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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Discover Les. | LSE:DISL | London | Ordinary Share | GB00B19GK384 | ORD 0.70P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMDISL
RNS Number : 8706E
Discover Leisure PLC
14 April 2011
FOR RELEASE
14 April 2011
DISCOVER LEISURE PLC
("Discover Leisure" or "the Group")
INTERIM RESULTS FOR THE 6 MONTHS ENDED 27 FEBRUARY 2011
Discover Leisure plc (AIM:DISL), the specialist caravan, motor home and leisure industry retailer, today announces its interim results for the six months ended 27 February 2011.
Financial highlights
Hot Features
Premium
-- Revenue increased by 10% to GBP20.0 million (H1 2010:
GBP18.2 million)
-- Gross margins compressed to 11.0% (H1 2010 : 13.6%)
as competition increased with further tightening of
the market place and the need for dealers to clear
excess inventories
-- Administrative expenses reduced by 10% to GBP3.6 million
(H1 2010: GBP4.0 million)
-- Profit on sale of properties of GBP0.36 million (H1
2010: GBP0.2 million)
-- Loss after tax fell by 37% to GBP1.08 million (H1
2010: GBP1.72 million)
-- Loss per share reduced to 0.70p (H1 2010: loss 1.11p)
Operational highlights
-- Sale of remaining surplus freehold completed and one
further satellite property sold clearing the balance
on the original GBP5 million asset disposal loan.
GBP2.03 million received and used to pay down Group
loans
-- Overall net debt reduced by GBP0.9m during loss making
half year
-- Trading maintained within agreed banking facilities
Commenting on the interim results, David Morrow, Chairman of Discover Leisure plc, said:
"Having improved the operational health of the business in the second half of the 2010 financial year, the Group entered the seasonally quieter first half of the year with the aim of selectively increasing market share, reducing debt further and generating cash. Good progress has been made in these areas and this has led to further improvements in total revenue, reduced administrative costs and an improved bottom line.
"The Group's results in the first half were better than last year but were impacted nonetheless by continued recessionary conditions and pressure on margins. Whilst the stock pressure may be lessening, the second half year is expected to be equally challenging."
For further information contact: Discover Leisure plc David Morrow, Chairman 01430 803 385 Trevor Parker, Chief Executive Neil Harwood, Finance Director Panmure Gordon (UK) Limited 020 7459 3600 Andrew Godber Cubitt Consulting 020 7367 5100 Chris Lane / Alice Coubrough
Background Note
Discover Leisure is a leading specialist caravan and leisure industry retailer which floated on AIM in May 2005. Following the restructuring of the Group's activities, it is focused on the retailing of caravans and motor homes in the North of England. It also sells a range of outdoor leisure products from its branches and over the internet.
The Group has 5 branches across the North of England located at: Birtley (Tyneside), Delamere (Cheshire), Chorley (Lancashire), Darlington (County Durham) and York (Yorkshire). Its head office is situated in East Yorkshire.
The board consists of David Morrow, Chairman; Trevor Parker, Chief Executive; and Neil Harwood, Finance Director. The Non Executive Directors are Ian Currie and James Hayward.
Chairman and Chief Executive's Statement
Having improved the operational health of the business in the second half of the 2010 financial year, the Group entered the seasonally quieter first half of the year with the aim of selectively increasing market share, reducing debt further and generating cash. In total, this would then give the Group the platform to achieve a second, full year of performance improvement.
In spite of a fragile economy and a market still around its trough, good progress has been made in these areas and this has led to further improvements in total revenue, reduced administrative costs and an improved bottom line. At the same time, net debt has been reduced whilst continuing to trade within agreed banking facilities.
As predicted the weakened economy did damage consumer confidence in the final quarter of 2010. The impact of this on an overstocked UK leisure vehicle market, in the six months to February 2011, was to create much stiffer competition and significantly lower margins as the industry reduced inventory and generated cash.
Group Financial Results
The majority of the Group's revenue is generated between Easter and the end of August and therefore the trading results for the period ended 27 February 2011 includes all of the off-peak season.
Revenue in the period rose by 10% to GBP20.0m (H1 2010: GBP18.2m). The net loss from operations after exceptional items was reduced by 32% to GBP1.0m (H1 2010: GBP1.5m) with the net finance expense increasing by 10% reflecting increased inventory levels and fees.
