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The third-party mortgage business has announced that it will undertake an on-market buyback of almost 9 per cent of its shares.
Yellow Brick Road (YBR) has informed shareholders that it will repurchase up to 28 million ordinary class shares over a period of up to 12 months.
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YBR stated that the buyback of just under 9 per cent of the group’s shares will not exceed a total value of $1 million.
Shares purchased in accordance with the buyback will be cancelled.
The buyback, which will commence no earlier than 25 September 2020, is expected to conclude by no later than 24 September 2021.
According to YBR, the buyback will be funded out of operating cash flows and cash on deposit.
The group claimed that it is “well placed” to return surplus capital to shareholders up to the limit of the buyback and “still have sufficient working capital” to fund operations.
YBR noted that the number of shares purchased, the purchase prices and timing of the buyback will be subject to the company’s share price and market conditions.
The group has reserved the right to “vary, suspend or terminate the buyback at any time”.
The announcement comes just weeks after YBR published its preliminary results for the 2020 financial year, reporting a 1.7 per cent increase in underlying loan book to $50.2 billion, up from $49.4 billion in FY19.
Net present value of the loan book decreased by 0.5 per cent, from $44.9 billion in FY19 to $44.6 billion in FY20.
YBR reported that net present value of loan book per ordinary share is 13.8¢ in FY20, down from 15.8¢ in FY19.
The group’s cash flow from operating activities has returned to positive territory, up from -$95,000 to $3.7 million.
The profit for the group after providing for income tax also returned to positive ground, totalling $5.96 million, and up from the FY19 loss of -$37,394.
[Related: Educate Australians on property as an asset class, says Bouris]
