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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 |
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TIDMDISL
RNS Number : 6628D
Discover Leisure PLC
07 December 2009
FOR RELEASE
10.00 AM
7 DECEMBER 2009
DISCOVER LEISURE PLC
("Discover Leisure" or "the Group")
(The specialist caravan, motor home and leisure industry retailer)
Preliminary Results
for the year ended 31 August 2009
Highlights
+-------------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+-------------------------------------------+--------------+--------------+
| | GBP'000 | GBP'000 |
+-------------------------------------------+--------------+--------------+
| | | |
+-------------------------------------------+--------------+--------------+
| Revenue | 84,443 | 135,767 |
+-------------------------------------------+--------------+--------------+
| Gross profit | 6,299 | 17,422 |
+-------------------------------------------+--------------+--------------+
| Loss from operations | (15,147) | (1,863) |
+-------------------------------------------+--------------+--------------+
| Loss from operations before exceptional | (7,993) | (523) |
| items | | |
+-------------------------------------------+--------------+--------------+
| Loss before tax | (16,708) | (3,727) |
+-------------------------------------------+--------------+--------------+
| Basic loss per share | (11.21)p | (2.08)p |
+-------------------------------------------+--------------+--------------+
·Rapid decline in consumer demand in early 2009, gave rise to an overstocked
market, smaller margins and significantly reduced cash flows
·30% fall in market volumes, a 41% drop in overall gross margin, restructuring
costs of GBP3.3m and a GBP10.7m impairment of goodwill led to a substantial loss
for the year
·In response Group restructuring plan, including the proposal of a Company
Voluntary Agreement (CVA), was implemented on 29 May 2009, with encouraging
results
·CVA subsequently approved saving 260 jobs and reducing liabilities by GBP7.5m.
·60% of sales capacity retained at five of the largest freehold sites
·Annualised cost savings estimated at GBP6.4m, a 59% reduction, comparing the
pre-restructured with the current business
·Total inventories reduced by 73% in year to August 2009
·Year end debt subsequently reduced by a further GBP1.7m from the sale of
surplus properties
· Revised banking facilities signed in June 2009 and covenants reset in December
2009 to account for the full impact of the restructuring
· Trading remains tough but the rates of decline in the tourer market have
reduced in August 2009 and orders for the new 2010 models have been strong
+-------------------------------+-----------------------+--------------------------+
| Discover Leisure plc | Tel: 01430 803385 |
+-------------------------------+--------------------------------------------------+
| David Morrow, Chairman | |
+-------------------------------------------------------+--------------------------+
| Trevor Parker, Chief Executive | |
+-------------------------------------------------------+--------------------------+
| Neil Harwood, Finance Director | |
+-------------------------------------------------------+--------------------------+
| Panmure Gordon (UK) Limited | Tel: 020 7459 3600 |
+-------------------------------------------------------+--------------------------+
| Andrew Godber / Stuart Gledhill | |
+-------------------------------------------------------+--------------------------+
| Cubitt Consulting Limited | Tel: 020 7367 5100 |
+-------------------------------------------------------+--------------------------+
| Brian Coleman-Smith / James Verstringhe / | |
| Nicola Krafft | |
+-------------------------------+-----------------------+--------------------------+
Background Note
Discover Leisure is a leading specialist caravan, motor home and leisure
industry retailer which floated on AIM in May 2005. The Group's strategy is to
lead the consolidation and modernisation of caravan and motorhome retailing in
the UK, which also creates opportunities to sell outdoor leisure products from
its branches and over the internet.
In August 2005, Discover Leisure acquired the company which owned Harringtons
Caravans. On 8 September 2006, it acquired Leisure World, which owned four
caravan retail outlets, for GBP5.75 million, followed on 3 July 2007 by the
acquisition of Barrons Holdings, a leading retailer of caravans, motor homes and
associated accessories with seven retail branches across the country, for
GBP20.0 million. On the same date, Mendip Caravan Centre, which operates three
retail branches, was purchased for a total consideration of GBP2.2 million. On
12 March, 2008, Discover Leisure announced the acquisition of the motor homes
dealership based on a five acre site in Cannock in Staffordshire from the
Brownhills Group for GBP2.66 million.
With a rapid decline in the demand for leisure vehicles following the global
financial crisis in 2008, the Group undertook a major restructuring of the
business in 2009 including the proposal and subsequent approval of a Company
Voluntary Arrangement (CVA), refinancing of its banking facilities and closure
of eleven of its trading sites.
The Group now has 5 branches employing 260 people across the north of England.
The branches are 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,
Simon Dixon and James Hayward.
FOR RELEASE
10.00 AM
7 DECEMBER 2009
DISCOVER LEISURE PLC
("Discover Leisure" or "the Group")
Preliminary Results
for the year ended 31 August 2009
CHAIRMAN'S and CHIEF EXECUTIVE'S STATEMENT
Introduction
Discover Leisure announces its results for the year ended 31 August 2009
following the Group's restructuring programme.
During the early part of 2009, the UK economic downturn led to an accelerated
decline in the leisure vehicle market. Faced with huge financial pressures, the
Board implemented a bold and innovative strategy to secure the future of the
Group. To stabilise the business and reduce the level of inherent risk, a
restructuring plan was announced on 29 May 2009 with the objectives of producing
a leaner, well-funded business with less debt and lower, ongoing cash
requirements.
The plan, which included a Company Voluntary Arrangement ("CVA"), has been fully
implemented and good progress has been made in achieving all of the targeted
outcomes, which are set out below. The CVA gave rise to a gain of GBP7.5m.
Inevitably, the 2009 result reflects the combined impact of the very weak market
and the significant costs of restructuring. In the face of a 30% fall in the new
vehicle market, a 41% reduction in overall margin as excess inventories were
liquidated for cash, a restructuring cost of GBP3.3m, which included the cost of
closing eleven sites, and a GBP10.7m impairment of goodwill, the net outcome for
this changed situation was a substantial loss for the financial year.
Despite these disappointing results, the Board believes that the decision to
implement its strategy in the summer was the right one for the current and
future interests of its stakeholders. Whilst the market remains challenging,
significant reductions in costs, inventories and debt have been achieved and a
further reduction in debt has been brought forward by the quicker than expected
progress in the sale of the surplus freehold properties. Three sales are now
completed, one site has exchanged contracts and one other expects to exchange by
January 2010 with completion in the near future.
Financial Results
Revenue in the year ended 31 August 2009 was GBP84.4m (2008: GBP135.8m) and the
loss from operations was GBP15.1m (2008: GBP1.9m).
After adjusting for the exceptional and one-off items the loss from operations
was GBP8.0m (2008: GBP0.5m).
The loss before tax was GBP16.7m (2008: GBP3.7m).
Basic and diluted losses per share were 11.2p (2008: 2.1p).
For a fuller explanation of the results please see the Finance Director's
review.
Dividend
In the current circumstances, the Board does not intend to declare a dividend.
2009 Restructuring Plan
The Group's restructuring plan set out to simultaneously stabilise operations
whilst reducing the overall level of risk. Four key objectives were targeted and
the respective achievements are summarised below.
+---------------------+------------------------------------------------------+
| Objectives | Achievements |
+---------------------+------------------------------------------------------+
| 1.Enhanced | Retail outlets reduced from 16 to the 5 largest |
| prospects | freehold sites which collectively account for 60% of |
| for profitability | group turnover pre- restructuring and offer the |
| | largest growth opportunities. |
| | The annual cost base of the current business, based |
| | upon the results of September and October 2009, |
| | excluding exceptional costs and interest, and if |
| | maintained for the remainder of the coming year, are |
| | GBP6.4m less than the full year costs of the |
| | historic business for the year ended August 2009. |
| | This equates to a 59% reduction in the Group's cost |
| | base. Further reductions are predicted in the first |
| | quarter of 2010. |
+---------------------+------------------------------------------------------+
| 2.Stronger balance | The approval of the CVA allowed the remeasurement of |
| sheet | unsecured liabilities resulting in a gain of GBP7.5m |
| | and a corresponding reduction in liabilities. |
+---------------------+------------------------------------------------------+
| 3.Lower cash and | The total investment in inventories, trade |
| inventory funding | receivables and vehicle receivables was reduced by |
| | GBP32.3m (74%) in the year to August 2009. |
| needs | |
| | |
+---------------------+------------------------------------------------------+
| 4.Continued banking | Revised finance facilities were announced on 29 May |
| support | 2009 with both NatWest and the Bank of Scotland and |
| | were subsequently signed off in June 2009. |
+---------------------+------------------------------------------------------+
Three of the main components underpinning the plan were the CVA, the customer
care plan and the sale of seven freehold properties.
