CFI mulls share buy-back

up to 10 percent of its issued share capital at its annual general meeting later this month.
The AGM on March 24 will consider the share buy-back request, receive 2010 final accounts and replace retiring directors.
CFI wants shareholder authority to use the company’s available cash resources to repurchase its own issued ordinary share capital on the open market.
“The maximum number of shares authorised to be acquired is not more than 10 percent of the company’s ordinary issued share capital,” said CFI.
The ZSE-listed agro-concern said the maximum price at which the share would be bought should be plus or minus 20 percent of the average weighted price for five days preceding the purchase. Companies buy back shares for many reasons, but some of these include the need to reduce the number of shares to increase its market value. Thus, when a firm buys back its shares it reduces the number of outstanding shares, creating a shortage, which may have the effect of raising its value.
A company may also buy back its shares to dilute the threat of shareholders looking to accumulate more shares to obtain a controlling interest.
Furthermore, a company may repurchase its shares as that allows it to invest in itself. By reducing the number of outstanding shares on the open market, companies increase the number of shares they own.
In the full year to September 31 2010 the group recorded significant revenue of US$73 million, compared with US$31 million the previous year. However, losses across a number of its subsidiaries chewed into the marginal profit of US$54 000.
As a result, CFI posted a loss before taxation of US$3,5 million with the poultry division contributing US$1,6 million, the specialised division US$869 000 while the retail division slumped to a US$1 million loss.
The poultry division comprises Agrifoods, Agrimix, Hubbard Zimbabwe, Glenara Estates, Crest Breeders, Suncrest and Vetco. The specialised division includes Victoria Foods, Dore and Pitt, Maitlands and Kobenhavn. Farm and City, Town and Country, Honeydew Farm form the retail division.