The loss before taxation was 22% less at GBP1.49m (H1 2010: GBP1.92) and the loss after taxation was 37% lower at GBP1.08m (H1 2010: GBP1.72m).
Inventories at 27 February 2011 were 12% higher than last year at GBP15.7m and the trade and other payables of GBP16.1m were 18% higher than February 2010. The seasonal cash outflow in the six months was GBP1.2m compared with GBP1.3m in the same period last year.
Signlease Limited, the main trading company within the Group, continues to comply fully with the terms of its Company Voluntary Arrangement (CVA) with payments totaling GBP764,000 made to the Supervisor since the inception of the CVA in June 2009.
Your attention is drawn to the basis of preparation note (note 1 to the interim report). This provides details upon the going concern basis.
Dividend
The directors are not currently recommending the payment of a dividend.
The Market
Tourers
Since 2009, the National Caravan Council (NCC) has produced a more reliable measure of the scale of the new touring caravan market with a monthly report of the consolidated retail sales by the UK dealer network.
In the six months to 27 February 2011, retail sales of tourers fell slightly by 0.6% to 12,783 (H1 2010: 12,865). After a four month period of growth to September 2010, the market gains were cancelled out by a loss of consumer confidence in the final quarter of 2010 and demand remains flat compared with last year.
The UK tourer inventory, started this period 25% higher than the cyclically, low level of 2009 (source: Black Horse inventory report) and an inventory excess exerted a downward pressure on margins throughout the six months to February 2011. By the end of February 2011, however, UK inventory levels were more in line with the market at just 4% greater than the previous year and the prospect of improving margins was slowly emerging.
Motor Homes
On face value, the decline of the UK motor home market appears to have ended in the six months to February 2011. Total registrations in the period rose by 14.9% to 2,847 (H1 2010: 2,477) with four of the six months showing gains on the previous year.
Until the durability of this trend can be gauged in the high season, the Group remains cautious on inventory commitments for this, higher priced, sector. As with tourers, an industry excess of motor home inventories had to be liquidated for cash in the six months to February 2011 and this is likely to have caused a sales blip in the period.
Total UK Leisure Vehicle Market
The total leisure vehicle market grew by 1.9% in the six months to February 2011 compared to last year.
Although there are no hard facts available, the Group believes that the increase in VAT may have caused some customers to bring forward their vehicle orders in this period. If correct, there may be some negative impact on the size of the market in the high season.
September - February Change
--------------- ----------------------- -----------------------------
2010 2011
--------------- ----------- ---------- -----------------------------
Tourer retail
sales 12,865 12,783 - 0.6%
--------------- ----------- ---------- -----------------------------
Motor Home
regs 2,477 2,847 +14.9%
--------------- ----------- ---------- -----------------------------
Total 15,342 15,630 +1.9%
--------------- ----------- ---------- -----------------------------
Aftersales
In a weaker new vehicle market, the market for service and parts offers an opportunity to Discover, as owners tend to extend their ownership periods. The Group has identified two specific growth possibilities and is currently finalising plans for both extensions to the product range. In the interim, the focus on aftersales has already led to a 2% improvement in gross margin, a 12% reduction in costs and a 25% improvement in operating profits.
Operational Results
The Group's operational focus in the first half year has been on the acceleration of targeted income streams, further cost savings and the improvement of customer satisfaction levels.
Incremental sales opportunities have been identified in the markets for new and used tourers and aftersales service and parts. The tourer sales campaign was successfully launched at the NEC Caravan show in October 2010 and, in the six months to February 2011, the sales drive delivered a 22% increase in new unit sales, in a market that fell by 0.6%, and a 35% rise in used unit sales compared to last year. In the same period, profits from the sales of service and parts have increased by 25% after improving margins and reducing costs by 12%.
In the six months to February 2011, the Group's total like-for-like costs, including net finance expenses but excluding exceptional items decreased by GBP361,000 (8%).
The Group calls every sales and service customer after their dealership visit to gauge satisfaction. In the quarter to February 2011 the Group's average rating was 89% compared to 86% in the previous quarter.
In contrast to these advances, the Group's overall gross margin has suffered from the need to generate cash and the tougher vehicle sales competition induced by an excess of inventory across the sector. Margins on both tourer and motor home sales in the first half were lower than last year and, whilst those from the shop and service sales increased, the total gross profit was 11% less than last year.