CVA
After considering every strategic option, the CVA was chosen because it offered
the best value for shareholders, banks, manufacturers, HMRC and suppliers whilst
saving 300 jobs and maintaining a service for customers.
The CVA was approved at a meeting of creditors on 15 June 2009 and no appeals
were lodged during the 28 day period in which a challenge could be made to the
relevant courts under the applicable insolvency regime.
Post CVA relations with manufacturers and suppliers were stabilised relatively
quickly with a comprehensive communication plan and we are grateful for their
support through a difficult time for the Group. As a result, operations were
returned to normality over a comparatively short time.
Customer Care Plan
To minimise the inconvenience to customers of the closed sites, a special task
force was created to deal with all pipeline orders and to resolve any concerns.
Property Sales
Good progress has been made in the disposal of the seven surplus sites. Two were
sold before the end of the financial year generating proceeds of GBP0.35m with a
third sale completed on 30 November realising a further GBP1.35m. The remaining
four properties have a total net book value of GBP3.0 million after impairment.
So far, all of the completed sales and the sales, for which contracts have been
exchanged, were agreed at prices in excess of their carrying value as at 31
August 2009.
The current status of the programme is summarised below:
+--------------------+--------------------------------------------------+
| Site | Status |
+--------------------+--------------------------------------------------+
| | |
+--------------------+--------------------------------------------------+
| Wrexham | Sale Completed |
+--------------------+--------------------------------------------------+
| Carlisle | Sale Completed |
+--------------------+--------------------------------------------------+
| Orpington | Sale Completed |
+--------------------+--------------------------------------------------+
| Portsmouth | Sold subject to planning, contracts exchanged |
+--------------------+--------------------------------------------------+
| Warrington | Interest being shown |
+--------------------+--------------------------------------------------+
| Weston | Interest being shown |
+--------------------+--------------------------------------------------+
| Herne Bay | Being marketed - residential planning being |
| | investigated |
+--------------------+--------------------------------------------------+
The Market
Discover Leisure operates within the UK caravan, motor home and camping
equipment sector (estimated to be worth GBP1.6 billion pa. prior to the
recession) and the UK outdoor clothing and equipment sector (estimated to be
worth GBP1.2 billion pa. prior to the recession).
As reported in the interim results on 29 May 2009, the precipitous falls in
credit and confidence during the six months to February 2009 had finally begun
to weaken this normally resilient market. Since then, the rates of decline in
the markets for new tourers and motor homes have reduced but annualised volumes,
as can be seen from the table below, remain well below 2008.
Change - 2009 versus 2008
+--------------+--------------------+---------------------+
| Period | New Tourers | New Motor Homes |
+--------------+--------------------+---------------------+
| | (sales to trade) | (registrations) |
+--------------+--------------------+---------------------+
| ½ year to | (39%) | (40%) |
| Feb. | | |
+--------------+--------------------+---------------------+
| Year to | (32%) | (25%) |
| August | | |
+--------------+--------------------+---------------------+
|Sept. & Oct. | (8%) | (24%)* |
+--------------+--------------------+---------------------+
* Source National Caravan Council (NCC). * October motor homes figures not
available - figure shown is for August and September
At the start of the downturn in the 2008, the fall in tourer volumes began ahead
of the reduction in motor homes sales but the low point in the cycle appears to
be approaching earlier in the tourer market where there are signs of a recovery.
The differing trends of tourer and motor home volumes are also being affected by
the shortage of motor home inventory as the manufacturers have cut back their
production rates and their commitment to buy chassis in a still uncertain
market.
Nationally, the levels of production and dealership inventories of tourers and
motor homes have reduced significantly during 2009 to the point where some
models, particularly the new 2010 vehicles, are in short supply. This has led to
a welcome increase in vehicle gross margins and, for tourers, an increase in
manufacturing output (September + October 2009 v 2008 +12% - source NCC).
The used vehicle market has been less hard hit as some buyers migrate to the
lower priced used sector. As an illustration, Group sales of used motor homes in
the year to August 2009 were down by 13% compared to sales of new motor homes,
which were down 31%.
Orders placed with the Group for new vehicles for the three months ending
November 2009 are as follows:
New Vehicle Orders
+-------------------+------------------+------------------+----------------+
| | Sep to Nov 2008 | Sep to Nov 2009 | Change |
+-------------------+------------------+------------------+----------------+
| | | | |
+-------------------+------------------+------------------+----------------+
| All New Vehicles | 455 | 439 | -4% |
+-------------------+------------------+------------------+----------------+
| New 2010 models | 62 | 313 | +405% |
| only | | | |
+-------------------+------------------+------------------+----------------+
Whilst overall volumes are slightly down, these should be viewed in the context
of the last year's heavy discounting for cash and that orders for the new 2010
models are well ahead of last year.
Operational Results and Plans
Results FY 2009
Faced with the UK's economic downturn in the first half of the financial year,
the initial phase of the Group's recovery strategy was aimed purely at survival
and the protection of stakeholder interests.
The clear target for the six months to August 2009 was to regain control by
reducing costs and inventories and by generating cash.
Substantial progress was achieved in all three areas.
Costs
The combined benefit of the restructuring plan and the on-going cost reduction
programme can be seen in the total cost saving achieved in the two months of
September and October 2009. Compared to the same period of 2008, the total
costs, excluding exceptional items and interest, were GBP1.57m, a reduction of
52%. If this cost base is maintained for the remainder of FY 2010 an annualised
cost saving of GBP6.4m pa will result, when compared with total costs for FY
2009.
Inventories
After a 30% fall in the size of the market and a potential 40% reduction in
total sales by the closure of the eleven dealerships, the Group set an objective
of reducing its investment in inventories and receivables (vehicle and trade) by
60% by 31 August 2009.
The results are shown below:
+-----------------------+-----------------------+
| | Investment Change |
| | Aug 2009 v Aug 2008 |
+-----------------------+-----------------------+
| Total inventories | (73%) |
+-----------------------+-----------------------+
| Trade & Vehicle | (74%) |
| receivables | |
+-----------------------+-----------------------+
| Total | (74%) |
+-----------------------+-----------------------+
Interest Costs
In parallel with the reduction in inventories and receivables, the Group's
interest costs have also been falling. In the two months of September and
October 2009, interest costs at GBP122,658 were 68% less than the same period of
2008. See the Finance Director's Report for more detail.
Cash
In the year to August 2009, the Group's working capital was reduced by GBP11.1m.
Plans and Actions FY 2010
The second phase of the Group's recovery plan will be to build increased
credibility with all stakeholders and create a stable platform for growth during
the year to August 2010.
The confidence of the Group's suppliers, staff, customers and investors was
understandably shaken by the events of the Group's final quarter to August 2009.
Nevertheless, with very few exceptions, all groups understood the reasons for
the change in strategy and offered their continued support. In response, the
Group began an initiative in September 2009 to further strengthen the confidence
amongst these crucial partners.
Supplier Confidence
Through a regular series of meetings, key suppliers have been kept informed of
the Group's operational and financial progress and of the plans for 2010.
Particular emphasis has been placed on vehicle manufacturers and those suppliers
who suffered losses through the CVA. Many of these groups have experienced
severe financial pressures of their own and have welcomed the opportunity to
begin rebuilding in partnership with Discover.
In preparing for the next season, plans for the supply of adequate volumes of
the new 2010 models have been agreed with the key vehicle manufacturers.
Staff Morale
During October and November 2009, the CEO met all of the 260 Discover employees
in groups of fifteen, in full day meetings, to thank them for their support,
discuss the effects of the major changes in 2009, identify the objectives of the
2010 recovery plan and emphasise the important roles that they all had to play.
Feedback from this series of meetings has been extremely positive.
