Besides a lacklustre cash performance, there’s nothing obvious in Trustco’s results to explain the collapse in its share price between May 2009 (80c) and August 2010 (25c). From March (ye) 2009 to March 2010 headline earnings increased from NAD0.108 to 0.126 a share (eps from 0.014c to 0.203c), net assets value increased from NAD0.561 to 0.707, dividends doubled (from 1c to 2c).

Insiders took advantage; In September last year directors bought a total of 1.1m shares at 40c to 47c a share. That month, shareholders approved a share buy-back and the transaction between Trustco Mobile, Econet Wireless and First Mutual Life Assurance Company was approved by the Commissioner of Insurance, Pension and Provident Funds in Zimbabwe.

All of which may have contributed to the share price bouncing back (above 70c) by November.

In December the company reported headline earnings of NAD0.078 per share for the six months to 30 September 2010 (from 0.045 the previous year) with a 12% increase in net assets value to NAD0.123 a share.  Unfortunately, the cash performance once again went the other way with a net cash outflow from operations of NAD3.4m contributing to drop in cash from NAD69.4m to NAD63.8m

Nevertheless, the directors declared an interim dividend of 1.5c a share and continue to buy – 3 of them having bought 557,500 shares @ 64c so far this year.

On a 12 month headline p:e of less than 5 and at a 20% discount to net asset value it may be worth following suit. On the other hand Trustco is trading at a 30% premium to its tangible asset value. Given its price volatility it may be wiser to wait and see what happens when the buy-back comes to an end. By which time the cash performance might have improved too