Farmer Business Developments plc Annual Report 2016

Transcription

1 Farmer Business Developments plc Annual Report 2016

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3 Contents Chairman s Statement 2 Board of Directors and Other Information 5 Report of the Directors 6 Independent Auditors Report 10 Financial Statements: Consolidated Income Statement 12 Consolidated Statement of Comprehensive Income 13 Consolidated Statement of Changes in Equity 13 Consolidated Balance Sheet 14 Consolidated Statement of Cash Flows 15 Company Balance Sheet 16 Company Statement of Changes in Equity 17 Company Statement of Cash Flows 17 Notes to the Financial Statements 18 Notice of Annual General Meeting 45 Notes for Shareholders 46 Farmer Business Developments plc 1 Annual Report 2016

4 Chairman s Statement RESULTS I am pleased to advise that Farmer Business Developments plc ( the Company ) recorded a profit before interest and taxation of 7.85m in 2016 which is slightly higher than the 7.72m achieved in Our Balance Sheet value grew by 5.33m during 2016 to m from m at the end of was a transitional year for the Group as it was the first year that full 12 months trading results were included for FBD Hotels and Resorts ( FBDH&R ), of which we took 100% ownership in October To assist shareholders in understanding our results for 2016, we have produced a Divisional Summary Statement below, which separates the results for FBDH&R and the Company s other Investments. Divisional Summary Statement FBD Hotels & Resorts Result 8,387 2,055 Farmer Business Developments Investment Result (537) 5,667 Profit before interest and taxation 7,850 7,722 Dividend income 71 2,902 Net interest (1,729) 830 Profit before taxation 6,192 11,454 This shows a strong performance by FBDH&R for 2016, contributing 8.39m to the Group profit before interest and taxation, reflecting our full ownership of the property and leisure business for the year, compared to a contribution of 2.06m in On the Investment side, there was a net mark down of 0.54m in Dividend income was low in 2016 at 0.07m reflecting the suspension of dividend payments by FBD Holdings plc, while net interest amounted to 1.73m paid, mostly on bank loans relating to our acquisition of FBDH&R. This left Group profit before taxation for 2016 at 6.19m. FBD HOLDINGS PLC It is encouraging to record that FBD Holdings plc returned to profitability in 2016 with an 11.4m profit before tax from continuing operations. The turnaround at FBD Holdings plc was based on a simplified strategy which focusses on its core Farm and SME customers under a single FBD brand, while reducing its exposure to business written through brokers. FBD Holdings plc believes its underwriting and rating actions mean that it is now well positioned to begin to deliver sustainable shareholder returns through growth in book value. Our 24.6% stake in FBD Holdings plc accounted for 61.4m or 33.5% of our net asset value at yearend. Your Board s policy is to maintain our stake in FBD Holdings plc as a long term investment in the expectation of both a return to dividend income and capital appreciation. I take this opportunity to convey our best wishes to Mr Michael Berkery who has recently retired as Chairman of FBD Holdings plc after 21 years and to acknowledge his considerable contribution to the growth and development of FBD Holdings plc, which has in turn greatly benefitted this Company and our shareholders. I wish Mr Liam Herlihy every success as incoming Chairman of FBD Holdings plc. Farmer Business Developments plc 2 Annual Report 2016