Customer Goodwill
A special customer task force achieved excellent results in a difficult
situation during the closure of the sites and in the weeks following the
approval of the CVA on 15 June 2009. All customer concerns were logged and
resolved.
Stable Trading Platform
With cautious confidence beginning to return, the Group has also been able to
start the creation of a stable platform for growth.
· The programme of cost reductions has continued since August 2009 and further
savings are expected in the six months to February.
· Opportunities to maximise the seasonalisation of the cost base are being
explored.
· Excess inventories of accessories and 2009 motor homes from the closed sites
are being liquidated through special promotions
· Inventories of new models and accessories are been rebuilt using a stringent
and conservative system of inventory control.
Discover Team
During the last year, the Discover employees have once again demonstrated their
character and commitment to the company in response to the most trying of
conditions. We thank them all for their great support.
Outlook
The outlook for both the UK economy and the leisure vehicle market in 2010
remains uncertain. The economy is still in recession and the market for tourers
and motor homes has yet to turn upwards.
The six months to February 2010 cover the quieter half of this seasonal business
and so it will be the spring before the Group will be able to see a clearer
outlook for the new financial year.
In the interim, the Group will take the opportunity to further build its
credibility, strengthen its competitiveness and improve its financial results.
The clear intent is that the business will be well positioned to benefit from
any market growth that might materialise in the normally stronger six months to
August.
Results for the first two months of the new financial year are encouraging. The
unaudited results are ahead of both budget and the same period of 2008.
We look forward to a better 2010.
+--------------------------+---------------------+--------------------+
| David Morrow | | Trevor Parker |
+--------------------------+---------------------+--------------------+
| Chairman | | Chief Executive |
+--------------------------+---------------------+--------------------+
| Discover Leisure plc | | Discover Leisure |
| | | plc |
+--------------------------+---------------------+--------------------+
| 4 December 2009 | | 4 December 2009 |
+--------------------------+---------------------+--------------------+
FINANCE DIRECTOR'S REVIEW
Overview
The financial year began with the global financial crisis. The scale of this was
such that it led to a depressed market and an unprecedented decline in sales and
margins within the industry. In order to survive the impact of this, a major
restructuring of the business took place in the second half of the year. The
effect of this upon the business was huge and the balance sheet at the year end
now reflects the final outcome of this episode. The restructuring should enable
the Group to survive through continued difficult trading conditions until
volumes begin to pick up again.
In the first half of the year the Group set about its revised strategy which in
the short term included two key financial objectives.
The first was cash generation and minimising debt by a reduction in inventory
levels. In order to achieve this, and to continue to trade within its banking
facilities, the business had to discount heavily in order to convert inventory
into cash during a period when demand for leisure vehicles was at its weakest.
Whilst significant provisioning for inventory losses had been made at the
previous year end these proved to be insufficient and margins suffered.
The second objective was to reduce the Group's cost base in line with the new
market conditions and significant advances were made.
The main trading season of March to August began very slowly and it became
apparent to the Board that trading would not be sufficiently profitable to
compensate for the level of first half losses and the resultant debt that had
been built up. After careful consideration the Board therefore implemented a
three point restructuring plan:
* restructuring of the business by closure of ten of its branches which were loss
making in the current trading environment
* restructuring of its finance facilities in order to preserve cash flow and
provide sufficient funding to continue to trade during the downturn
* restructuring of the Group debt by a Company Voluntary Arrangement (CVA)
All three aspects were essential to the survival of the Group and it was
pleasing that all were concluded by mid June 2009. Both funders are now
committed to the Group which has sufficient headroom to be able to trade at
current levels for the medium term.
Results
Revenue in the year to August 2009 has decreased from GBP135.8 million in 2008
to GBP84.4 million. This reflects both the closure of 11 branches at various
points during the year and a fundamental decline in sales as consumer confidence
fell dramatically. In spite of heavy discounting, revenues were 29% lower than
last year on a like for like basis.
Gross profit in the year was GBP6.3m compared to GBP17.4m in the prior year and
the gross margin percentage declined from 12.8% to 7.5%. The cause of this
reduction was the need to discount vehicles heavily often at a significant loss.
Administrative expenses, after excluding exceptional and one-off items, reduced
to GBP14.3m in the year compared with GBP17.9m last year. This represents 16.9%
of revenue against 13.2% last year. This relative increase in expenses reflects
the fixed nature of many of the Group's costs and the resultant reduced "return"
on investment during this period of low revenue.
The Group made an operating loss before exceptional items, finances costs and
tax of GBP8.0m compared with GBP0.5m last year.
The results incorporate a number of exceptional costs associated with the events
of the year. These include an impairment charge in respect of goodwill of
GBP10.7m of which GBP4.3m relates to the sites that were closed during the year.
The balance relates to the lower profitability currently projected for the
retained branches. The Group also incurred other costs of GBP3.3m in total
relating to the restructuring. This includes the impairment of various property,
plant and equipment associated with the closed branches, the actual costs of
closing these branches, the costs of reducing staff numbers prior to the CVA,
various professional costs associated with the process including those incurred
as a result of the refinancing of the Group's banking facilities. The results
also include the financial impact of the CVA, which produced a gain of GBP7.5m -
see below for more detail.
The Group made an operating loss before finance costs and tax of GBP15.1m (2008:
GBP1.9m) and a loss after tax of GBP17.4m (2008: GBP3.2m).
Actions since the Year End
Even though the Group under went a major restructuring in the last financial
year, it continues to review all of its operations to ensure that they can be
justified in the current trading environment. In order to trade during the
summer and to effect the restructuring, a level of manpower had to be maintained
post the CVA. However, now that the changes have been made, the various
repercussions dealt with, and the quieter winter period approaches, further
reductions to the Group's headcount have been made. As a result staff numbers
have fallen from 308 at the end of August to a current level of 260 by way of
natural wastage and redundancies. The majority of the costs of these actions
will be incurred in the new financial year.
The business continues to work closely and positively with its funders to ensure
their continued support for the business. This includes re-setting parts of its
covenant suite with the NatWest bank to reflect the impact of the originally
unforeseen effects of the restructuring - see Funding section below.
Finance
Finance expense for the year ended 31 August 2009 may be summarised as follows:
+--------------------------------------------+--------------+-------------+
| | 2009 | 2008 |
+--------------------------------------------+--------------+-------------+
| | GBP'000 | GBP'000 |
+--------------------------------------------+--------------+-------------+
| | | |
+--------------------------------------------+--------------+-------------+
| Bank loans and overdrafts | 672 | 948 |
+--------------------------------------------+--------------+-------------+
| Inventory loans | 864 | 955 |
+--------------------------------------------+--------------+-------------+
| Other interest | 71 | 42 |
+--------------------------------------------+--------------+-------------+
| | __________ | __________ |
+--------------------------------------------+--------------+-------------+
| Total | 1,607 | 1,945 |
+--------------------------------------------+--------------+-------------+
| | __________ | __________ |
+--------------------------------------------+--------------+-------------+
| | | |
+--------------------------------------------+--------------+-------------+
Overall the finance expense has reduced in the year. This improvement arises
from a number of factors but mainly due to lower interest rates, particularly
from the second half of the year onwards. Bank base rates fell from 5.0% at 1
September 2008 to 0.5% in March of this year. LIBOR, has followed this trend
although lagging behind and Finance House Base rates have reduced by 5.0% to
1.5% during the year.
Whilst falling interest rates have had a positive impact upon the interest cost,
the revised facilities signed during the year added an average 2.75% to the
rates paid in comparison with those charged last year. In addition, average
inventory levels in the six months to February 2009 were higher than in the
previous year and the portion attracting interest charges was much higher due to
the increase in average inventory age.
In spite of the increased cost of finance, the interest expense should continue
to fall with lower inventory levels and as result of the proceeds of the
property realisation programme as outlined in the Chairman's and CEO report.
Taxation
The Group has a tax charge for the period of GBP662,000 on a loss of GBP16.7m.
This is due to releasing the deferred tax asset which arose principally from
taxable losses which can be used to offset against future profits. However,
these losses are no longer being recognised as a deferred tax asset as they may
not be utilised in the foreseeable future.
