Pepco launches 50 million euro share buyback under 400 million euro programme
Key Facts
Pepco Group launched the first tranche of its new share buyback programme in October, capped at 50 million euros, according to the group's statement announcing its start. The tranche forms part of a programme with an overall ceiling of 400 million euros, setting the scale of current purchases relative to the total amount allocated to the programme. The group said the purpose of the buyback was "capital reduction", under its policy of returning cash to shareholders. The board linked the timing of the launch to its assessment of the shares, saying "the current share price undervalues the group's growth prospects and underlying earnings potential". Purchases are subject to a price cap, before expenses, equivalent to 110% of the reference market price specified by the company. That reference is calculated as the higher of the trading price at the time of the repurchase and the previous trading day's closing price, under the announced terms of the tranche.
The buyback launch follows Pepco's increase in its underlying net profit and free cash flow forecasts in a trading update ahead of its annual results. According to the group's update, expected annual growth in underlying net profit now exceeds 60%, compared with previous guidance for growth of more than 50%. It also raised its forecast for free cash flow before financing to more than 350 million euros, from around 300 million euros. This revision concerns cash flow before financing, while the policy of returning cash to shareholders is based on free cash flow after financing payments. On trading, the group expected annual revenue to exceed 4.5 billion euros, according to Investing's report on the trading update. The revenue forecast represents growth of around 8% at constant exchange rates, the basis used by the group for its annual comparison.
The capital allocation policy prioritises strategic investment in the business over cash returns to shareholders, according to the group's update. It then aims to return all of the previous year's free cash flow after financing payments through cash dividends and share buybacks. For ordinary dividends, Pepco intends to raise its payout ratio gradually towards 40% of underlying net profit as a target over time. The group previously conducted a separate transaction from the new programme, carrying out a share repurchase offer worth approximately 400,000,000 euros. Under that offer, it bought 36,462,201 ordinary shares, according to its announcement on the transaction's settlement. Settlement of the previous offer was completed on 17 August 2026, before the launch of the current tranche of the new programme.
The new tranche was launched following a secondary offering by Ibex, Pepco's controlling shareholder, to institutional investors. According to the group's disclosure on Ibex's ownership, the sale involved around 32.3 million ordinary shares at 44.00 zlotys per share. The offering reduced Ibex's share of outstanding stock and voting rights from 66.1% before the sale to 59.8% afterwards. Ibex nevertheless retained its position as the group's controlling shareholder, despite reducing its ownership and voting rights through the offering. Pepco was not a party to the shareholder's sale and received no proceeds from it, according to its disclosure on the transaction.
On upcoming dates, the group expected settlement of Ibex's secondary offering on 23 October 2026, according to the disclosure on the change in the shareholder's stake. Pepco intends to announce its preliminary annual results on 9 December 2026, according to the timetable in its trading update. The forthcoming annual results cover the financial year ended September 2026, the period to which the upgraded profit and cash flow forecasts apply. For the first buyback tranche, the group set 31 December 2026 as the latest completion date. This will be followed by the first-quarter trading update, which Pepco scheduled for publication on 14 January 2027.