In anticipation of a marginally increased demand in the 2011 market, vehicle inventories at 27 February 2011 were higher than the cyclical low point at the equivalent point last year. At the same time, the remaining orders for inventory have been reviewed and some cautious reductions made.
Property Disposals & Debt Reduction
As reported in November 2010, the sale of the last of the Group's seven surplus properties was completed on 11(th) November 2010 leaving a balance of GBP293,000 on the NatWest asset disposal loan.
This balance was then extinguished in February 2011 using part of the profit from the sale of a satellite property to the main dealership site in Darlington.
The latter was announced on 3(rd) February 2011 and the residual profit of GBP110,000 was repaid against the Group's GBP8m term loan with NatWest.
In the low season of the six months to February 2011, the gross proceeds from these sales of GBP2.03 million helped the Group to reduce its net debt by a total of GBP0.9 million.
Outlook
The predictions for only a modest growth in the UK economy in 2011 are proving to be accurate. Consumer confidence remains fragile and may well weaken again as the deficit cuts and the tax increases begin to bite from April.
The trend in the UK leisure market has shown some improvements relative to last year's low point but the recovery is patchy and the 2011 high season could be threatened by a further fall in confidence. For these reasons, it is difficult to predict the market's path in the six months to August 2011.
The Group is expecting the seasonal uplift in trade in the second half year. It is also possible that the Group's trading environment will benefit from the weakening of competitive dealers after three years of reduced demand. Nevertheless, it is still assumed that it will be another tough period for margins and cash. Steps have already been taken to improve both of these and this work will continue in order to be prepared for the next low season.
In parallel, we continue to assess our strategic options. Whilst there are obstacles still to overcome, opportunities to extend the product range and to add a new distribution channel are emerging and it is hoped that progress will be made in both of these areas during 2011.
The Group's results in the first half were better than last year, but were impacted nonetheless by continued recessionary conditions and pressure on margins. Whilst the stock pressure may be lessening, the second half year is expected to be equally challenging.
David Morrow Trevor Parker
Chairman Chief Executive
14 April 2011 14 April 2011
Unaudited Consolidated Statement of Comprehensive Income
Note
Six months Six months Year ended
to 27 February to 28 February 31 August
2011 2010 2010
GBP'000 GBP'000 GBP'000
Revenue 20,006 18,219 52,250
Cost of sales (17,799) (15,739) (44,751)
--------------- --------------- ----------
Gross profit 2,207 2,480 7,499
Total administrative
expenses (3,604) (4,010) (8,104)
Loss from operations
before exceptional
items (1,397) (1,530) (605)
Exceptional items
Restructuring costs - (127) (169)
Receivables provisions 26 (22) 16
Profit on disposal of
property 358 197 15
-------------------------- ---- --------------- --------------- ----------
Loss from operations (1,013) (1,482) (743)
Finance income 18 20 38
Finance costs (499) (456) (1,097)
--------------- --------------- ----------
Loss before tax (1,494) (1,918) (1,802)
Tax credit 2 414 200 252
Loss for the period (1,080) (1,718) (1,550)
Other comprehensive income - - -
Total comprehensive income
for the period (1,080) (1,718) (1,550)
--------------- --------------- ----------
Attributable to:
- Equity holders of the
parent (1,080) (1,718) (1,550)
--------------- --------------- ----------
Basic and diluted loss
per share 3 (0.70)p (1.11)p (1.00)p
--------------- --------------- ----------
Unaudited Consolidated Statement of Financial Position
27 February 28 February 31 August
Note 2011 2010 2010
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 9,951 9,951 9,951
Property, plant and equipment 9,306 9,942 9,717
Total non-current assets 19,257 19,893 19,668
----------- ----------- ---------
Current assets
Inventories 15,674 13,747 13,533
Trade and other receivables 599 1,218 1,240
Assets held for resale - 2,250 1,500
Cash and cash equivalents 10 11 19
Total current assets 16,283 17,226 16,292
----------- ----------- ---------
Total assets 35,540 37,119 35,960
----------- ----------- ---------
Current liabilities
Trade and other payables 16,105 13,563 14,022
Loans and borrowings 3,262 5,111 3,709
Provisions 331 477 292
Total current liabilities 19,698 19,151 18,023
----------- ----------- ---------
Non-current liabilities
Trade and other payables 223 299 257
Loans and borrowings 7,292 7,826 7,768
Provisions 697 835 788
Deferred tax liability 659 1,125 1,073