Net Borrowings
Net borrowings at 31 August 2009 and 31 August 2008 are summarised below:
+----------------------------------------------+------------+-------------+
| | 2009 | 2008 |
+----------------------------------------------+------------+-------------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+------------+-------------+
| | | |
+----------------------------------------------+------------+-------------+
| (Overdraft)/Cash at bank | (749) | (2,812) |
+----------------------------------------------+------------+-------------+
| Hire purchase borrowings | (548) | (1,043) |
+----------------------------------------------+------------+-------------+
| Term loans | (13,012) | (10,710) |
+----------------------------------------------+------------+-------------+
| Other loans | - | (55) |
+----------------------------------------------+------------+-------------+
| Inventory loans | - | (8,000) |
+----------------------------------------------+------------+-------------+
| | __________ | __________ |
+----------------------------------------------+------------+-------------+
| Net borrowings | (14,345) | (22,620) |
+----------------------------------------------+------------+-------------+
| | __________ | __________ |
+----------------------------------------------+------------+-------------+
| | | |
+----------------------------------------------+------------+-------------+
Net borrowings have decreased by 37% - GBP8.3 million in the period. However,
GBP8m of this reduction was achieved through conversion of an inventory loan
into inventory plans which are treated as trade payables. The other principal
elements of the net borrowings movement were:
* an operating cash outflow of GBP9.4 million as result of the losses incurred in
the year;
* net finance expense paid of GBP1.7 million;
* a reduction in the working capital of the business by GBP11.1m mainly due to
lower inventory levels reflecting the removal of the excess inventories and also
the reduced requirements of the condensed business post restructuring. This can
also be seen in a reduced level of receivables. The latter was also impacted by
the withdrawal from the decimated holiday home market, where sales were made on
credit;
* a much reduced investment in the property/plant/equipment of the business with a
total net inflow of GBP0.4m compared with an outflow of GBP0.6m last year. The
inflow reflects the beginning of the sale of freehold properties now surplus to
the group's requirements;
* repayment of finance lease creditors arising from the significant investment
made in the previous year; and
* whilst not affecting the overall net debt, GBP2.7m of the group's overdraft was
effectively converted into term loans.
At 31 August 2009, net debt represented 149% of shareholders' funds (31 August
2008: 85%). The Board continually monitors the borrowing requirements of the
Group and the interest rate risk and will continue to act accordingly in the
future.
Company Voluntary Arrangement (CVA)
The Company proposed a CVA which was approved by its creditors on 15 June 2009.
Full details of this can be found in Note 6 to this announcement.
Funding
The Group's main bankers, NatWest, agreed new facilities with the Group in June
of this year as part of the Group's restructuring plan.
These revised facilities include a term loan of GBP8m secured against the
freehold property relating to the retained sites, recently valued at GBP8.4m.
This loan is repayable over five years with the first repayments beginning in
October of 2010, thus helping cash flow in the first 18 months after the
restructuring. A second loan of GBP5m is secured against seven freehold
properties relating to closed sites and which were recently valued at GBP4.4m.
The net proceeds from the sale of these properties will be used to reduce this
loan as and when each property is sold. Two of the properties were sold
immediately prior to the year end and the remainder are at various stages in the
sale process. It is envisaged that a further three of the properties will be
sold in the coming year realising an estimated GBP3.3m. The remaining two are
likely to be longer term with planning consent required to maximise their full
value. The interest rate on this loan ratchets up with time and the balance of
the loan is repayable in May 2012. In the opinion of the Directors the property
disposal programme will generate sufficient funds to repay the loan in full
within its three year term. These two loans total GBP13m compared with the
previous loans of GBP10.3m and therefore we have effectively generated
additional funds of GBP2.7m compared with the previous loan facilities. These
monies were used to pay down the overdraft and at the same time the overdraft
facility was reduced from GBP6m to GBP3m.
The revised facilities agreed in June 2009 incorporated a suite of covenants
throughout the five year term of the facilities. These were based upon forecast
trading levels, expected costs of the retained business and the financial impact
of the restructuring. The latter was particularly difficult to predict and the
full impact only realised a number of months later following the completion of
the year end accounts. The resultant balance sheet had an impact upon two of the
four covenants and the Directors requested that these be reset well in advance
of any potential breaches occurring. A revised set of covenants were agreed on 4
December 2009.
Black Horse Ltd, part of the Lloyds Banking Group, has taken over as the Group's
inventory funders, following the integration of the Bank of Scotland into Lloyds
over the last year. They continue to support the Group by way of inventory
funding.
Your attention is drawn to the basis of preparation note (Note 1 of this
announcement) which provides further details upon the Group's funding.
Inventory
Inventory at the end of the year was GBP29.9m (73%) lower than the previous year
end. The excess inventories from the previous year have largely been addressed
and the Group is in a good position to begin to take the 2010 model inventory,
in a controlled manner, in anticipation of an improved selling season next
Spring. All parties within the industry, from manufacturers to inventory funders
to dealers are working together to match the supply of vehicles with demand, to
be able to react more quickly to changes in the market and to ensure that the
industry generally can run at lower average inventory levels in the future.
Management Reporting
We continue to strive for quality and timely reporting and accounting to be able
support the business at all levels, enabling it to react quickly to ensure that
profitability and cash flow are maximised.
Neil Harwood
Finance Director
Discover Leisure plc
4 December 2009
Consolidated Income Statement for the year ended 31 August 2009
+-------------------------------------+------+----------+-----------+
| | | 2009 | 2008 |
+-------------------------------------+------+----------+-----------+
| | Note | GBP000 | GBP000 |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Revenue | | 84,443 | 135,767 |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Cost of sales | | | |
+-------------------------------------+------+----------+-----------+
| Other | | (76,473) | (116,202) |
+-------------------------------------+------+----------+-----------+
| Inventory provisions | | (1,671) | (2,143) |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Total cost of sales | | (78,144) | (118,345) |
+-------------------------------------+------+----------+-----------+
| | | ______ | ______ |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Gross profit | | 6,299 | 17,422 |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Total administrative expenses | | (14,292) | (17,945) |
+-------------------------------------+------+----------+-----------+
| | | _______ | ______ |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Loss from operations before | | (7,993) | (523) |
| exceptional items | | | |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Exceptional items | | | |
+-------------------------------------+------+----------+-----------+
| Goodwill impairment | 4 | (10,664) | - |
+-------------------------------------+------+----------+-----------+
| Gain arising on Company | 6 | 7,487 | - |
| Voluntary Arrangement | | | |
+-------------------------------------+------+----------+-----------+
| Property, plant and equipment | | (1,363) | - |
| impairment | | | |
+-------------------------------------+------+----------+-----------+
| Restructuring costs | 3 | (1,920) | - |
+-------------------------------------+------+----------+-----------+
| Receivables provisions | | (371) | (1,098) |
+-------------------------------------+------+----------+-----------+
| Share-based payments | | (323) | (242) |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| | | ______ | ______ |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Loss from operations | 3 | (15,147) | (1,863) |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Finance costs | | (1,607) | (1,945) |
+-------------------------------------+------+----------+-----------+
| Finance income | | 46 | 81 |
+-------------------------------------+------+----------+-----------+
| | | ______ | ______ |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Loss before tax | | (16,708) | (3,727) |
+-------------------------------------+------+----------+-----------+
| | | ______ | ______ |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Tax (charge)/credit | | (662) | 504 |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Loss for the year | | (17,370) | (3,223) |
+-------------------------------------+------+----------+-----------+
| | | ______ | ______ |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Attributable to: | | | |
+-------------------------------------+------+----------+-----------+
| - Equity holders of the parent | | (17,370) | (3,223) |
+-------------------------------------+------+----------+-----------+
| | | ______ | ______ |
+-------------------------------------+------+----------+-----------+
| | | | |
+-------------------------------------+------+----------+-----------+
| Loss per share | | | |
| - Basic and diluted (pence) | 2 | (11.21)p | (2.08)p |
+-------------------------------------+------+----------+-----------+
| | | ______ | ______ |
+-------------------------------------+------+----------+-----------+
Consolidated Statement of Changes in Equity for the year ended 31 August 2009
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | | Share | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | Share | premium | Merger | Retained | | Minority | Total |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| 31 August | capital | account | reserve | earnings | Total | interest | equity |
| 2009 | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| Loss for the | - | - | - | (17,370) | (17,370) | - | (17,370) |
| year | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| Total | | | | | | | |
| recognised | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| income and | - | - | - | (17,370) | (17,370) | - | (17,370) |
| expense | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| Share-based | - | - | - | 323 | 323 | - | 323 |
| payments | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| Opening | 1,085 | 22,266 | 6,865 | (3,568) | 26,648 | - | 26,648 |
| | | | | | | | |
| shareholders' | | | | | | | |
| funds at 1 | | | | | | | |
| September | | | | | | | |
| 2008 | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| Closing | 1,085 | 22,266 | 6,865 | (20,615) | 9,601 | - | 9,601 |
| | | | | | | | |
| shareholders' | | | | | | | |
| funds at 31 | | | | | | | |
| August 2009 | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+---------------+---------+---------+---------+----------+----------+----------+----------+
| | | | | | | | |
+---------------+---------+---------+---------+----------+----------+----------+----------+
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | | Share | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | Share | premium | Merger | Retained | | Minority | Total |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| 31 August | capital | account | reserve | earnings | Total | interest | equity |
