Cantillon: What a difference a year can make in a share price

Shares in housebuilder Abbey held up well on Thursday, despite the company reporting a 10 per cent drop in profits in the year to April and emphasising
continuing problems in the Irish and Czech property markets.

In fact, the shares held up so well as to rise, adding a cool 4.4 per cent in the hours after the numbers were issued. This saw them close at €8.74, the price they stayed at yesterday, meaning they have gained close to 40 per cent since the start of the year.

And while we’re on percentages, the company’s shares now stand some 65 per cent higher than the €5.30 level at which the main shareholder in the company, the Gallagher family, tried to buy the stock it did not own late last summer.

In the event, the offer was not received with enthusiasm, and Gallagher Holdings ended up with a 72.6 per cent stake, rather than the 90 per cent-plus it would have needed to take the company off the Dublin and London markets.

On Thursday, amid the Irish and Czech gloom, Abbey pointed to encouraging UK activity, saying it had completed most of its sales there. It is this aspect of the business that has presumably been powering the share performance in recent months, with official statistics showing that UK housebuilding is experiencing something of a revival, supported in part by government policies on house purchases.

In hindsight, it would have been excellent timing for the Gallaghers if they had
managed their take-private last year – perhaps less so for other shareholders.

During the offer period, the company’s independent directors, advised by Davy, observed that it was “not possible to give a firm recommendation” on the proposal because of “company-specific and macro factors”.

Again with the benefit of hindsight, perhaps the company's smaller
shareholders could, and should, have expected a better service.