----------- ----------- ---------
Total non-current liabilities 8,871 10,085 9,886
----------- ----------- ---------
Total liabilities 28,569 29,236 27,909
----------- ----------- ---------
Total Net Assets 6,971 7,883 8,051
----------- ----------- ---------
Capital and reserves attributable
to equity holders of the Company
Share capital 1,085 1,085 1,085
Share premium reserve 22,266 22,266 22,266
Merger reserve 6,865 6,865 6,865
Retained earnings (23,245) (22,333) (22,165)
----------- ----------- ---------
Total Equity 6,971 7,883 8,051
----------- ----------- ---------
Unaudited Consolidated Statement of Cash Flows
27 February 28 February 31 August
2011 2010 2010
GBP'000 GBP'000 GBP'000
Operating activities
Loss for the period (1,080) (1,718) (1,550)
Adjusted for:
Depreciation 259 276 543
Finance income (18) (20) (38)
Finance cost 499 456 1,097
Taxation (414) (200) (252)
Profit on sale of property, plant
and equipment (365) (187) (15)
----------- ----------- ---------
Operating loss before changes
in working capital and provisions (1,119) (1,393) (215)
(Increase) in inventories (2,141) (2,593) (2,379)
Decrease in trade and other
receivables 641 321 299
Increase in trade and other payables 1,968 3,236 3,618
(Decrease) in provisions (52) (91) (386)
Net cash flows (outflow)/inflow
from operating activities (703) (520) 937
----------- ----------- ---------
Investing activities
Finance income received 18 20 38
Purchase of property, plant and
equipment (33) (14) (135)
Sale of property, plant and
equipment 2,050 2,314 2,982
Net cash generated from investing
activities 2,035 2,320 2,885
----------- ----------- ---------
Cash flows from financing activities
Finance expense paid (418) (381) (1,079)
Repayment of finance lease
creditors (135) (213) (375)
Repayment of loans (1,960) (2,540) (3,111)
Net cash used in financing activities (2,513) (3,134) (4,565)
Net decrease in cash and cash
equivalents (1,181) (1,334) (743)
----------- ----------- ---------
Opening cash and cash equivalents (1,492) (749) (749)
----------- ----------- ---------
Closing cash and cash equivalents (2,673) (2,083) (1,492)
----------- ----------- ---------
Unaudited Statement of Changes in Equity
Share
27 February Share premium Merger Retained
2011 capital account reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss for the
financial period - - - (1,080) (1,080)
Total comprehensive
income - - - (1,080) (1,080)
Opening shareholders'
funds 1,085 22,266 6,865 (22,165) 8,051
-------- -------- -------- --------- -------
Closing shareholders'
funds 1,085 22,266 6,865 (23,245) 6,971
-------- -------- -------- --------- -------
Share
28 February Share premium Merger Retained
2010 capital account reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss for the
financial period - - - (1,718) (1,718)
Total comprehensive
income - - - (1,718) (1,718)
Opening shareholders'
funds 1,085 22,266 6,865 (20,615) 9,601
-------- -------- -------- --------- -------
Closing shareholders'
funds 1,085 22,266 6,865 (22,333) 7,883
-------- -------- -------- --------- -------
Share
Share premium Merger Retained
31 August 2010 capital account reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss for the
financial period - - - (1,550) (1,550)
-------- -------- -------- --------- -------
Total comprehensive
income - - - (1,550) (1,550)
Opening shareholders'
funds 1,085 22,266 6,865 (20,615) 9,601
-------- -------- -------- --------- -------
Closing shareholders'
funds 1,085 22,266 6,865 (22,165) 8,051
-------- -------- -------- --------- -------
NOTES
1 Basis of preparation
The consolidated interim financial statements of the Group for the period ended 27 February 2011 are unaudited and do not comprise statutory accounts within the meaning of Section 435 of the Companies Act 2006.
The comparative figures for the financial year ended 31 August 2010 are not the Group's full statutory accounts for that year. Those accounts have been reported on by the Group's auditor and delivered to the Registrar of Companies. Their report was unqualified but did include an emphasis of matter paragraph but did not contain a statement under section 498 (2) (3) of the Companies Act 2006. The emphasis of matter paragraph is contained below:
"In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosures made in Note 1 to the financial statements concerning the Group's and the Company's ability to continue as a going concern. The following uncertainties exist:
-- The Group and Company are dependent on continuing support from their bankers in the form of term financing, overdrafts and various "inventory facilities". Although the directors believe that the banks will continue to support the Group and the Company, the overdrafts and "inventory facilities" are technically repayable on demand and as such this cannot be guaranteed.