| 2008 | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| Loss for the | - | - | - | (3,223) | (3,223) | - | (3,223) |
| year | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| Total | | | | | | | |
| recognised | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| income and | - | - | - | (3,223) | (3,223) | - | (3,223) |
| expense | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| Share-based | - | - | - | 242 | 242 | - | 242 |
| payments | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| Other | - | - | - | (19) | (19) | 10 | (9) |
| movements | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| Opening | 1,085 | 22,266 | 6,865 | (568) | 29,648 | (10) | 29,638 |
| | | | | | | | |
| shareholders' | | | | | | | |
| funds at 1 | | | | | | | |
| September | | | | | | | |
| 2007 | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| Closing | 1,085 | 22,266 | 6,865 | (3,568) | 26,648 | - | 26,648 |
| | | | | | | | |
| shareholders' | | | | | | | |
| funds at 31 | | | | | | | |
| August 2008 | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | ______ | ______ | ______ | ______ | ______ | ______ | ______ |
+---------------+---------+---------+---------+----------+---------+----------+---------+
| | | | | | | | |
+---------------+---------+---------+---------+----------+---------+----------+---------+
Consolidated Balance Sheet at 31 August 2009
+------------------------------------------+--------+------------+----------+
| | | 2009 | 2008 |
+------------------------------------------+--------+------------+----------+
| | Note | GBP'000 | GBP'000 |
+------------------------------------------+--------+------------+----------+
| ASSETS | | | |
+------------------------------------------+--------+------------+----------+
| Non-current assets | | | |
+------------------------------------------+--------+------------+----------+
| Property, plant and equipment | | 11,588 | 17,134 |
+------------------------------------------+--------+------------+----------+
| Intangible assets | 4 | 9,951 | 20,615 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Total non-current assets | | 21,539 | 37,749 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Current Assets | | | |
+------------------------------------------+--------+------------+----------+
| Inventories | | 11,154 | 41,010 |
+------------------------------------------+--------+------------+----------+
| Trade and other receivables | | 1,539 | 4,504 |
+------------------------------------------+--------+------------+----------+
| Assets held for resale | 5 | 2,993 | - |
+------------------------------------------+--------+------------+----------+
| Cash and cash equivalents | | 11 | 64 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Total current assets | | 15,697 | 45,578 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Total assets | | 37,236 | 83,327 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| | | | |
+------------------------------------------+--------+------------+----------+
| LIABILITIES | | | |
+------------------------------------------+--------+------------+----------+
| Current liabilities | | | |
+------------------------------------------+--------+------------+----------+
| Trade and other payables | | 10,354 | 32,634 |
+------------------------------------------+--------+------------+----------+
| Loans and borrowings | 8 | 4,680 | 11,308 |
+------------------------------------------+--------+------------+----------+
| Provisions | 6 | 343 | - |
+------------------------------------------+--------+------------+----------+
| Current tax liabilities | | - | 698 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Total current liabilities | | 15,377 | 44,640 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Non-current liabilities | | | |
+------------------------------------------+--------+------------+----------+
| Trade and other payables | | 257 | - |
+------------------------------------------+--------+------------+----------+
| Loans and borrowings | 8 | 9,676 | 11,376 |
+------------------------------------------+--------+------------+----------+
| Provisions | 6 | 1,000 | - |
+------------------------------------------+--------+------------+----------+
| Deferred tax liability | | 1,325 | 663 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Total non-current liabilities | | 12,258 | 12,039 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| Total liabilities | | 27,635 | 56,679 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| TOTAL NET ASSETS | | 9,601 | 26,648 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| | | | |
+------------------------------------------+--------+------------+----------+
| Capital and reserves attributable to | | | |
| equity holders of the Company | | | |
| | | | |
+------------------------------------------+--------+------------+----------+
| Share capital | 9 | 1,085 | 1,085 |
+------------------------------------------+--------+------------+----------+
| Share premium reserve | | 22,266 | 22,266 |
+------------------------------------------+--------+------------+----------+
| Merger reserve | | 6,865 | 6,865 |
+------------------------------------------+--------+------------+----------+
| Retained earnings | | (20,615) | (3,568) |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
| TOTAL EQUITY | | 9,601 | 26,648 |
+------------------------------------------+--------+------------+----------+
| | | ________ | ________ |
+------------------------------------------+--------+------------+----------+
Consolidated Cash Flow Statement for the year ended 31 August 2009
+-------------------------------------------+--------+------------+----------+
| | | 2009 | 2008 |
+-------------------------------------------+--------+------------+----------+
| | | GBP'000 | GBP'000 |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Operating activities | | | |
+-------------------------------------------+--------+------------+----------+
| Loss for the period | | (17,370) | (3,223) |
+-------------------------------------------+--------+------------+----------+
| Adjustments for: | | | |
+-------------------------------------------+--------+------------+----------+
| Depreciation | | 942 | 928 |
+-------------------------------------------+--------+------------+----------+
| Impairment of property, plant and | | 1,363 | - |
| equipment | | | |
+-------------------------------------------+--------+------------+----------+
| Impairment of goodwill | | 10,664 | - |
+-------------------------------------------+--------+------------+----------+
| Gain arising from the CVA | | (7,487) | - |
+-------------------------------------------+--------+------------+----------+
| Finance income | | (46) | (81) |
+-------------------------------------------+--------+------------+----------+
| Finance cost | | 1,607 | 1,945 |
+-------------------------------------------+--------+------------+----------+
| Taxation | | 662 | (320) |
+-------------------------------------------+--------+------------+----------+
| Share-based payments | | 323 | 242 |
+-------------------------------------------+--------+------------+----------+
| Profit on sale of property, plant and | | (76) | (8) |
| equipment | | | |
+-------------------------------------------+--------+------------+----------+
| Profit on sale of business | | - | (19) |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| Operating loss before changes in working | | (9,418) | (536) |
| capital and provisions | | | |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Decrease in trade and other receivables | | 2,965 | 626 |
+-------------------------------------------+--------+------------+----------+
| Decrease/(increase) in inventories | | 29,856 | (7,831) |
+-------------------------------------------+--------+------------+----------+
| Decrease/(increase) in trade and other | | (23,095) | 2,287 |
| payables | | | |
+-------------------------------------------+--------+------------+----------+
| Increase in provisions | | 1,343 | - |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| Cash generated from/(absorbed by) | | 11,069 | (4,918) |
| operations | | | |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Corporation tax paid | | - | - |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| Cash in/(out) flows from operating | | 1,651 | (5,454) |
| activities carried forward | | | |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
Consolidated Cash Flow Statement for the year ended 31 August 2009 (Continued)
+-------------------------------------------+--------+------------+----------+
| | | 2009 | 2008 |
+-------------------------------------------+--------+------------+----------+
| | Note | GBP'000 | GBP'000 |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Cash in/(out) flows from operating | | 1,651 | (5,454) |
| activities brought forward | | | |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Investing activities | | | |
+-------------------------------------------+--------+------------+----------+
| Interest received | | 46 | 81 |
+-------------------------------------------+--------+------------+----------+
| Purchase of property, plant and | | (170) | (926) |
| equipment | | | |
+-------------------------------------------+--------+------------+----------+
| Sale of property, plant and equipment | | 547 | 350 |
+-------------------------------------------+--------+------------+----------+
| Disposal of business | | - | 19 |
+-------------------------------------------+--------+------------+----------+
| Acquisitions, net of overdraft/cash | | - | (2,659) |
| acquired | | | |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| Net cash generated/(used) in investing | | 423 | (3,135) |
| activities | | | |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Financing activities | | | |
+-------------------------------------------+--------+------------+----------+
| New loans | | 2,700 | 14,250 |
+-------------------------------------------+--------+------------+----------+
| Repayment of loans | | (453) | (10,019) |
+-------------------------------------------+--------+------------+----------+
| Repayment of finance lease creditors | | (512) | (194) |
+-------------------------------------------+--------+------------+----------+
| Interest paid | | (1,746) | (1,845) |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| | | (11) | 2,192 |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| Increase/(decrease) in cash and cash | 7 | 2,063 | (6,397) |
| equivalents | | | |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Opening cash and cash equivalents | 7 | (2,812) | 3,585 |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
| Closing cash and cash equivalents | 7 | (749) | (2,812) |
+-------------------------------------------+--------+------------+----------+
| | | _______ | _______ |
+-------------------------------------------+--------+------------+----------+
| | | | |
+-------------------------------------------+--------+------------+----------+
1. BASIS OF PREPARATION AND FINANCIAL INFORMATION
The financial information set out below does not constitute the company's
statutory accounts for the 31 August 2008 or 2009. Statutory accounts for the
years ended 31 August 2008 and 31 August 2009 have been reported on by the
Independent Auditors. The Independent Auditors' Report on the Annual Report and
Financial Statements for 2008 was unqualified, but did include an emphasis of
matter paragraph relating to uncertainties regarding the ability to trade within
current facilities, but did not contain a statement under 237(2) or 237(3) of
the Companies Act 1985. The Independent Auditors' Report on the Annual Report
and Financial Statements for 2009 was unqualified. However, it did include an
emphasis of matter paragraph detailed below, but did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the
year ended 31 August 2008 have been filed with the Registrar of Companies. The
statutory accounts for the year ended 31 August 2009 will be delivered to the
Registrar in due course.