5 FBD INSURANCE DISCOUNT I take this opportunity to remind our farming shareholders, who hold at least 10,000 ordinary shares in our Company, that their investment is recognised and rewarded through a discount of 10% on their insurance premiums with FBD Insurance and also through this Company s annual dividends. FBD Insurance has a proven track record of delivering a superior product and service to its core farming customers. REVIEW OF INVESTMENTS Our Company is primarily an investment holding company with a major trading subsidiary, which is FBDH&R. The nature of an investment holding company is that year-on-year income is not alone the indicative assurance of performance. In an investment holding company, the growth of the asset value of the Balance Sheet is an intrinsic part of the overall performance together with income. a) FBD Hotels & Resorts ( FBDH&R ) FBDH&R is our single largest investment representing 86m or 47% of our Balance Sheet value. The trading performance of FBDH&R improved again in 2016, driven by growth in occupancy and yield. Both the Irish and Spanish markets performed strongly and EBITDA (earnings before interest, tax, depreciation and amortisation) was 9.9m. Revenue per available room in Ireland was up 12%, while in Spain total leisure revenue increased by 8%. FBDH&R entered a third property development with Taylor Wimpey at the La Cala Resort in Spain during The development will consist of 158 units comprising 41 townhouses and 117 apartments. This brings to 321 the total number of units being developed at La Cala, on 22% of our landbank. Construction under the second property development began in February 2016 and 43 of the 103 units have been sold to date from plans. The first property development launched in late 2014 consisting of 60 apartments was sold out during the year and 75% of the units have now been handed over. In late 2016, FBDH&R sold the Tower Hotel Waterford realising a gain of 1.6m. The net proceeds from the sale were used to pay down some debt, finance the 46 bedroom extension to our Castleknock Hotel, and fund the acquisition of certain development plots at La Cala. Overall, the outlook for the FBDH&R business is positive and we are confident that our investment will deliver strong returns. b) Berlin Airport Our investment in development lands at Schönefeld adjacent to the new Willy Brandt Airport in Berlin remains our third largest interest. We continue to carry this investment at cost of 19.7m, which represents 11% of our net assets. The airport management company accepted in January that the airport would not be commissioned in the second half of 2017, and it is now expected to be mid 2018 before the airport is opened. Nevertheless, interest among developers is significant and market sentiment around the development lands is positive. The project managers are engaged in a strategy of enhancing value as much as possible through essential infrastructure improvements funded by selling some land, as the market has picked up. We remain positive about this investment and take the view that our patience will pay off by retaining the most valuable land to meet demand when the airport opens. c) Other Investments The remaining 16m (8.5%) of our Balance Sheet consists of a portfolio of smaller investments and cash. These include international equities and private equity funds, together with an Irish venture capital fund. A shopping centre in Geneva, which was the underlying asset in one of our investments, was sold at the end of We have already received full repayment of our initial investment and, once the investment vehicles are wound up, we expect that our share of the proceeds will be received in 2017 and we will materialise an after tax gain in excess of 1m. SHARE DEALING SERVICE In response to concerns expressed by shareholders, your Board engaged Davy Select to operate a private grey market in the Company s shares. This service replaced the matched bargain service operated by Capita Share Dealing Services. The new Davy Select service opened in July 2016 and has achieved a much higher volume of trading, with a total of 185,393 shares traded in the second half of last year at a price of 95 cent per share, compared to 35,107 shares traded on the old matched bargain service in the first six months of A note from Davy Select is included with this mailing and a representative will attend the AGM to answer shareholders questions. Farmer Business Developments plc 3 Annual Report 2016

6 Chairman s Statement continued The Company remains open to new farmer shareholders, however your Board s policy is to continue to maintain our character as a farmers company and to prevent opportunists from stake building. COMPANY WEBSITE To improve communications with our shareholders, the Company launched a new website on 01 July 2016 at The website provides ready access to useful investor information and details on how to transfer shares, as well as the latest share trades and prices on our private grey market operated by Davy Select. SHARE REGISTRARS Capita Asset Services, Shareholder Solutions (Ireland) continue to manage the registration and certification of share transfers in the settlement of estates and in private transactions. They may be contacted at or enquiries@capita.ie. DIVIDEND For 2016, the Directors are recommending a dividend of 5c per share (2015: 5c) on the ordinary shares. Your Board is committed to a sustainable dividend policy of using available resources to benefit shareholders. CONCLUSION Our Company continues to have a strong Balance Sheet with our wholly owned FBDH&R subsidiary, Berlin Airport and smaller investments performing well. The decisive actions taken by FBD Holdings plc have returned it to profitability with a focus on its valued customers and positioned for growth. We are confident that our portfolio of investments will continue to reward our shareholders with superior returns. Thank you for your support. Padraig Walshe Chairman 05 May 2017 Farmer Business Developments plc 4 Annual Report 2016

7 Board of Directors and Other Information BOARD OF DIRECTORS Padraig Walshe (Chairman) Jack Bayly John Bryan Donal Buckley Barry Donnelly Joe Healy (resigned on 24 March) James Kane (Vice Chairman) Michael Kennedy Kevin Kiersey Diarmuid Lally T.J. Maher John McCullen Patrick Murphy Neil O Riordan Hugh Ryan Tommy Joe Tuffy SECRETARY AND REGISTERED OFFICE Bryan Barry, Farmer Business Developments plc, Irish Farm Centre, Bluebell, Dublin 12. Phone: bryanbarry@fbdevelopments.ie SHARE REGISTRAR Capita Asset Services, Shareholder Solutions (Ireland), 2 Grand Canal Square, Grand Canal Harbour, Dublin 2. Phone: enquiries@capita.ie SHARE MARKET Davy Select, Davy House, 49 Dawson Street, Dublin 2. Phone: davyselect@davy.ie BANKERS Allied Irish Banks, Lower Baggot St., Dublin 2. SOLICITORS Arthur Cox, Ten Earlsfort Terrace, Dublin 2. AUDITORS Deloitte, Chartered Accountants and Statutory Audit Firm, Deloitte & Touche House, Earlsfort Terrace, Dublin 2. Farmer Business Developments plc 5 Annual Report 2016

