4Sight CEO Tertius Zitzke.
“We are confident the share repurchase and subsequent adjustment in available shares will have a positive impact on the company’s earnings per share and unlock value for our shareholders.”
Kamil Patel, chairperson of the 4Sight board, comments: “The first three years of 4Sight, with the new exco and current board of directors appointed on 29 October 2019, were focused on stabilising what we have and developing skills and competencies.
“For the next three years, we are going to focus our efforts on growing the value for shareholders and deliver our current strategy towards our customers’ digital transformation journeys.”
“We've bestowed a lot of faith in our customer base, as well as our vendors who are supporting us with excellent product offerings and with our added value services delivering fourth industrial revolution solutions and building Enterprise 5.0 for our customers.”
4Sight’s share buyback programme comes as the company is heading to Australia, in an expansion plan that will also see the group increase its footprint across Africa.
“We see good growth, and before the end of the year, we are going into the Pacific and the rest of Africa, where we service very well through our channel partner model,” Zitzke told ITWeb in a recent interview.
He explained that 4Sight’s value proposition to the market is based on four clusters: operational technology, information technology, business environment and channel partners.
According to Zitzke, the company's channel strategy continues to positively impact performance, amid the rising demand for digital transformation expertise and solutions across multiple sectors.
In the latest reporting period, for the six months ending 30 June, 4Sight grew its recurring revenue from 53% to 62%, and Zitzke said it is on track to achieve its goal of a minimum of 70% annuity revenue.
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