Emphasis of Matter
"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. In this instance the Directors
believe that the additional profit generated from the Profit Improvement Plan
and other remedial action would provide sufficient additional cash flow to
compensate for such a trading downturn, however, this could also require the
renegotiation of banking facilities.
* The Directors have incorporated certain liabilities into the CVA which have not
yet been legally confirmed as being compromised under the terms of the CVA. In
the event that some or all of these liabilities become payable outside of the
CVA, then the Group and Company may not have sufficient funds to meet these
debts.
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."
The reason for the Group's losses are outlined in detail in the Chairman's and
Finance Director's report. In summary, the Group entered the year with excess
inventories following a disappointing trading season in the summer of 2008. In
the first month of the financial year, the global financial crisis had become
apparent and there was a significant fall in consumer confidence. With a very
uncertain outlook and a worsening trading environment, the Directors took action
to improve trading performance by cutting costs and generating funds through the
realisation of and reduction in the Group's inventories.
During this period it was recognised that the existing covenants incorporated
into the Group's banking facilities were clearly no longer suitable for purpose
and the Directors requested that these be revised. The principal bankers
commissioned an independent review of the Group's strategy and prospects and the
forecasts supporting this. This was concluded in December 2008 and the Bank
stated that they would continue to support the business within its existing
facilities but requested that the Directors plan and execute a process which
would ultimately lead to the refinancing in full of the Bank's indebtedness in
their desire to exit the sector. The Bank did recognise that in the prevailing
economic environment it would not be easy to achieve this objective but did
renew its existing facilities for a period of twelve months with revised
covenants which were then in line with the Group's business plan and forecasts
at the time.
The Group's inventories were financed by another funder through various
inventory facilities. This funder remained supportive allowing extended terms
for funding of inventory. However, in order to generate sufficient cash flow
during this period the business had to discount product heavily resulting in
material losses. The Group also took advantage of the Government scheme to help
spread its VAT liability which is traditionally highly seasonal.
All of these actions enabled the Group to operate within its then current
facilities in the short term. However, its ability to do this longer term was
dependant upon the trading performance during its spring/summer season beginning
in March 2009 ("the season"). Meanwhile the Directors continued to engage in
seeking alternative funding and other sources of funds such as property
realisation and continued to reduce costs further.
With the advent of the season it became apparent that the demand for leisure
vehicles would be poor and trading levels would be insufficient to improve the
finances of the business. A number of its branches were still loss making and
the inventory funders were restricting the use of the Group's inventory
facilities to sold vehicles, thus limiting the Group's ability to sell.
Discussions with its existing and potential new funders to extend facilities
available to the Group were unsuccessful.
The Directors had therefore to consider the options for the future and as a
result set about a three point plan
- Restructuring of the business by closure of a number of its loss making
branches
- Restructuring of its facilities with its bankers in order to preserve cash
flow
- The proposal of a Company Voluntary Arrangement (CVA)
All three were concluded by mid June 2009, which in the opinion of the
Directors, improved the balance sheet sufficiently to provide the Group with
enough headroom to continue to trade at current levels for the medium term. The
Bank had agreed revised loans and borrowings extended for up to five years.
The revised facilities agreed in June 2009 incorporated a suite of covenants
throughout the five year term of the facilities. These were based upon forecast
trading levels at the time, expected costs of the retained business and the
financial impact of the restructuring. The latter was particularly difficult to
predict and the full impact was only realised a number of months later following
the preparation of the accounts for the year ended 31 August 2009. The resultant
balance sheet had an impact upon two of the four covenants and the Directors
requested that these be reset well in advance of any potential breaches
occurring. A revised set of covenants were agreed on 4 December 2009.
As part of the CVA process, the Directors prepared detailed forecasts including
cash flow projections for the full five year term of the CVA in order to
demonstrate that there was a reasonable prospect of the CVA succeeding. These
projections have been updated recently for a period of 12 months from the date
of approval of these accounts and incorporate related income statements and
balance sheet projections. Consistent with any projections, the Directors have
had to make various key assumptions in their forecasts. Whilst economic
conditions and the consumer climate appear to be improving, albeit slowly, the
outlook still presents a challenge in terms of the levels of trading volumes and
again the Group is highly dependant upon the forthcoming season. The Directors
are satisfied that the latest forecasts are achievable and note that further
annualised cost savings of at least GBP400,000 have already been achieved as
part of a formal Profit Improvement Plan (PIP) which was endorsed by the Board
and whose progress is reviewed on a monthly basis. The impact of this plan has
not been included in the forecasts. Based upon these latest forecasts, the
Directors are satisfied that the Group has adequate resources to comply with its
existing banking arrangements. However, 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. In this instance, the Directors
believe that the additional profit generated from the PIP and other remedial
action would provide sufficient additional cash flow to compensate for such a
trading downturn. However, depending upon the level of underperformance, banking
facilities may also need to be renegotiated.
In addition, and consistent with prior years, the Group is dependant on the
continuing support of its bankers in the form of short term financing,
overdrafts and various inventory facilities. Although the Directors believe that
the Banks will continue to support the Group, the overdrafts and "inventory
facilities" are technically repayable on demand and as such this cannot be
guaranteed.
The accounts incorporate GBP9.3m of liabilities into the CVA. However, this
includes certain liabilities which have not yet been legally confirmed as being
compromised under the terms of the CVA. In the unlikely event that some or all
of these become payable outside of the CVA, then the Group may not have
sufficient funds to meet these debts.
Whilst the economic climate is not as uncertain as it was, the directors have
concluded that the current environment in which the Group is operating,
including compliance with the terms of the CVA over the next five years and the
circumstances outlined above, represent a material uncertainty that may cast
significant doubt upon the Group's and the Company's ability to continue as a
going concern. Nevertheless after making enquiries, and considering the
uncertainties described above, the directors have a reasonable expectation that
the Group and the Company have adequate resources to continue trading for the
foreseeable future. It is therefore appropriate to prepare the financial
statements on a going concern basis.