8 Report of the Directors The Directors present their Annual Report and audited Financial Statements for the year ended 31 December PRINCIPAL ACTIVITY, BUSINESS REVIEW AND PROSPECTS Farmer Business Developments plc (the Company) is an investment holding company. FBD Hotels and Resorts ( FBDH&R ) is the Groups largest investment. The activities of FBDH&R consist of hotel operations in Ireland and Spain and investment in properties associated with these activities. Farmer Business Development s other investments are 24.61% (2015: 24.62%) of the ordinary share capital of FBD Holdings plc, lands zoned for development adjacent to the new Berlin airport and a diversified portfolio of investments and cash deposits. FBD Holdings plc is an investment holding company. The principal activity of its major subsidiary, FBD Insurance plc, is looking after the insurance needs of farmers, private individuals and business owners. The 2016 results for Farmer Business Developments plc reflect a profit before taxation of 6,192,000 (2015: 11,454,000). After a tax charge of 1,086,000 (2015: 913,000), the Group showed a profit after taxation of 5,106,000 (2015: 10,541,000). The Consolidated Balance Sheet had Net Assets of 183,097,000 at 31 December 2016, up from 177,773,000 the previous year. These numbers are considered to be the key performance indicators of the Group. The Group declared and paid an annual dividend of 5 cents per ordinary share (2015: 5 cent) totalling 2,594,000 (2015: 2,594,000) and preference dividends of 151,000 (2015: 151,000). Retained profit for the year was 2,869,000 (2015: 7,797,000). The major risks and uncertainties facing the Group s operating activities lie in the hospitality sector, the primary risk being a downturn in Ireland and Spain and the impact of Brexit that may diminish demand for leisure and business travel. In common with all companies operating in this sector the Group faces risks and uncertainties such as competition and increasing costs. The general economic uncertainty is also a risk for the Group. The Directors are of the opinion that the Group is well positioned to manage these risks. The major risks and uncertainties facing the Group s investing activities arise from its exposure to interest rate risk, market risk, foreign currency risk and credit risk through its investments, which are explained in note 29. Within the investment portfolio, the principal individual risk is due to the Company s significant investment in the shares of FBD Holdings plc, which makes up 33.5% of its net assets, up from 33% in While the insurance environment remains challenging, FBD Holdings plc strengthened its capital position and implemented a number of strategic initiatives to restore the group to profitability in RESULTS Profit before taxation 6,192 11,454 Taxation (1,086) (913) Profit after taxation 5,106 10,541 Non-controlling interests (66) 17 Currency translation movement 574 (16) Dividend paid on 14% non-cumulative preference shares (89) (89) Dividend paid on 11% non-cumulative preference shares (62) (62) Dividend paid on ordinary shares (2,594) (2,594) Movement on revenue reserves 2,869 7,797 Net Assets 183, ,773 Farmer Business Developments plc 6 Annual Report 2016

9 Report of the Directors continued DIRECTORS The names of the current Directors are listed on page 5. At last year s Annual General Meeting on 24 June 2016, Mr Jack Bayly and Mr Joe Healy retired by rotation and were reelected as Directors appointed by Shareholders. On 24 March 2017, Mr Joe Healy resigned as a Director appointed by Shareholders. At the forthcoming AGM on 07 June 2017, Mr James Kane will retire as a Director appointed by the Co-operative Societies holding shares in the Company, which is in line with the reduction in Board size approved by shareholders at last year s AGM. Mr James Kane is recommended by the Directors for election as a Director appointed by Shareholders at the AGM on 07 June to fill the vacancy which has arisen. The Company has also received notice from a member, Mr Richie McBride, of his intention to nominate Mr Brian Marshall for election as a Director appointed by Shareholders at the AGM on 07 June and notice from Mr Marshall of his willingness to serve as a Director. Mr Tommy Joe Tuffy, Mr Neil O Riordan and Mr Michael Kennedy will retire as Directors appointed by the Co-operative Societies which are shareholders in the Company on a date to be determined in July 2017 and are eligible for re-appointment. The Company will convene a meeting of the said Co-operative Societies on the same date to appoint three Directors. DIRECTORS AND SECRETARY S INTERESTS The beneficial interests of the Directors and Secretary of the Company and their spouses, civil partners and minor children in the share capital of the Company, at 31 December 2016 and 1 January 2016 were as follows: Number of Ordinary Shares of 0.13 each Number of 14% Non- Cumulative Preference Shares of 1.27 each Number of 11% Non- Cumulative Preference Shares of 0.13 each Directors: 31/12/16 01/01/16 31/12/16 01/01/16 31/12/16 01/01/16 Jack Bayly 52,575 52, ,000 3,000 John Bryan 2,000 2, Donal Buckley Barry Donnelly 6,185 1, Joe Healy 1,000 1, James Kane 24,921 24, Michael Kennedy 30,549 30, ,000 3,000 Kevin Kiersey 14,244 14, Diarmuid Lally 1,000 1, T.J. Maher John McCullen 12,567 12, ,000 3,000 Patrick Murphy 5,185 5, Neil O Riordan 1,000 1, Hugh Ryan 22,869 22, Tommy Joe Tuffy 1,000 1, Padraig Walshe 10,369 10, Secretary Bryan Barry 6,000 6, Farmer Business Developments plc 7 Annual Report 2016

