Trustco confident share price will recover
The Trustco Group share price dropped more than 9.3% last week on the Johannesburg Securities Exchange with Trustco shareholders asking hard questions about the diamond mine acquisition, the suspension of an interim dividend, and a proposed share buy-back scheme. This week Trustco spokesperson, Neville Basson attributed the share price movement to the global market reaction.
Basson, in response to questions posed by the Economist, said that during last week, the global market reacted with mixed effects on the news of Donald Trump’s election as the next US president.
Despite the shake up, Basson said Trustco is confident that in the long run their share price will ultimately break out of the recent volatile cycle which has affected many emerging markets. “Our share prices will return to fully-valued prices reflecting the high growth of the underlying companies and the positive economic landscape of Namibian investments,” he said.
On Wednesday, Trustco released their interim results up to September 2016 which show that their revenue for the interim period rose to N$560.2 million (N$498.8 million), income from operations increased to N$594.6 million (N$534.6 million), profit for the period was higher at N$166.5 million (N$151.0 million), while headline earnings per share rose to 21.54cps (19.91cps).
In terms of the dividends, Trustco said that given the near finalisation of Trustco Bank’s core banking system and the necessary organic capitalisation of the resources segment, the board of directors has decided to defer the declaration and payment of any 2017 interim dividend to coincide with publication of the 2017 integrated annual report.
Meanwhile, asked on the issue of Trustco skipping its dividend for the second half of this year, Basson told the Economist that the board usually makes a decision on the interim dividend at the last board meeting of the calendar year.
Touching on the proposed 2018 share buy-back scheme, Basson said that the proposal is fact. “The Specific Repurchase of shares was announced on SENS on the 17th of October 2016 indicating that the group will buy back 5.3% of the current outstanding equity shares from Buckley Capital,” he said. According to Basson, Trustco is busy compiling a circular which will be distributed once the JSE has approved it. All relevant and required information will also be included in the circular.
Furthermore, he said that the share repurchases, dividends and most transactions with shareholders are expected to be funded from reserves.