Measures allow Blue Diamond Group to gain ‘breathing space’
DECISIVE action by the Guernsey-headquartered Blue Diamond Group has secured ‘breathing space’ for the garden centre operator to chart recovery after Covid-19 hit trading.
Measures to mitigate the impact included development of an online and home delivery operation in lockdown that netted nearly £9m. of sales – excluding VAT – during lockdown.
Other action included a large number of employees being furloughed, although colleagues had to be recalled to meet demand such was the success of the home delivery operation.
The purchase of remaining shares in one centre was deferred until 2021 along with bonuses. Blue Diamond has been in talks with landlords to achieve ‘viable’ levels of rent for periods of closure and reduced trade.
An additional facility was also negotiated with its bank until the end of 2020.
Blue Diamond chairman Simon Burke, writing in the group’s latest annual report, hailed his colleagues and the leadership of managing director Alan Roper in dealing with the situation.
‘There is no doubt in my mind that these actions saved Blue Diamond from a very serious financial problem,’ he said.
‘Although we had support from our bank, we would have faced cash shortages over the summer and autumn, and unsustainably high levels of debt. To address this would have needed radical measures, taken at a time of maximum weakness and therefore damaging to shareholder value.
‘As it is, we can continue as a going concern, and have gained breathing space to recover the trading position and to plan in a measured fashion for any financial actions that will be needed to repair our balance sheet.
‘We also have the positive legacy of a working online retail business and a greatly expanded website, which will bring further opportunity in coming years.’
He acknowledged that the coming months would be ‘challenging’ but was upbeat about the future, with the group having performed ‘very strongly’ prior to the advent of Covid-19.
‘Debt reduction and a strong capital base will be our priority, and so cash conservation will be a key theme for some time to come.
‘What we have seen, however, is the resilience of the Blue Diamond business in the face of a very severe shock, its ability to draw customers even in a difficult environment, and the energy and enterprise of the team to respond creatively to the challenges they have faced.
‘These factors give me confidence that we will weather whatever lies in store for us and do what it takes to ensure that Blue Diamond will come out the other end strong and prosperous once more.’
The directors’ report for the year ended 31 December 2019 echoed this upbeat assessment.
‘The board has reviewed a number of scenarios including what it considers to be the worst case of double-digit like for-like sales declines against 2019 in 2020 and 2021, along with the additional actions that it could take to mitigate the impact including the sale of surplus land, a redundancy programme, significant cost reductions and the issue of new shares, and has concluded that the group remains a going concern.
‘Furthermore, the development of the group’s online and home delivery operation continues apace with expansion into our home, fashion and Christmas products, and would provide further protection for the business that has not been factored into the worst case scenario.’
n Blue Diamond has struck a deal with the Royal Bank of Scotland International to amend its borrowing facilities.
Until 31 December, the term loan has been changed to interest payments only, with the revolving credit facility increased from £16m. to £24m. before reverting to £16m. thereafter and covenant testing postponed until 31 March 2021.
‘The group has given additional security to RBSI in the form of a legal mortgage over Bridgmere Nurseries and an additional bond of £4.2m. over Le Friquet Garden Centre,’ added its latest annual report.