10 Report of the Directors continued DISCLOSURE OF INFORMATION TO AUDITORS In the case of each of the persons who are Directors at the time the Directors Report and Financial Statements are approved: n So far as the Director is aware, there is no relevant audit information of which the Company s statutory auditors are unaware; and n Each Director has taken all steps that ought to have been taken by the Director in order to make himself/ herself aware of any relevant audit information and to establish that the Company s auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section 330 of the Companies Act DIRECTORS COMPLIANCE STATEMENT As required by Section 225 of the Companies Act 2014, the Directors acknowledge that the Directors are responsible for securing the Company s compliance with its relevant obligations; and the Directors confirm that the Directors commenced the following three procedures in order to comply with the Directors obligations: a) the drawing up of a compliance policy statement setting out the Company s policies that, in the Directors opinion, are appropriate to the Company, and respecting compliance by the Company with its relevant obligations; b) the putting in place of appropriate arrangements or structures that are, in the Directors opinion, designed to secure material compliance with the Company s relevant obligations; and c) reviewing of any arrangements or structures that are in place or being put in place. AUDIT COMMITTEE In accordance with Section 167 of the Companies Act 2014, the Company established an audit committee. The audit committee s responsibilities include monitoring: a) the Company s financial reporting process; b) the effectiveness of the Company s systems of internal control and risk management; c) the Company s statutory audit and statutory financial statements; and d) reviewing the independence of the statutory auditor. Farmer Business Developments plc 8 Annual Report 2016

11 Report of the Directors continued DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Directors are responsible for preparing the Directors Report and the Financial Statements in accordance with the Companies Act 2014 and the applicable regulations. Irish company law requires the Directors to prepare Financial Statements for each financial year. Under the law, the Directors have elected to prepare the Financial Statements in accordance with FRS 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland ( relevant financial reporting framework ). Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial position of the Company as at the financial year end date and of the profit or loss of the Company for the financial year and otherwise comply with the Companies Act In preparing those Financial Statements, the Directors are required to: n select suitable accounting policies for the Parent Company and the Group Financial Statements and then apply them consistently; n make judgements and estimates that are reasonable and prudent; n state whether the Financial Statements have been prepared in accordance with the applicable accounting standards, identify those standards, and note the effect and the reasons for any material departure from those standards; and n prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for ensuring that the Company keeps or causes to be kept adequate accounting records which correctly explain and record the transactions of the Company, enable at any time the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy, enable them to ensure that the Financial Statements and Directors Report comply with the Companies Act 2014 and enable the Financial Statements to be audited. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. SUBSIDIARIES The Company s direct subsidiaries are listed in note 30. SUBSEQUENT EVENTS There have been no events subsequent to the year-end which will impact on the Financial Statements for the year ended 31 December INDEPENDENT AUDITORS The auditors, Deloitte, Chartered Accountants and Statutory Audit Firm continue in office in accordance with Section 383(2) of the Companies Act, ACCOUNTING RECORDS The Directors have taken appropriate measures to ensure compliance with Sections 281 to 285 of the Companies Act The specific measures taken are the use of suitably qualified accounting personnel and the maintenance of appropriate accounting systems. The books of account are located at Irish Farm Centre, Bluebell, Dublin 12. ANNUAL GENERAL MEETING The notice of the Annual General Meeting of the Company which will be held at 12 noon on 07 June 2017 in the Irish Farm Centre, Bluebell, Dublin 12, as set out on page 45. APPROVAL OF FINANCIAL STATEMENTS The Financial Statements were approved by the Directors on 03 May Signed on behalf of the Board: Padraig Walshe Chairman 03 May 2017 James Kane Director Farmer Business Developments plc 9 Annual Report 2016

12 Independent Auditors Report To the members of Farmer Business Developments plc We have audited the financial statements of Farmer Business Developments plc for the financial year ended 31 December 2016 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows, the Company Balance Sheet, Company Statement of Changes in Equity, Company Statement of Cash Flows and the related notes 1 to 34. The relevant financial reporting framework that has been applied in their preparation is the Companies Act 2014 and FRS 102 the Financial Reporting Standard applicable in the UK and Republic of Ireland ( relevant financial reporting framework ). This report is made solely to the Company s members, as a body, in accordance with Section 391 of the Companies Act Our audit work has been undertaken so that we might state to the Company s members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s members as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS As explained more fully in the Directors Responsibilities Statement, the Directors are responsible for the preparation of the Financial Statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act Our responsibility is to audit and express an opinion on the Financial Statements in accordance with the Companies Act 2014 and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the Financial Statements. In addition, we read all the financial and non-financial information in the Annual Report for the financial year ended 31 December 2016 to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies, we consider the implications for our report. Farmer Business Developments plc 10 Annual Report 2016

