Farmer Business Developments plc is to propose a voluntary share buy-back scheme to shareholders at its Annual General Meeting (AGM) next month.
The board of the investment holding company is concerned that sellers in its private grey market have been experiencing difficulties in finding buyers for their shares.
This has resulted in share prices on the grey market remaining depressed over the past two years.
Following professional advice, the board is now proposing to give shareholders the choice to avail of a voluntary scheme this summer, but only if it gets the green light at the AGM on June 15.
The board said that the scheme would “provide an exit opportunity for shareholders who want to sell shares and realise value”.
The buy-back price would be €1.53/share, which, the board said, is 75% above the average selling price achieved on the grey market in the past two years.
The company would commit a maximum of €2 million to the summer scheme.
In the event of the scheme being over-subscribed, preference will be given to the first 10,369 shares offered by each shareholder; the equivalent of original shareholders’ investment in the 1960s.
Following the conclusion of the proposed buy-back scheme, if it is approved, the company plans to launch an in-house share trading service in September.
This service will facilitate buyers and sellers who wish to trade shares at agreed prices.
Farmer Business Developments
Farmer Business Developments plc is an investment holding company of 4,400 mostly farmer shareholders.
The majority are the original shareholders who came together to found what is now known as FBD Holdings plc.
The investment holding company remains the largest shareholder (24.2%) in FBD Holdings plc, but also has assets including FBD Hotels and Resorts, a 61% investment in the Bulberry Group and a portfolio of smaller investments and cash deposits.
According to its annual report for 2021, Farmer Business Developments plc recorded a group pre-tax profit of €11.64 million, down from €50.69m in 2020.
Profit after tax stood at €9.89 million, compared to €37.23 million in the previous year.
The previous year’s results were significantly boosted by the disposal of development land in Germany held by its subsidiary, Bulberry Properties. There were no land sales in 2021.
FBD Holdings plc reported a pre-tax profit of €110.4 million in 2021, including an underwriting profit of €95.2 million.
Following its strong performance, FBD Holdings plc announced a return of dividends, after a two-year suspension due to the Covid-19 pandemic. It proposed a dividend payment of €1/share for the 2021 financial year.
The overall investment of Farmer Business Developments plc in FBD Holdings plc is €86 million or 37% of its shareholder funds.
“The challenge for FBD Holdings plc is to maintain its strong performance and grow the business profitably as the economy recovers post pandemic,” the report stated.
Farmer Business Developments plc said that it will maintain its stake in FBD Holdings plc as a long-term investment.
The report showed a notable recovery for FBD Hotels and Resorts as Covid-19 restrictions eased. It recorded a profit of €13.13 million, compared to a loss of €1.63 million in 2020.
FBD Hotels and Resorts purchased Killashee Hotel in Co. Kildare in March 2022 for €25 million.
The report noted that the company’s Irish operations have recovered faster than Spain. Its Irish resorts are 22% behind 2019 revenues, while Spanish resorts are 53% back.
As a result of its strong performance in 2021, the directors of Farmer Business Developments plc recommended a final dividend of 7c/ordinary share for the year 2021.
This comes on top of the interim dividend of 10c/share paid on November 30, 2021, bringing the total dividend for the year to 17 cent.
The company said that its outlook for 2022 is “positive”, but did note some “adverse factors in the global environment” which will “put a drag on growth and demand this year and next”.
This includes increasing energy, commodity and transport costs, along with global supply chain challenges.
Chair of Farmer Business Developments plc, Padraig Walshe said:
“Our company has a strong balance sheet and we are well positioned to benefit from the post-pandemic economic recovery and to manage the inflationary challenges and cost pressures which are affecting all businesses,” he said
“We are confident that our businesses and investments will deliver superior returns to our loyal shareholders,” Walshe concluded.