2 LOSS PER SHARE
Loss per share has been calculated by dividing the loss attributable to ordinary
shareholders of GBP17,370,000 (2008: GBP3,223,000) by the weighted average
number of shares in issue of 155,010,346
(2008: 155,010,346).
3 LOSS FROM OPERATIONS
+--------------------------------------+----------+------------+-----------+
| | | 2009 | 2008 |
+--------------------------------------+----------+------------+-----------+
| | | GBP'000 | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| This has been arrived at after | | | |
| charging/(crediting): | | | |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Staff costs | | 10,583 | 13,387 |
+--------------------------------------+----------+------------+-----------+
| Depreciation of property, plant and | | 942 | 928 |
| equipment | | | |
+--------------------------------------+----------+------------+-----------+
| Operating lease expense | | | |
+--------------------------------------+----------+------------+-----------+
| - Plant and equipment | | 50 | 63 |
+--------------------------------------+----------+------------+-----------+
| - Property | | 365 | 253 |
+--------------------------------------+----------+------------+-----------+
| Restructuring costs | | | |
+--------------------------------------+----------+------------+-----------+
| - Staff redundancy and termination | | 1,099 | 285 |
| costs | | | |
+--------------------------------------+----------+------------+-----------+
| - Professional fees | | 471 | - |
+--------------------------------------+----------+------------+-----------+
| - Branch closure costs | | 350 | - |
+--------------------------------------+----------+------------+-----------+
| Receivables provisions | | 371 | 1,098 |
+--------------------------------------+----------+------------+-----------+
| Inventory provisions | | 1,671 | 2,143 |
+--------------------------------------+----------+------------+-----------+
| Audit fees | | 50 | 72 |
+--------------------------------------+----------+------------+-----------+
| Audit fee under accrual previous | | 19 | - |
| years | | | |
+--------------------------------------+----------+------------+-----------+
| Fees paid to the Company's auditors | | | |
| for non-audit | | | |
+--------------------------------------+----------+------------+-----------+
| services provided to the Company | | 22 | 22 |
| and UK | | | |
| subsidiaries | | | |
+--------------------------------------+----------+------------+-----------+
| Profit on disposal of fixed assets | | (76) | (8) |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
4 GOODWILL AND IMPAIRMENT
+--------------------------------------+----------+------------+-----------+
| | | | Goodwill |
+--------------------------------------+----------+------------+-----------+
| | | | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| Cost or valuation | | | |
+--------------------------------------+----------+------------+-----------+
| As at 1 September 2007 | | | 19,800 |
+--------------------------------------+----------+------------+-----------+
| Acquired through business | | | 552 |
| combinations | | | |
+--------------------------------------+----------+------------+-----------+
| Fair vale adjustment on prior year | | | 263 |
| acquisitions | | | |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| At 31 August 2008 and 31 August 2009 | | | 20,615 |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Accumulated impairment charge | | | |
+--------------------------------------+----------+------------+-----------+
| As at 1 September 2007 and 31 August | | | - |
| 2008 | | | |
+--------------------------------------+----------+------------+-----------+
| Impairment charge in the year | | | (10,664) |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| At 31 August 2009 | | | (10,664) |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Net Book value | | | |
+--------------------------------------+----------+------------+-----------+
| At 31 August 2008 | | | 20,615 |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| At 31 August 2009 | | | 9,951 |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
Goodwill acquired in business combinations is allocated at acquisition to the
cash generating units ("CGU"), which are the individual sites within each
acquisition. Goodwill net of any impairment charge is allocated to each
acquisition as follows:
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| | | 2009 | 2008 |
+--------------------------------------+----------+------------+-----------+
| | | GBP'000 | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Leisure World (Holdings) Limited | | 1,255 | 3,671 |
+--------------------------------------+----------+------------+-----------+
| Barrons Holdings Limited | | 7,532 | 14,626 |
+--------------------------------------+----------+------------+-----------+
| Mendip Caravan Centre Limited | | - | 175 |
+--------------------------------------+----------+------------+-----------+
| Harrington Caravan Centre Limited | | 1,164 | 1,591 |
+--------------------------------------+----------+------------+-----------+
| Cannock | | - | 552 |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | 9,951 | 20,615 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
The recoverable amounts of the CGUs are determined from value in use
calculations, derived from the present value of future cash flows generated by
the CGUs. There are a number of assumptions and estimates involved in
calculating the present value of the future cash flows, including but not
restricted to the following:
* Growth rates applied to profit from operations used as the basis for the future
cash flows.
* Discount rate applied to the cash flows to calculate their present value.
Although the Directors are satisfied that the assumptions used are appropriate
to the current circumstances of the Group, changes to these key assumptions or
estimates could significantly affect the result of the impairment calculation.
Notwithstanding the requirement for an annual impairment review, there were a
number of impairment triggers in the year such as lower than budgeted
profitability and the Group reorganisation. The impairment charge of GBP10.7m
reflects both the closure of certain of the CGU's in the year and lower levels
of profitability currently projected for the retained branches.
The basis of the assumptions used is as follows:
* Management estimates discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks specific to the
business.
* The Group prepares pre-tax cash flow forecasts derived from the most recent
financial forecasts approved by the Directors for the next five years and
extrapolates cash flows for future periods. Where directors believe cash flows
for a CGU may decline in future periods, this is taken into account; otherwise,
a prudent view is taken and no growth is assumed for future periods.
* The rate used to discount the forecast pre-tax cash flows is 13.0% (2008: 11.0%)
and represents the Director's current best estimate of the weighted average cost
of capital ("WACC") and the risk factors specific to the individual CGU's.
* Sensitising the discount rate by 1% will result in a change to the impairment
charge of approximately GBP1m.
* The forecasts for the first five years use current budget profitability for year
one which have incorporated expected difficult trading conditions referred to in
these accounts. Thereafter a gradual return to previous historic levels of
profitability is forecast over the next four years for the retained business.
Thereafter no growth is forecast for the remaining twenty years.
* The Directors have apportioned goodwill upon the purchase of a business or group
between the various constituent CGU's according to average relative historic
profitability if that CGU relative to the performance of the business as a
whole. If a CGU has a history of loss making then no goodwill has been
apportioned to that CGU.
* A maximum period of twenty five years is used to assess whether discounted
future cash flows are at least equal to the value of goodwill. The Directors
believe this is a fair and prudent period to assess goodwill over due to the
historic longevity of businesses within this industry.
5 ASSETS HELD FOR RESALE
+--------------------------------------+----------+------------+-----------+
| | | 2009 | 2008 |
+--------------------------------------+----------+------------+-----------+
| | | GBP'000 | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Properties held for resale | | 2,993 | - |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
Assets for resale represent those properties, which are no longer traded from,
are for sale and which in the opinion of the Directors will be sold within one
year. They are valued at the lower of their fair value less costs to sell and
their carrying value. An impairment charge of GBP435,000 had been recognised
prior to the reclassification to assets held for resale
6 COMPANY VOLUNTARY ARRANGEMENT
On 29 May 2009, Signlease Ltd, the main trading subsidiary of the Group,
proposed a Company Voluntary Arrangement (CVA) to its creditors, which was
subsequently approved on 15 June 2009. A CVA is a formal procedure under the
Insolvency Act 1986, which enables a company to agree with its unsecured
creditors a composition in satisfaction of its debts or a scheme of arrangement
of its affairs which can determine how its debts should be paid and in what
proportions.
The proposal asked the following categories of creditors to compromise their
claims for payments
* HMRC in respect of VAT, PAYE and National Insurance and Corporation Tax
* unsecured trade creditors in respect of supplies of goods and services
* the agreed claims of the landlords of the closed sites in respect of rents and
certain contingent claims such as delapidations
* certain contingent liabilities such as finance commission debit backs in respect
of finance agreements arranged by Signlease Ltd on behalf of its customers
* the claims of employees made redundant as part of the sites closures immediately
prior to the approval of the CVA.