-- Although the Directors are satisfied that the Group and Company has the ability to continue to trade within its current financing arrangements, they recognise that the current economic environment presents significant challenges. As explained in Note 1, the Directors recognise that future trading performance in the current economic environment is difficult to forecast with certainty and a period of underperformance against forecast would have a significant effect on cash flows and would adversely impact on the Group's ability to operate within existing facilities and the terms of the CVA.
Along with the other matters disclosed in Note 1 to the financial statements, these conditions indicate the existence of a material uncertainty which may cast significant doubt upon the Group's and Company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a going concern".
These interim financial statements have been prepared on a going concern basis.
The Group has certain banking and inventory facilities available to it. The overdraft is technically repayable on demand and the inventory facilities have a notice period of 90 days. Furthermore, the overdraft is to be formally reviewed at the end of June 2011 and the inventory facilities on a three month basis. These facilities have been revised in conjunction with its Bankers on a number of occasions since the major restructuring of the Group's finances in 2009. This has included additional temporary winter overdraft facilities, revised covenants, revision of capital repayment schedules and additional winter inventory facilities. These changes have been made in line with the requirements of the business over the last two years.
The funding requirements of the business are highly seasonal with the need to fund winter losses. Potentially significant movements in the working capital requirements of the business around inventory levels and its funding can materially alter this figure, either way. The current facilities should be adequate for the coming six months, during the cash positive months of the trading season. However, the funding requirements of the 2011/12 winter are highly dependant upon the trading performance of the Group both during the forthcoming season and the following out of season months. Current forecasts show that further funding may be needed during next winter. Continued economic uncertainty could materially change these forecasts and have a material impact upon the forecast funding requirements. The Group will therefore continue to update its forecasts and work with its funders to bridge any potential funding gap as and when appropriate. Furthermore, the directors, based upon their existing relationship with the funders and their support to the Group over the past two years, are confident that they will retain their support during this period.
In addition to this, the Board continues to pursue other more strategic options which will underpin the financial stability of the Group.
Given all of the above, there are material uncertainties that may cast significant doubt upon the Group's ability to continue as a going concern. Nevertheless, after making enquires, and considering all the current uncertainties, and the continued support of the Banks over the past two years, the directors have a reasonable expectation that the Group has adequate resources to continue trading for the foreseeable future. It is therefore appropriate to prepare the interim statements on a going concern basis. If this was not the case the interim statements would require adjustment and restatement to reflect that the going concern basis has no longer been applied.
2 Taxation
Due to the uncertainty of the timing of the recovery of deferred tax assets relating to taxable losses, the Directors are of the opinion that it is not appropriate to recognise any such assets in respect of any future utilisation of such amounts. The taxation credit within the statement of comprehensive income represents the reversal of the deferred tax liability arising on the revaluation of certain properties which were disposed of during the period.
3 Earnings per share
The calculation of the basic and diluted earnings per share is based on the loss for the period of GBP1,080,000 (six months to 28 February 2010: GBP(1,718,000)) and on the weighted average number of shares in the issue during the period of 155,010,000 (six months to 28 February 2010: 155,010,000).
4 Analysis of changes in net funds
At 31
August Cash Non cash At 27 February
2010 flows movements 2011
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 19 (9) - 10
Bank overdrafts (1,511) (1,172) - (2,683)
Cash and cash equivalents as
per the cash flow statement (1,492) (1,181) - (2,673)
Current liabilities - interest
bearing loans (1,989) 1,960 (471) (500)
Current liabilities - hire
purchase (209) 135 (5) (79)
Non current liabilities -
interest bearing loans (7,758) - 471 (7,287)
Non current liabilities - hire
purchase (10) 5 (5)
Net debt (11,458) 914 - (10,544)
-------- ------- ---------- --------------
5 Interim Report
A copy of this report will be available from the Registered Office of the Company at Monckton Court, South Newbald Road, North Newbald, East Yorkshire, YO43 4RW or can be obtained from the Company's corporate AIM Rule 26 website:
www.discover.co.uk/corporate/aim_rule_26.htm .
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGURPCUPGGAW
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