13 Independent Auditors Report continued To the members of Farmer Business Developments plc OPINION ON FINANCIAL STATEMENTS In our opinion, the Group and parent Company Financial Statements: n give a true and fair view of the assets, liabilities and financial position of the Group and parent Company as at 31 December 2016 and of the profit of the Group for the financial year then ended; and n have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirements of the Companies Act MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY THE COMPANIES ACT 2014 n We have obtained all the information and explanations which we consider necessary for the purposes of our audit. n In our opinion the accounting records of the parent Company were sufficient to permit the Financial Statements to be readily and properly audited. n The parent Company Balance Sheet is in agreement with the accounting records. n In our opinion the information given in the Directors Report is consistent with the Financial Statements. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion, the disclosures of Directors remuneration and transactions specified by law are not made. Kevin Sheehan For and on behalf of Deloitte Chartered Accountants and Statutory Audit Firm, Dublin 05 May 2017 Farmer Business Developments plc 11 Annual Report 2016

14 Consolidated Income Statement For the financial year ended 31 December 2016 Notes Turnover continuing operations 4 51,047 10,749 Turnover discontinued operations 4 5,417 1,186 Turnover 4 56,464 11,935 Cost of sales (9,507) (4,543) GROSS PROFIT 46,957 7,392 Staff costs 5 (23,320) (4,421) Administrative expenses (18,461) (2,495) Operating profit continuing operations 4, Operating profit discontinued operations Group operating profit 5, Fair value (loss)/gain on investments 15 (1,736) 1,337 Profit on sale of investments 15 2,204 4,146 Profit on sale of hotel 14 1,578 - Reversal of negative goodwill arising on sale of land Share of results of joint venture - 1,763 PROFIT BEFORE INTEREST AND TAXATION 7,850 7,722 Interest income and other similar items ,091 Interest payable and similar expenses 7 (1,806) (359) PROFIT BEFORE TAXATION 8(a) 6,192 11,454 Taxation 10 (1,086) (913) PROFIT AFTER TAXATION 5,106 10,541 Attributable to non-controlling interests 27 (66) 17 PROFIT FOR THE FINANCIAL YEAR 5,040 10, comparatives above include the results of FBD Hotels and Resorts group from 23 October 2015 to 31 December The Financial Statements were approved by the Board on 03 May Farmer Business Developments plc 12 Annual Report 2016

15 Consolidated Statement of Comprehensive Income For the financial year ended 31 December 2016 Notes Profit for the financial year 5,040 10,558 OTHER COMPREHENSIVE INCOME Currency translation movement 574 (16) Unrealised gains/(losses) on investments classified as available for sale 13 2,389 (41,124) TOTAL COMPREHENSIVE INCOME /(LOSS) FOR THE FINANCIAL YEAR 8,003 (30,582) Consolidated Statement of Changes in Equity For the financial year ended 31 December 2016 Called up share capital presented as equity Revaluation reserves Revenue reserves Capital Redemption reserves Preference share capital Non-controlling interests Total equity 000s At 1 January ,117 92, ,424 4,074 1, ,356 Acquisition of subsidiary Profit for the year , (17) 10,541 Other comprehensive expense - (41,124) (16) (41,140) Dividends paid and approved - - (2,745) (2,745) At 31 December ,117 51, ,221 4,074 1, ,773 Profit for the year - - 5, ,106 Other comprehensive income - 2, ,963 Dividends paid and approved - - (2,745) (2,745) At 31 December ,117 53, ,090 4,074 1, ,097 Farmer Business Developments plc 13 Annual Report 2016

16 Consolidated Balance Sheet At 31 December 2016 Notes NON CURRENT ASSETS Tangible fixed assets , ,180 Investments available for sale 13 61,401 59,012 Investments designated as at FVTPL 15 42,748 47,525 Negative goodwill (161) (789) Deferred taxation asset 20(a) 1, , ,208 CURRENT ASSETS Inventories 16 12,831 11,393 Debtors 17(a) 10,200 11,940 Cash and cash equivalents 12,540 6,346 35,571 29,679 CURRENT LIABILITIES CREDITORS: Amounts falling due within one year 21(a) (28,343) (27,799) NET CURRENT ASSETS 7,228 1,880 TOTAL ASSETS LESS CURRENT LIABILITIES 223, ,088 NON CURRENT LIABILITIES: Amounts falling due after one year 21(c) (40,869) (52,315) NET ASSETS 183, ,773 CAPITAL AND RESERVES Called up share capital presented as equity 25 7,117 7,117 Reserves 173, ,716 SHAREHOLDERS FUNDS EQUITY INTERESTS 181, ,833 Preference share capital 26 1,196 1,196 SHAREHOLDERS FUNDS ATTRIBUTABLE TO THE OWNERS 182, ,029 Non-controlling interests TOTAL EQUITY 183, ,773 The Financial Statements were approved by the Board on 03 May 2017 and signed on its behalf by: Padraig Walshe Chairman James Kane Director The accompanying notes on pages 18 to 44 form an integral part of the Financial Statements. Farmer Business Developments plc 14 Annual Report 2016