The CVA proposed that a total of GBP2,292,000 be paid into the CVA over the next
five years at the rate of GBP458,400 per annum. These payments will satisfy the
fees of the supervisor over that period and the net sums will be distributed to
the above categories in proportion to their agreed final debt.
The proposal was approved at a meeting of the creditors on 15 June 2009 and Mark
Firmin and Howard Smith of KPMG LLP were appointed the Supervisors to the
arrangement.
A number of modifications were proposed by HMRC and these can found on the
Group's corporate website -
http://www.discover.co.uk/corporate/notifications.htm. Your attention is drawn
to modifications 15 and 19. Both modifications provide for additional
contributions into the CVA in certain circumstances. However, at present the
Director's do not believe that future circumstances will be such that these will
result in further contributions and therefore no provision has been for any such
additional contributions.
The CVA results in a substantial modification of the terms of exiting financial
liabilities which results in a gain being recognised on re-measurement to fair
value in accordance with IAS 39. For other liabilities, these have been
re-measured in accordance with IAS 37 and IAS 12 as appropriate. The overall
gain on the CVA has been calculated by comparing the total debts compromised,
and deducting the fair value of amounts payable under the terms of the CVA to
arrive at the total gain.
The CVA has been accounted for as follows:
+--------------------------------------+----------+------------+-----------+
| | | | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Total debts compromised under the | | | 9,281 |
| CVA | | | |
+--------------------------------------+----------+------------+-----------+
| Fair value of amounts payable under | | | (1,794) |
| the terms of the CVA | | | |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| Gain arising on the CVA | | | 7,487 |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
The amount payable to the CVA at 31 August 2009 is calculated as follows:
+--------------------------------------+----------+------------+-----------+
| | | | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Total amount payable under the terms | | | 2,292 |
| of the CVA | | | |
+--------------------------------------+----------+------------+-----------+
| Fair value adjustment | | | (498) |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | 1,794 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Paid to CVA in the year | | | (102) |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Amount payable to the CVA at 31 | | | 1,692 |
| August 2009 | | | |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
The amount payable to the CVA at 31 August 2009 is disclosed as follows:
+--------------------------------------+----------+------------+-----------+
| | | | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Trade payables - Current | | | 92 |
+--------------------------------------+----------+------------+-----------+
| Provisions - Current | | | 257 |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| Total Current liabilities under the | | | 349 |
| CVA | | | |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Trade payables - Non current | | | 343 |
+--------------------------------------+----------+------------+-----------+
| Provisions - Non current | | | 1,000 |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| Total Non current liabilities under | | | 1,343 |
| the CVA | | | |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Total net payable to CVA at 31 | | | 1,692 |
| August 2009 | | | |
+--------------------------------------+----------+------------+-----------+
| | | | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
In the event that the Group defaults on the CVA, the full liability, comprised
within the arrangement, will become payable.
7 NOTES TO THE CASH FLOW STATEMENT
Cash and cash equivalents comprise:
+--------------------------------------+----------+------------+-----------+
| | | 2009 | 2008 |
+--------------------------------------+----------+------------+-----------+
| | | GBP'000 | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Cash available on demand | | 11 | 64 |
+--------------------------------------+----------+------------+-----------+
| Bank overdraft | | (760) | (2,876) |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | (749) | (2,812) |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Net (decrease)/increase in cash and | | 2,063 | (6,397) |
| cash equivalents | | | |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Cash and cash equivalents at | | (2,812) | 3,585 |
| beginning of year | | | |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Cash and cash equivalents at end of | | (749) | (2,812) |
| year | | | |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
Analysis of net debt:
+-------------------------------------+------------+------------+-----------+
| | 1 | Cashflow | 31 |
| | September | | August |
+-------------------------------------+------------+------------+-----------+
| | 2009 | | 2009 |
+-------------------------------------+------------+------------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------+------------+------------+-----------+
| | | | |
+-------------------------------------+------------+------------+-----------+
| Cash and cash equivalents | (2,812) | 2,063 | (749) |
+-------------------------------------+------------+------------+-----------+
| Bank Loans | (10,710) | (2,302) | (13,012) |
+-------------------------------------+------------+------------+-----------+
| Finance Leases | (1,043) | 459 | (584) |
+-------------------------------------+------------+------------+-----------+
| Other loans | (55) | 55 | - |
+-------------------------------------+------------+------------+-----------+
| Inventory loans | (8,000) | 8,000 | - |
+-------------------------------------+------------+------------+-----------+
| | _________ | _________ | _________ |
+-------------------------------------+------------+------------+-----------+
| | (22,620) | 8,275 | (14,345) |
+-------------------------------------+------------+------------+-----------+
| | _________ | _________ | _________ |
+-------------------------------------+------------+------------+-----------+
8 LOANS AND BORROWINGS
+--------------------------------------+----------+------------+-----------+
| | | 2009 | 2008 |
+--------------------------------------+----------+------------+-----------+
| | | GBP'000 | GBP'000 |
+--------------------------------------+----------+------------+-----------+
| Non-current | | | |
+--------------------------------------+----------+------------+-----------+
| Bank loans and overdrafts | | 9,436 | 10,550 |
+--------------------------------------+----------+------------+-----------+
| Finance lease obligations | | 240 | 826 |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | 9,676 | 11,376 |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Current | | | |
+--------------------------------------+----------+------------+-----------+
| Bank loans and overdrafts | | 4,336 | 3,091 |
+--------------------------------------+----------+------------+-----------+
| Finance lease obligations | | 344 | 217 |
+--------------------------------------+----------+------------+-----------+
| Other loans | | - | 8,000 |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | 4,680 | 11,308 |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
| Total borrowings | | 14,356 | 22,684 |
+--------------------------------------+----------+------------+-----------+
| | | _________ | _________ |
+--------------------------------------+----------+------------+-----------+
| | | | |
+--------------------------------------+----------+------------+-----------+
9 SHARE CAPITAL
+--------------------------------------------------+-----------+-----------+
| | 2009 | 2008 |
+--------------------------------------------------+-----------+-----------+
| | GBP'000 | GBP'000 |
+--------------------------------------------------+-----------+-----------+
| Authorised share capital: | | |
+--------------------------------------------------+-----------+-----------+
| 300,000,000 Ordinary shares of GBP0.007 each | 2,100 | 2,100 |
+--------------------------------------------------+-----------+-----------+
| 50,000 Redeemable shares of GBP1 each | 50 | 50 |
+--------------------------------------------------+-----------+-----------+
| | _______ | _______ |
+--------------------------------------------------+-----------+-----------+
| | 2,150 | 2,150 |
+--------------------------------------------------+-----------+-----------+
| | _______ | _______ |
+--------------------------------------------------+-----------+-----------+
Allotted, called up and fully paid share capital:
+-----------------------------+------------+----------+------------+---------+
| | 2009 | 2009 | 2008 | 2008 |
+-----------------------------+------------+----------+------------+---------+
| | '000 | GBP'000 | '000 | GBP'000 |
+-----------------------------+------------+----------+------------+---------+
| | | | | |
+-----------------------------+------------+----------+------------+---------+
| Ordinary shares of GBP0.007 | 155,010 | 1,085 | 155,010 | 1,085 |
| each | | | | |
+-----------------------------+------------+----------+------------+---------+
| | __________ | ______ | __________ | _____ |
+-----------------------------+------------+----------+------------+---------+
All shares have equal voting rights and there are no restrictions on the
distribution of dividends and repayment of capital.
10 EVENTS AFTER THE BALANCE SHEET DATE
On 4 December new inventory facilities were completed by the Group with Black
Horse Ltd, part of the Lloyds Banking Group, and await formal legal completion
by the other parties. These replaced those facilities previously held with Bank
of Scotland Dealer Finance, which has now been incorporated into Black Horse
Ltd. The terms are substantially the same.
On 30 November the sale of the Group's freehold property at Orpington was
completed realising a net GBP1,342,000. Under the terms of the facilities with
Nat West Bank, the proceeds will be used to reduce its second loan with the
Bank.
11 ANNUAL REPORT
The Annual Report will be posted to shareholders on or about the 14 December
2009.
12 ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 11:00 a.m. on 26 January
2010 at Monckton Court, South Newbald Road, North Newbald, East Yorkshire, YO43
4RW.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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