Minutes of the 32nd Ordinary General Meeting held at Le Friquet on 10 June 2015, 11.30 am
There were 40 members present as per the register.
Mr Geoff Dorey was elected to the chair. Mr Geoff Dorey welcomed the shareholders.
Apologies had been received from Mr P Fairclough, Mr M Wordsworth, Mrs I Matthews, Mr E Plummer, Mrs C Bellamy, Mrs P Warren, Mr P de Carteret, Mrs S Duquemin, Mr & Mrs I Dorey.
The notice convening the meeting was taken as read.
The minutes from the Ordinary General Meeting held on 11 June 2014 were approved.
Mr Alan Roper gave a presentation on the Group's performance in 2014 and the outlook.
Mr Alan Roper explained that Blue Diamond is the largest privately owned garden centre group in the UK, and the third largest after Dobbies and Wyevale.
We recognise that we are in a complex retail business and that in addition to horticulture we are also engaged in home, gardening, fashion and restaurants. For Blue Diamond to survive the Company needs to be good at all these areas. Mr Alan Roper has developed the 'Head' structure to address this that gives specialist people control over the buying, retail space, performance management and human resources in their areas. It aims to develop people with the right skill set and knowledge and to encourage and empower staff to have ownership in their roles.
Blue Diamond acquired Trelawney and Newbridge Garden Centres in December 2014 and January 2015 respectively, which were both family run businesses. Blue Diamond bought both businesses despite higher bids from Wyevale. The reason for this is many vendors respect the culture and values of Blue Diamond, which ensures the protection of their legacies.
Our redeveloped Redfields store has been greeted positively by customers, employees and the industry, and will be used as a template for existing and future garden centres and restaurants in the same way that Trentham was eleven years ago.
2014 was a great year that delivered record profits. In 2015 we are also performing well and are currently ahead of expectations to the end of May, which we expect to continue into June when the gardening season closes. We have a great new product range coming from the USA for Christmas.
Mr D Warr congratulated Mr Alan Roper and all Blue Diamond staff for a successful and positive year and asked what the strategy is for the future, the size of the Group and the level of gearing that will entail.
Mr Alan Roper explained that the Company has lots of opportunities within the existing estate for growth. Fermoys Garden Centre will be extended and there is the opportunity to develop the greenfield Probus site near Truro within the next two years. Mr Alan Roper also added that there is redevelopment plans for Festival Garden Centre at the end of 2015.
There are also plans to build an extension at Newbridge Garden Centre. The Board plans to maintain the gearing level at 50% or below but will flex that limit if a robust opportunity comes along. Any breach will always require Board approval and the expectation is that it will come down to less than 50% by the end of the financial year. The growth plan will potentially allow us to reach a turnover of £200 million and 30 centres within the next ten years.
Mr R Brache asked why after a recent visit to Redfields there is no mention of shoplifters there, like there is at Le Friquet, and wondered if this is just a problem at Le Friquet. Also, Treetops Restaurant at Redfields is excellent because it reduces the noise level from children, which is a problem at Le Friquet.
Mr Alan Roper confirmed that there had been problems with shrinkage at Le Friquet but that it is measured and is being addressed by improved security.
Mr Alan Roper explained that Redfields gave him the opportunity to create two different restaurant experiences through Treetops and Café Theatre. At Le Friquet this was not possible but going forward this will be looked at.
Mr R Dorey asked that with ambitious plans in such a competitive landscape how this will change the company and what effect it will have.
Mr Alan Roper explained that Terra Firma/Wyevale is buying everything it can and it could reach £500 million turnover within the year with the mooted acquisition of Dobbies. There are more retailers expanding into gardening, for example Next is targeting the younger gardener, and there is always Home Base and B&Q. The market remains relatively fragmented, however, consisting of large specialist groups, multiple retailers and independents.
The success of Blue Diamond is that we are a group that thinks and acts like an independent garden centre. We offer the customer a point of difference and innovation, and we are always focused on the AB customer demographic.
