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GrowthOps announces $5m share buy-back

Marketing and technology company GrowthOps – which purchased agencies including AJF Partnership and Khemistry – has announced a share buy-back program, just weeks after posting a $48m loss.

The buy-back will extend to up to $5m, or 10%, of its outstanding shares. By ensuring the buy-back impacts less than 10% of shares, GrowthOps does not have to get shareholder approval.

The program will commence on 29 March and be in place for up to 12 months.

GrowthOps said in its ASX announcement that a portion of its $70m IPO valuation had been set aside for an acquisition that hadn’t eventuated, so it was looking to “return capital to its shareholders” in order to create what chairperson Dominique Fisher referred to as “long-term value”.

Despite the $48m loss off the back of its acquisition of Asia-Pacific Digital (APD), GrowthOps said that the buy-back will be funded by “cash on our balance sheet”.

Trimantium GrowthOps rebranded to GrowthOps, but still officially trades under the former name

Nick Brown, a practice leader in LegalVision’s corporate law team, said that choosing to commence a buy-back rather than issuing dividends (an alternative way to return capital to shareholders) is common.

“A company can fund buy-backs in a number of ways, whereas dividends are only payable out of distributable profits,” Brown told Mumbrella.

“Unused cash is costly. Buying back some or all of the outstanding shares can be a simple way to pay off investors and reduce the overall cost of capital.”

In its statement, GrowthOps said that “the number and timing of shares purchased will depend on GrowthOps’ share price and general market conditions”.

Its share price has dropped by over 30% over the past year, after its launch on the ASX in March 2018.

In February, when the company revealed its $48m loss, the company also announced a leadership restructure, with founding managing director Phillip Kingston stepping down and CEO Paul Mansfield filling the void.

GrowthOps’ share price peaked at 1.39 shortly after its launch on the ASX, but dropped to as low as 0.46 this month (Click to enlarge)

Kingston served as the company’s managing director since its IPO last year, and has now transitioned to be on the board as an executive director.

GrowthOps made eight acquisitions – including Khemistry, AJF Partnership and Voodoo Creative – before floating, and finalised its takeover of APD in August last year.

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