17 Consolidated Statement of Cash Flows For the financial year ended 31 December 2016 Notes OPERATING ACTIVITIES Net cash inflow from operating activities 28(a) 4,682 3,324 CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES Purchase of subsidiary (net of cash acquired) - (43,741) Purchase of tangible fixed assets (2,402) (517) Loan repayment received from related company - 7,500 Sale of quoted and unquoted investments 15 5,876 5,554 Net cash inflow on sale of hotel 11,057 - Purchase of quoted and unquoted investments 15 (631) (10,066) NET CASH INFLOW/(OUTFLOW) FROM INVESTMENT ACTIVITIES 13,900 (41,270) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from new bank borrowings - 35,000 Repayments of loan obligations (9,643) (417) Ordinary and preference dividends paid 11 (2,745) (2,745) NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES (12,388) 31,838 INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE YEAR 6,194 (6,108) Cash and cash equivalents at the beginning of the year 6,346 12,454 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 12,540 6,346 Farmer Business Developments plc 15 Annual Report 2016

18 Company Balance Sheet At 31 December 2016 Notes NON CURRENT ASSETS Investments designated as at FVTPL 15 42,748 47,525 Investment in subsidiaries , ,975 Deferred taxation assets 20(c) 1, , ,500 CURRENT ASSETS Debtors falling due within one year 17(b) Cash and cash equivalents 10 2, ,815 CURRENT LIABILITIES CREDITORS: Amounts falling due within one year 21(b) (46,478) (43,530) NET CURRENT LIABILITIES (45,556) (40,715) TOTAL ASSETS LESS CURRENT LIABILITIES 175, ,785 CREDITORS: Amounts falling due after more than one year 21(d) - (5,000) NET ASSETS 175, ,785 CAPITAL AND RESERVES Called up share capital presented as equity 25 7,117 7,117 Reserves 166, ,472 ORDINARY SHAREHOLDERS FUNDS 173, ,589 Preference share capital 26 1,196 1,196 TOTAL SHAREHOLDERS FUNDS 175, ,785 The Financial Statements were approved by the Board on 03 May 2017 and signed on its behalf by: Padraig Walshe Chairman James Kane Director The accompanying notes on pages 18 to 44 form an integral part of the Financial Statements. Farmer Business Developments plc 16 Annual Report 2016

19 Company Statement of Changes in Equity For the financial year ended 31 December 2016 Called up share capital presented as equity Revenue reserves Capital redemption reserves Preference share capital Total equity 000s At 1 January , ,105 4,074 1, ,492 Loss for the year - (30,962) - - (30,962) Dividends paid and approved - (2,745) - - (2,745) At 31 December , ,398 4,074 1, ,785 Profit for the year - 1, ,970 Dividends paid and approved - (2,745) - - (2,745) At 31 December , ,623 4,074 1, ,010 Company Statement of Cash Flows For the financial year ended 31 December 2016 Notes OPERATING ACTIVITIES Net cash (outflow)/inflow from operating activities 28 (b) (2,526) 5,372 CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES Investment in subsidiary - (23,598) Loan repayment received from related company - 7,500 Sale of quoted and unquoted investments 15 5,876 5,554 Purchase of quoted and unquoted investments 15 (631) (10,066) NET CASH INFLOW/(OUTFLOW) FROM INVESTMENT ACTIVITIES 5,245 (20,610) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from new bank borrowings - 10,000 Loan repayment (2,000) - Ordinary and preference dividends paid 11 (2,745) (2,745) NET CASH (OUTFLOW)/INFLOW FROM FINANCING ACTIVITIES (4,745) 7,255 DECREASE IN CASH AND CASH EQUIVALENTS FOR THE YEAR (2,026) (7,983) Cash and cash equivalents at the beginning of the year 2,036 10,019 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 10 2,036 Farmer Business Developments plc 17 Annual Report 2016

