Minutes of the 31st Ordinary General Meeting held at Le Friquet on 11 June 2014 at 11.30 am
|There were 25 members present as per the register and in attendance was Mr Richard Jackson (BDO Ltd). Mr Warr and Mr Woodhead also attended as proxies.|
|Mr G Dorey was elected to the chair.|
|Apologies had been received from Mr P Atkinson, Mr P Fairclough, Miss P Merriman, Mrs F Dorey and Mrs S Martin.|
The notice convening the meeting was taken as read.
The Chairman presented Mr A Duquemin, who resigned from the Board in March 2014 after 17 years' service, with a gift in recognition of the contribution he had made to the success and development of the Company.
|The minutes of the Ordinary General Meeting held on 7 June 2013 were read, approved and signed.|
Report and Accounts
The Chairman described the opening of the redeveloped Redfields Garden Centre as the highlight of the year, a year that had once again been affected by unfavourable weather conditions, but one in which the Company still delivered an acceptable financial performance.
Mr A Roper explained the increase of £600k in Head Office costs was the result of investment in group activities such as Buying, Retail Support, Finance, Marketing and HR, to support the expansion of the Company.
Mr Collingridge asked if Grosvenor Garden Centre makes £716k of profit, what is happening in the rest of the UK portfolio if the UK makes only £688k profit, as per note 25 to the financial statements.
Mr R Hemans explained that the UK centres made more than twice the profit of the CI centres before group costs. He acknowledged that note 25 was not helpful enough and would ensure that it was more relevant and clear in the 2014 Annual Report. The strange numbers in note 25 were the result of intercompany charges and recharges of rent, interest and management costs between the UK and Guernsey, and these would be re-presented next year.
Mr A Roper explained that UK law allowed the Company to reduce its overall UK tax liability by charging rent to the UK Freehold Centres owned in Guernsey.
Mr A Duquemin asked about the move in property valuations. Mr R Hemans explained that broadly St Peter's Garden Centre increased by £2 million and Le Friquet Garden Centre decreased by £1 million.
Mr A Duquemin noted the increase in the dividend and asked what the Board's dividend policy was going forwards. Mr G Dorey explained that given the good start to the 2014 season and taking account of the Company's cash flow requirements, the Board had decided to increase the dividend. If the Company achieves its current financial projections for 2014 there should be scope to increase the 2014 dividend.
Mr R Brache asked if the minutes could be issued earlier than a year from the date of the last meeting and the Board committed to sending these within one month of the AGM. Mr R Brache asked about the appointment of a Retail Director. Mr A Roper explained that the Company had advertised and continues to advertise but that no suitable candidates have been found. Mr A Roper explained that the Group retails many categories such as ladies fashion, catering and gardening products, and to be credible in both non-Garden retailing and in Gardening requires a Retail Director with extensive multi-disciplinary experience. Mr A Roper explained that he had put forward an alternative that has been accepted by the Board, which is to appoint five senior personnel to cover category management, facilities and operations, and from those five individuals it is likely the Board will appoint a Retail Director.
In response to a question on succession planning, Mr A Roper recommended the Company should advertise if he was no longer in post. There would be several suitable candidates working for other profitable garden centre groups. The business was strong and the controls are in place to manage the business. The approach is to empower the garden centres and encourage them to take ownership of their performances within the boundaries of the Group's retail and financial standards. The Company has been successful in turning around both Grosvenor and Fryers from loss-making entities.
Mr R Brache asked about Olympus. Mr G Dorey explained that since the introduction of Sports Direct to the island Olympus has suffered although it did still make a profit before management charges in the year ending 31 December 2013. Olympus is not core to the business and the Board will look to wind the business down in the next few years to coincide with staff retirement and the length of the lease.
Mr D Warr asked what the Board's plan is for the next three to five years and what level of gearing it is prepared to accept.
Mr G Dorey explained the Board had agreed a gearing limit of 50% and would continue to grow turnover by acquiring more garden centres as the opportunities present themselves. There are currently many possibilities the Board is considering. Mr Dorey informed the meeting that the 2014 full year profit before tax forecast was £4.4m.
In response to Mr A Duquemin's question, Mr A Roper assured the meeting that there would be a Retail Director in place this time next year, whether appointed from within or without the Company.
Mr I Dorey asked why there was a reduction in the Company's tax charge. Mr R Hemans explained that it was the result of a lower UK tax rate, more generous capital allowances in the UK, the re-charge of Blue Diamond Ltd.'s costs against UK profits that had not happened previously and the agreement of the Guernsey tax office that intercompany rents should not be taxable.
The shareholders asked about the acquisition strategy of The Garden Centre Group (TGCG) and Mr A Roper explained that they would buy any Garden Centre. The Company's strategy is to focus on locations with a sizeable ABC1 demographic and centres that are capable of producing more than £3m of turnover.
Mr Geoff Mahy asked when the Company changed lawyers. Mr R Hemans said he could not answer, Collas Crill were the lawyers when he joined the Company.
The Report and Accounts were then approved and adopted.
|Mr R Jackson read a section of the Auditors Report, which was then approved.|
|A final ordinary dividend of 10p gross per share, as recommended by the Board, was approved.|
|Mr R Hemans and Sir John Collins were elected to the Board. Mr G Dorey was re-elected to the Board.|
It was recommended that there be no change in the non-executive directors' fee currently set at £15k p.a. This was approved.
Mr David Warr noted that the non-executive directors' remuneration was £104k according to the financial statements and Mr G Dorey confirmed this included his Chairman's fee of £60k p.a.
Mr D Warr asked the Board to take advice on the articles regarding the scope of member approval required in relation to directors' fees, namely whether it should extend to the Chairman and Executive Directors.
|BDO Limited were re-elected for 2014.|
Any Other Business
Mr D Warr, Mr R Brache and Mr A Duquemin raised concerns about the current restrictions relating to the transfer of shares and their suitability for a modern company. Mr G Dorey explained that the Board made decisions in relation to new shareholders taking into account the best interests of the Company. Mr G Dorey was not keen to open up trading in the shares to local stockbrokers without restriction because this could introduce unwanted shareholders. Mr G Dorey reminded the meeting that Blue Diamond was a private company and that the Board had never rejected anew shareholder. Any changes in the articles relating to the transfer of shares would also require his personal approval as a shareholder because a special resolution was necessary.
Mr A Duquemin raised concerns about the timing of information provided to shareholders and the implications this had for share dealing by directors. Mr G Dorey undertook to release the interim and final financial statements earlier and to provide more notice of the annual general meeting in future. There would also be formal guidance on director share dealing.
Mr G Martin asked for the trees on the drive-way to Le Friquet Garden Centre to be looked at as they were leaning after this year's snow fall.
Mr A Roper acknowledged and agreed to take action. Mr R Brache asked about the development plans for the old Le Friquet Garden Centre. Mr A Roper explained there was planning permission to build a Day care Centre and following the States approval of free pre-school education this would be actively pursued.
Mrs. Sue Lloyd asked about discount cards for shareholders. Mr A Roper and Mr R Hemans agreed this was affordable and would issue them shortly.
The Chairman declared the Meeting closed.