KARACHI: Lucky Cement Ltd said on Friday it has completed the buyback exercise, which began on September 29, 2022, at spot prices prevailing on the Pakistan Stock Exchange.

The 10 million shares that the company has recouped from the stock market in about five and a half months will now be cancelled to improve its “future financial position”.

The practice of listed firms buying back their shares is becoming increasingly popular. The total number of shares goes down once a company conducts a share buyback. As a result, its break-up value and profit per outstanding share go up along with many other key financial indicators.

According to buyback data compiled by Arif Habib Ltd, the cement maker had repurchased as many as 9.95m shares until March 15 i.e. two days before the conclusion of the buyback exercise. The average purchase price by that time was Rs435.70 per share. This means the buyback exercise has cost the company around Rs4.35 billion.

The company used the funds from its “distributable profits” and utilised its “internally generated cash flows” for the transaction. The soon-to-be-cancelled shares consist of 8.8pc of the company’s free float, which is the shareholding that’s in the hands of public investors as opposed to the locked-in shares held by the sponsors. The total number of outstanding shares of Lucky Cement will reduce to 313.3m from 323.3m after the cancellation of the bought-back shares.

Lucky Cement has become the fifth company to have completed its share buyback exercise in the last one year. Earlier, Maple Leaf Cement Factory Ltd, NetSol Technologies Ltd, JDW Sugar Mills Ltd and Bank Alfalah Ltd also carried out their share repurchases. The companies that are in the middle of their buyback exercises are Engro Corporation Ltd, Kohat Cement Ltd, Kohinoor Textile Mills Ltd and Synthetic Products Enterprises Ltd.

Recent changes in the share buyback regulations seem to have encouraged the practice, which is equally popular in developed markets. These changes were introduced via an amendment to Companies Act 2017 on Dec 4, 2021.

Published in Dawn, March 18th, 2023

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