Blue Diamond Group boss hits out at Jersey retail profit tax
GARDEN centre operator Blue Diamond, which is headquartered in Guernsey, has attacked a new retail profits tax in Jersey as a ‘discriminatory and retrograde levy’.
Chairman Simon Burke set out his concerns in the company’s annual report and consolidated financial statements covering 2018, warning that the tax would have an ‘adverse’ impact.
The Blue Diamond group’s Guernsey taxable profits are chargeable to income tax at the standard rate of 0% while its Jersey retail profits are taxable at 20%.
The current rate of UK corporation tax of 19% will reduce to 17% with effect from 1 April 2020.
‘By any standards, 2018 was a dramatic year for Blue Diamond.
‘Our biggest garden centre opening ever, the acquisition of nine centres from Wyevale, a share issue, a sale-and leaseback of Brambridge [garden centre], and extraordinary swings in the weather all played their part,’ said Mr Burke.
‘I am very pleased to report that we have navigated them with success.’
In his chairman’s report, Mr Burke said there had been a number of non-recurring items – such as a write-down related to an associated company in Jersey and reflected declining high street retail property values.
Therefore, underlying profit reflected more closely the performance of the core Blue Diamond estate during 2018 – which was £10.6m. before tax, an increase of 15%.
‘The picture on earnings per share is similar.
‘In addition to the factors above, earnings are also affected by £0.4m. of additional tax resulting from the new retail profits tax in Jersey.
‘This is a discriminatory and retrograde levy, targeting a sector which in general needs support, rather than undermining, from governments,’ he added.
‘It will surely have an adverse effect on investment in retail and the employment which that generates.
‘However, notwithstanding this, underlying earnings per share rose by 16% to 27p (without the Jersey tax they would have been 28p).
‘The reported earnings were 26p, including the various items listed above.
‘We are proposing a final dividend of 4.1p per share, bringing the total for 2018 to 5.9p, an increase of 5%.
‘The board considers this increase represents a fair balance between increasing returns to shareholders and meeting the investment needs of the business.’