20 Notes to the Financial Statements For the financial year ended 31 December STATEMENT OF ACCOUNTING POLICIES A) GENERAL INFORMATION AND BASIS OF PREPARATION AND ACCOUNTING The Group Financial Statements have been prepared under the historical cost convention as modified to include certain items at fair value, and in accordance with the Companies Acts 2014 and Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council, and promulgated for use in Ireland by Chartered Accountants Ireland. B) BASIS OF CONSOLIDATION The consolidated Financial Statements include the Financial Statements of the Company and its subsidiary undertakings, made up to 31 December In subsidiary undertakings, control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The accounting policies of the subsidiaries are in line with those used by the Group. All intra Group transactions, balances, income and expenses are eliminated on consolidation. The Group s share of the results and net assets of a joint venture are included based on the equity method of accounting. A joint venture is an entity subject to joint control by the Group and other parties. Under the equity method of accounting, the Group s share of the post-acquisition profits and losses of joint ventures is recognised in the Consolidated Income Statement. In the Group and the Company s Balance Sheets the joint venture is held at cost plus the Group s share of the post-acquisition profits and losses. The acquisition of subsidiaries is accounted for using the acquisition method. The cost of acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS102 are recognised at their fair value at the acquisition date. C) NEGATIVE GOODWILL The excess of the net amount of identifiable assets, liabilities and provisions for contingent liabilities recognised in accordance with FRS 102 over the cost of the business combination is recognised as negative goodwill on the face of the Balance Sheet at the acquisition date. Any excess exceeding the fair value of non-monetary assets acquired is recognised in profit and loss in the periods expected to be benefited. D) TURNOVER Turnover recognised in the Consolidated Income Statement account represents the total invoice value of goods or services supplied to customers outside the Group during the year, excluding VAT and discounts. Turnover is recognised to the extent that the Group obtains the right to consideration in exchange for its performance. Where payments are received in advance of goods or services provided, the amounts are recorded as deferred income and included as part of creditors due within one year. Turnover on property sales is recognised on signing of agreements and when the entity has transferred the significant risks and rewards of ownership of the property and the amount of revenue can be measured reliably. E) TAXATION AND DEFERRED TAXATION Current tax, including Irish corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Farmer Business Developments plc 18 Annual Report 2016

21 Notes to the Financial Statements continued 1 STATEMENT OF ACCOUNTING POLICIES continued E) TAXATION AND DEFERRED TAXATION (continued) Deferred tax arises in respect of all timing differences at the reporting date. Timing differences are differences between taxable profits and total comprehensive income as stated in the financial statements that arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax assets are recognised only to the extent that is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. They are regarded as recoverable to the extent that, on the basis of available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax relating to property, plant and equipment measured using the revaluation model and investment property is measured using the tax rates and allowances that apply to sale of the asset. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the amounts and the Company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset only if: a) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and b) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on the Company and the Company intends either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. F) FOREIGN CURRENCY The individual financial statements of each company in the Group are stated in the currency of the primary economic environment in which it operates (its functional currency). The functional and the presentation currency of the Group Financial Statements is euro, denoted by the symbol. Transactions in currencies other than euro are recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets and liabilities in foreign currencies have been translated into euro at closing rates at the reporting date. Gains and losses on translation are recognised in the Consolidated Income Statement in the period in which they arise except when they relate to items for which gains and losses are recognised in equity. Non-monetary items are translated at the exchange rate at the date of transaction. G) RETIREMENT BENEFITS The Group operates a number of defined contribution schemes. Costs arising in respect of the Group s defined contribution schemes are charged to the consolidated income statement as an expense as they fall due. H) DIVIDENDS Dividend income from investments is recognised when the shareholders rights to receive payment have been established. Dividend distribution to the Company s shareholders is recognised as a liability in the Group s Financial Statements in the period in which the dividends are approved. Farmer Business Developments plc 19 Annual Report 2016