A question was asked if it was possible to enclose the children's play area at Le Friquet with clear glass as it is very noisy, which would still allow children and their parents to see each other but will also help with noise.
Mr Alan Roper explained that he does not want the play area to be like a prison or greenhouse if enclosed. He acknowledged that the area was not perfect and agreed to review.
Report and Accounts
The Chairman stated that 2014 had been a good year and that he was proud to leave the Company at such a high point and also in such good hands.
The Annual Report & Accounts and the Report of the Auditors were approved.
Mr T Carey asked about the long term incentive plan for the Executives, what percentage would this equate to if all targets were achieved and what the pay-out would be. He recognised it was very important.
Mr Richard Hemans explained that it was developed by the Board and Non-Executives to retain, motivate and incentivise the Executive, and to align them more with shareholders. There were tough targets in place over a three year period relating to turnover, return on capital employed, net asset value and gearing. The scheme would pay out at the end of three years in April 2018 and the amount would depend on the level of achievement. The maximum pay-out would be around £1m but the performance would have to be extraordinary, and it is likely to be far less than that.
Sir John Collins explained that it is a fair process and he would hope that it would be extended to more people which will incentivise.
In response to a question regarding payments Mr Richard Hemans advised that payments would be received in cash, but there is an expectation that the Executives will use 30% of the proceeds to buy shares in the Company.
The Board proposed an increased final dividend of 12p gross per share compared to the previous 10p per share, which was approved.
Mr Geoff Dorey introduced the new non-executive director, Mr Simon Burke. Mr Simon Burke outlined his career to date which has been spent in specialty retailing and has included appointments as Chairman and Chief Executive of Virgin Entertainment, Hamleys, Majestic Wine and Bathstore. Mr Simon Burke recognised that Blue Diamond is an excellent Company that has a bright future and was proud to have been put forward as the first non-Guernsey, non-Dorey Chairman of the Company. Mr Simon Burke was elected to the Board. Mr Peter Atkinson was re-elected to the Board.
Mr Simon Burke's remuneration as Chairman was agreed at £100,000 pa.
It was agreed to adjust the non-executive remuneration to £24,000 pa.
BDO were re-elected for 2015.
Special Resolution Amendment and Restatement of Company Articles to Comply with Guernsey law
Mr D Warr raised the issue of why shares had to be offered first to directors, which he considered unfair particularly when the directors have the best knowledge of the performance of the Company. The revised articles were an opportunity to address this.
Sir John Collins explained that Board is conscious of this view however things are working well and believes there is no need to make any changes. No shareholder wanting to buy shares has been prevented from doing so. The directors do not buy shares during the close period, which is two months before the publication of the interim and annual reports. The Board's preference is that the Company remains private and the Board wishes to keep the controls over the share register it currently has.
Mr D Warr replied that he disagreed and felt it was a missed opportunity.
Mr A Duquemin asked if the Board planned to issue any equity and if so would the new shares be offered to existing shareholders first. Sir John Collins confirmed there were no current plans to issue any additional equity but if the Board should decide to do so it would be offered to existing shareholders first.
The special resolution to amend and restate the Company's articles was approved.
Any Other Business
Miss P Merriman asked if the Board might introduce the right to allocate a small proportion of shares for sale to potential shareholders.
The Chairman explained that there is a list of interested parties that wish to become shareholders and the Board turns to this list if existing shareholders do not wish to buy the shares that are for sale.
Mr G Martin thanked the Board for the success of the shareholders' discount card and observed that in the Channel Islands the Company needed to remember that there was a static customer base and the needs to of the Islands' customers must be remembered.
Miss C Cariou asked about the Company's online strategy. Mr Simon Burke explained that any modern retailer needs to have an online presence. This is a priority and will be discussed shortly by the Board.
Mr C Worsley congratulated the Board on an excellent financial performance.
Mr Peter Atkinson on behalf of the Board and members thanked the Chairman for his service to the Company for over 50 years.
The Chairman thanked Mr Peter Atkinson for his kind words.
The Chairman declared the meeting closed.