At the begging of the year we published an overview of share buy-backs performed by Croatian and Slovenian companies. Now, with half of the year behind us, we decided to update the overview by looking at just how much of the total volume traded was generated through buy-back programs.  

A share buyback refers to the repurchasing of the shares by the company that originally issued them.  A buyback occurs when the company, which initially issued the shares, pays their shareholders a market value for the shares and in return gains back the shares that were previously dispersed among investors. Just like dividends, a share buyback can be used to return cash back to its shareholders.

Key reasons for a buyback:

• used to return cash back to its shareholders;
• the company wants to award their employees and management through stock rewards and option;
• the management deems that the stock is undervalued;
• the management wants to boost the company’s financial ratios (such as EPS);
• to prevent other shareholders from acquiring more shares (or a takeover).

Percentage of Share Buybacks in Total Traded Volume in H1 2019 (%)

Source: InterCapital Research

During the first six months, Adris’s share buy-back program accounted for 62% of the total volume recorded by the company’s regular share. Note that the bulk of the buy-back program came in February when the company concluded a share buy-back worth HRK 58m (for both regular and preferred shares). Furthermore, Adris is expected to continue in a similar fashion in the future as the company started their new buy-back program in June. The program is intended to buy back a of maximum 1.64m shares or up to HRK 900m, while the company is entitled to acquire up to 10% of their share capital. It is also worth noting that this is a continuation of the buyback program following up a program which started in March 2018 and ended on 16 June 2019.

In second place lies HT, whose share in the total volume of shares traded remained roughly the same, amounting to 27% (from 22% in 2018). In third place follows Atlantic Grupa whose buy-back program accounted for 25% of the company’s total volume. However, note that the aim of this buy-back program was to repurchase share which would later be distrusted to employees as a form of compensation.

Meanwhile, Krka’s share in the total volume traded increased slightly during 2019 and amounted to 18% (from 13% in 2018). Note that Krka was the only Slovenian company which performed share buybacks. On the flip side, Koncar’s contribution to the total volume traded decreased significantly and now amounts to just 1% (from 15% in 2018).

It is worth mentioning that on 28 June, Arena Hospitality launched their first share buyback program with the intention to purchase up to 20.000 of their shares. The mentioned buyback will last until 30 June 2020.

To read our earlier overview of share buy-backs in 2018 please click here.