22 Notes to the Financial Statements continued I) TANGIBLE FIXED ASSETS AND DEPRECIATION All tangible fixed assets are initially recorded at historic cost. The Group has a policy of full valuation by independent external valuers of land and buildings and investment properties on the basis of existing use at least every five years. Tangible fixed assets acquired as part of a business combination are recorded at fair value. At the current financial year end the directors relied on internal evaluation in assessing the value of its hotel assets, resorts and investment properties which they believe are not materially different than the market values. Investment properties for which fair value can be measured reliably without undue cost or effort on an ongoing basis are measured at fair value annually with any change recognised in the Income Statement. If an asset s carrying amount is increased as a result of a revaluation, the increase shall be recognised in other comprehensive income and accumulated in equity. However, the increase shall be recognised in Consolidated Income Statement to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit and loss. The decrease of an asset s carrying amount as a result of an impairment shall be recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity, in respect of that asset. Depreciation is provided at rates calculated to write off the cost, less residual value based on prices prevailing at the date of acquisition, of each asset evenly over its expected useful life, over a five to seven-year period. J) REVALUATION OF INVESTMENT PROPERTIES Investment properties for which fair value can be measured reliably without undue cost or effort on an ongoing basis are measured at fair value annually with any change recognised in the Income Statement. The Directors used a valuation technique based on a discounted cash flow model in determining the fair value of investment property at the reporting date. The determined fair value of the investment property is most sensitive to the estimated discount factor. K) INVENTORIES Inventories acquired as part of an acquisition are valued at fair value, otherwise they are valued at the lower of cost and net realisable value after making due allowance for any obsolete or slow moving items. Cost includes all expenditure incurred in bringing inventories to their present location and condition. Net realisable value is the estimated selling price, less further costs expected to be incurred to completion and disposal. Inventories include development land which the Group intend to dispose and/or develop in the short to medium term. L) FINANCIAL INSTRUMENTS Financial Instruments are recognised and measured in accordance with Section 12.2(b) of FRS 102 which adopts the provisions of IAS 39 Financial Instruments: Recognition and Measurement. Financial Instruments are recognised in the Consolidated Balance Sheet when the Group becomes a party to the contractual provisions of the instrument. (i) Investments classified as at fair value through profit or loss (FVTPL) Financial assets are classified as FVTPL (fair value through profit or loss) when the financial asset is either held for trading or it is designated as FVTPL. A financial asset is classified as held for trading if: n n n it has been acquired principally for the purpose of selling in the near term; or on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or it is a derivative that is not designated and effective as a hedging instrument. Farmer Business Developments plc 20 Annual Report 2016

23 1 STATEMENT OF ACCOUNTING POLICIES continued L) FINANCIAL INSTRUMENTS (continued) A financial asset other than a financial asset held for trading may be designated as FVTPL upon initial recognition if: n such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or n the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or n it forms part of a contract containing one or more embedded derivatives, the entire combined contract (asset or liability) may be designated as FVTPL. Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in the Consolidated Income Statement. (ii) Available for sale investments Available for sale investments of the Group include its shareholding in FBD Holdings plc. This investment is stated at fair value, using the closing bid price, with unrealised gains and losses recognised as a revaluation surplus or deficit in the revaluation reserve in the year in which they arise. In the accounts of the subsidiary company, Farmer Business Developments Assets Ltd, the investment is stated at fair value using the closing bid price, with unrealised gains and losses reflected through the Consolidated Income Statement. (iii) Deposits Term deposits with banks comprise cash held for the purpose of investment. Demand deposits with banks are held for operating purposes. (iv) Loans and receivables Loans are initially measured at fair value plus transaction costs and subsequently carried at amortised cost less any impairment using the effective interest rate method. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts though the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount of initial recognition. Interest is charged on the loans at the market rate. (v) Investment in Group company Financial assets representing the Company s investment in subsidiary undertakings are stated at cost less provision for any permanent diminution in value. M) IMPAIRMENT OF FINANCIAL INSTRUMENTS Financial assets at amortised cost are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at financial asset s original effective interest rate. If, in a subsequent year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss, to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Farmer Business Developments plc 21 Annual Report 2016

24 Notes to the Financial Statements continued N) SHARE CAPITAL Ordinary Shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are taken as a deduction within equity, net of tax, from the proceeds. Preference Shares Preference shares that do not meet the definition of a financial liability are classified as equity. O) TREASURY SHARES Where the Company purchases its own equity share capital, the consideration paid is deducted from total shareholders equity and classified as treasury shares until such shares are cancelled or re-issued. Where such shares are subsequently sold or re-issued, any consideration received is included in total shareholders equity. P) INTEREST-BEARING LOANS AND BORROWINGS All interest-bearing loans and borrowings are initially recognised at fair value. After initial recognition debt is increased by the finance cost in respect of the reporting period and reduced by repayments made in the period. Q) CAPITAL INSTRUMENTS Equity instruments are included in shareholders funds. Other instruments, including convertible loan notes are included in liabilities at fair value and if they contain an obligation to transfer economic benefits. The finance cost recognised in the income statement in respect of capital instruments other than equity shares is allocated to periods over the term of the instrument at a constant rate on the carrying amount. 2 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group s accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Critical judgements in applying the Group s accounting policies The following are the critical judgements, that the Directors have made in the process of applying the Group s accounting policies and that have the most significant effect on the amounts recognised in the financial statements. Following the acquisition of FBD Hotels and Resorts group on 23 October 2015 hotel assets, resorts and investment properties were initially included in the Balance Sheet at fair value. The fair value of these properties is determined by valuations conducted by management and supported by external professional valuers as required. The carrying value of inventory acquired as part of the acquisition is valued at its fair value, otherwise value of inventory is recorded at the lower of cost or estimated selling price. The land held for long term capital appreciation was valued at its fair value within investment property. Subsequent to this date only investment properties are recorded at fair value. Financial instruments are measured subsequent to initial recognition at fair value and grouped into Level 1 to 3 based on the degree to which fair value is observable. Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data. Farmer Business Developments plc 22 Annual Report 2016