Notice of Annual General Meeting 

BLUE DIAMOND LIMITED ("Company") Registered No. 12307

Minutes of the 2017 Annual General Meeting of Blue Diamond Ltd held in the Fred Bell Lecture Theatre at Le Friquet Garden Centre, Guernsey on 15th June 2017

Simon Burke (SB) welcomed shareholders to the meeting and gave apologies for the absence of Mr Stuart Falla and Mrs Patricia Alford-Burnett. He then handed over to Alan Roper (AR) to make a presentation.

AR gave an overview of the Group’s profit growth between 2011 and 2016 in terms of the contribution from existing centres and acquisitions, offset by the increase in central costs. AR outlined that future significant profit growth would result from new centres rather than existing centres. Few owners were selling their garden centres because the last three years had been very profitable and Wyevale were no longer seeking acquisitions. AR said there were currently more opportunities in the redevelopment of existing garden centres and the development of greenfield sites. AR talked through the opportunities at Fermoys, Harlow, Coton Orchard, Newbridge, Bridgford, Wirral, Eleveden and Sheffield.

SB invited questions from shareholders.

Andrew Duquemin (AD) asked what the phasing and funding requirements of these new opportunities were. AR outlined their timing over the next four years and the expected cost of each project. SB confirmed the plans were within the Company’s funding ability.

AD commented that the potential sale and leaseback transaction at Fermoys was a new method of funding for the Company. SB confirmed it was a unique situation in the case of Fermoys and this formed part of the wider funding plan.

Richard Brache (RB) asked why Fryers Roses were not sold more widely around the Group and what the plans were Fryers Garden Centre. AR confirmed that the rose operation at Fryers had been lossmaking and the roses were in all our centres. AR said that a planning application would be made soon for Fryers in conjunction with a care home operator that had offered £2.3m for 1.3 acres of the 15 acre site.

Dave Warr (DW) asked if the Board planned to issue any more shares. SB said there were currently no plans to issue more shares because the Company did not need the funds but this would be kept under review.

DW commented that Dobbies was BD’s closest competitor and asked about the current state of the market. AR observed that BD is stable whilst many of its rivals are in a state of flux, such as Dobbies that is now owned by private equity and Wyevale that is going through major operational and financial problems. It seems there is a growing focus on the ABC1 customer segment but private equity owners fundamentally do not understand the garden centre business and this could lead to good-value acquisition opportunities in the future.

AD asked about the LTIP and whether it would be renewed upon expiry of the current plan in order to retain key management. John Collins (JC) said the Board was very focused on keeping talent and the LTIP would be renewed for the Executive and possibly extended to the wider senior management team.

John Collingridge (JCO) asked why dividends were paid gross and if this would continue, and why there had been a change of Guernsey legal advisors. Richard Hemans (RH) confirmed dividends were paid gross as a result of the exhaustion of the Company’s pre-2008 reserves that arose from Guernsey’s move to zero-10 and confirmed dividends would be paid gross in the future. RH explained there had been a change in legal advisors because of the evolving requirements of the Company, which became apparent during the new share issue process.

Piers Proctor (PP) asked if the ice rink at Le Friquet had increased footfall and would be repeated. AR replied that he was not enamoured of ‘sideshows’ but was in favour of the ice rink because it looked lovely at Le Friquet and was special for the island. There was an increase in footfall for the restaurant but not the garden centre.

AD asked what the Board’s policy was on nominee shareholders. RH replied that the Board knew the identity of the beneficial owners and SB confirmed the Board would not allow anonymous shareholders.

RB asked what the Board’s policy was on VAT-inclusive prices in the Channel Islands. AR replied it depended on the product and the Company needed to balance the price of products with the higher costs in the Islands, such as freight and wages. SB said this should be seen in the context of a pricing policy decision, which would be governed by the level of demand and competition in the market, and would be directly related to the need to make a return on the considerable investment made in Le Friquet and St. Peters. The Board’s primary duty is to shareholders so that the Company makes an acceptable return on its investment and the returns on Le Friquet did not indicate the centre was making supernormal profits. Indeed, any pricing would be controlled by the imperative to remain competitive.

DW asked if the Board was happy with the current process for buying and selling shares, particularly the amount of time shareholders had to express an interest and the first-come first-served basis. SB said the Board was happy and the share split was intended to improve liquidity as well enable employees to become shareholders. RH explained shareholders were given two weeks to respond to share offers and that shares were now allocated to purchasers in proportion to the number of shares they applied for, in the event the offer was oversubscribed. This improves fairness for all shareholders and makes it easier for the directors to buy shares, having removed their first refusal over shares in 2016.

Geoffrey Gavey (GG) asked if the Board was happy with the success of the share issue. SB said yes, 84% of the new shares had been sold, which was more than expected, raising nearly £4m and at a very low cost.

RB asked why more of the 72,104 unissued shares had not been sold at £10.50 when the latest share offer was oversubscribed. SB explained that the Company did not need the money, the Board wanted to give existing shareholders the opportunity to sell their shares and did not want to dilute existing shareholders unnecessarily. RH commented the share price may increase in the future, meaning the company could raise more money when it needed the funds. Several shareholders approved this cautious approach to issuing the new shares.

SB then asked shareholders to approve the formal resolutions:

(1) To approve the Share Split. This was approved.

(2) To re-elect Sir John Collins as a director. This was approved.

(3) To re-appoint BDO Limited as the Company's Auditor. This was approved.

(4) To authorise the Board to determine the remuneration of the Auditor. This was approved.

Any other business. None. SB declared 


By Order of the Board

For and on behalf of Richard Hemans Company Secretary