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Blue Diamond Garden Centres Reports Record Interim Profits

Bicester new signage

Blue Diamond Garden Centres has reported on half-year trading for the six months ended 30th June 2019.

Simon Burke, chairman, made the following statement in the company's reports:

"I am pleased to report strong trading figures for the first half of 2019 and on further
positive changes in the Blue Diamond business.

"Total sales increased by 57% to £86.7m whilst like for like sales (including East Bridgford)
were 12% ahead of 2018. UK like for like sales were up 13% and Channel Islands sales
were up 4%. The weather was generally benign, which helped this performance, but we
continue to outperform the GCA, both in total and across most of the major categories.
Gross margins strengthened in the period, driven in particular by improved restaurant
figures and new buying arrangements for furniture. Although we saw some increases in
overheads, and in interest payable on our enlarged debt, profit before tax increased by
56% to £7.6m. This includes an exceptional profit of £0.5m from the sale of surplus land
at Fryer's.

"Our net debt at the end of June was equivalent to one and a half times annual EBITDA,
against the Board’s ceiling of three times, and our gearing was 39%.

"Given the level of activity involved in the Wyevale acquisitions, and its potential to distract
from the core business, we are pleased to have achieved such a strong performance
from the existing Blue Diamond centres. Some of the larger stores, including Redfields,
Trentham and Grosvenor, did particularly well. East Bridgford is now trading like for like
and we are pleased with its progress.

"In the nine stores purchased from Wyevale last year, we saw overall sales growth of 37%
compared with their performance a year ago (under previous ownership). We have carried
out a diverse range of improvements to these stores, from full refurbishment to minor
layout changes. In Bicester and Nailsworth, where we did full refurbishments, we have
recorded sales increases of 55% and 27% respectively; but there has been significant
improvement in every store. Overall, we are very pleased with the performance of the nine
stores and they contributed a significant profit in the period.

"In July I wrote to tell you that we planned to acquire a further six stores from Wyevale,
with the possibility of one other. In the event we acquired all seven sites and they joined
the Blue Diamond family in September. Along with the six listed in my letter, we also
acquired the Bridgemere Garden Centre, a site with significant heritage which came with
a seventy-acre freehold nursery, from which we will be able to supply both mainstream
and exclusive plants to our own stores. The total outlay including stock was £10.3m, and
the most recent annual results from these stores showed turnover of £18.6m and EBITDA
of £2.6m. The acquisition was funded by a combination of additional debt facilities and
existing resources.

"We are now beginning the process of integrating these stores, making use of the learnings
from the first group of acquired centres. There are many opportunities to invest in these
stores, to expand their capacity or to make other improvements, and there remain many
good opportunities to invest in the previously existing Blue Diamond estate, in the earlier
Wyevale acquisitions, and in some promising green-field developments. These will
underpin our ability to continue growing the business into the medium term. For now,
however, the Board's priority is to reduce debt and create better headroom underneath
our targeted three times net debt to EBITDA ceiling. With this in mind we are proposing an
interim dividend of 2p per share, an increase of 11% on 2018.

"Since the end of the period we have seen good trading and we are confident in our
Christmas offer. We believe that we can bring substantial improvement to the latest group
of Wyevale stores, which will further grow profits. The continuing cloud on the horizon is
the unresolved Brexit position and the instability it is causing. I believe this is a significant
risk to our trading, in common with a great many other businesses.

"Finally, I am delighted to confirm that Tom Carey joined the Board at the end of September. 

Tom will be known to many of you as a prominent Guernsey advocate and partner in Carey Olsen, who have advised Blue Diamond on legal matters in recent years. I am very glad to welcome Tom to our Board."

Source : Blue Diamond Garden Centres

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11 October 2019

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