Caravans and motorhome specialist Discover Leisure PLC (LON:DISL) said it needs to secure additional finance and is therefore pursuing a number of opportunities to secure the ongoing trade of the business.
In a business update, the group said turnover in the full-year to August 31 2011 dipped to £49.8 million from £52.3 million a year earlier, while the pretax loss narrowed to £1.5 millin from £1.8 million.
In April the company had predicted a challenging second half on the back of what it called “continuing recessionary conditions”.
UK sales of both tourers and motorhomes in the three months to August 2011 were below the similarly weak year-ago period.
Discover Leisure witnessed the usual seasonal uplift in trade in the second half and trading for the 12 months to August 31 was in line with expectations. “However, profits in the second half of the year have not been sufficient to offset the previous winter losses and therefore the finances of the business have come under increasing pressure,” it said.
With low season conditions already in place and the expectations of a continued difficult trading environment, the group will come under further significant pressure this autumn and into the winter.
The group has continued to benefit from its existing lending facilities, but the board recognises that it needs to secure additional finance and is therefore actively involved in pursuing a number of opportunities to secure the ongoing trade of the business.
Discover Leisure floated on AIM in May 2005. 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 a Company Voluntary Arrangement (CVA), refinancing of its banking facilities and closure of eleven of its trading sites.
The East Yorkshire headquartered group now has 5 branches employing 250 people across the north of England.
Shares in Discover Leisure were suspended from trading on AIM at 7.30am this morning.
This is at the company's request and is pending clarification of its financial position.
Following its announcement on Monday the Board has continued to vigorously pursue a number of opportunities to find additional finance to secure the on-going trade of the business.
Despite the extremely challenging trading conditions and financial environment, the Board says it has had some success in finding financial investors who have indicated an intention to invest additional capital or acquire certain assets of the company.
However, the Board now believes that it is increasingly unlikely that an acceptable solution to the funding issues which the Group faces can be secured in the necessary timeframe. Accordingly, the company has requested a suspension of the listing and trading of its shares with immediate effect.
In simple business financial terms it is possible to borrow funds for certain projects such as buying in new stock or expanding premises where future profits will repay the loan.
Lenders are not keen to lend money out to cover a cash shortage because a business is not generating enough profits to pay it's overheads.
Many business's are today using and abusing
Pre-Pack Administration Taking the good bits of their business forwards and leaving the debt behind!
Following the suspension of shares in Discover, KPMG have now been appointed joint administrators of Discover Leisure, around 250 staff face an uncertain future.
The administrators said they were seeking a sale of the business, but have closed it in the short term while they pursue offers.
A number of redundancies are anticipated and will be confirmed in the coming days.
In a statement, the administrators said: “The directors recently sought investment in an attempt to keep the business trading, however, their efforts proved unsuccessful.”
Visited one of thier outlets back in July at Chorley, could not help thinking that they had far to much stock of caravan's and motorhomes on hand, and only the brave manufacturers were still suplying them, or maybe it was all there own manufactured stock?. as there was quite a few brands not on display.
I was looking for FC's but they had none, no doubt the likes of Pennine had seen the light.
got our motor ome back from them yesterday . what a mess its in . nothing at all in the bathroom which is a big shower /toilet bathroom . bigger than normal . a new shower tray there but not fitted everything else stripped out . we have to sort it out ourselves. waiting for estimates from someone first . apperently the lads at discover darlington wanted to put it back together before they had to go but the bosses wouldnt let them
Quote: Originally posted by Francais on 22/10/2011
Visited one of thier outlets back in July at Chorley, could not help thinking that they had far to much stock of caravan's and motorhomes on hand, and only the brave manufacturers were still suplying them, or maybe it was all there own manufactured stock?. as there was quite a few brands not on display.
I was looking for FC's but they had none, no doubt the likes of Pennine had seen the light.
There is less than a 1/4 of the stock left on the forecourt now so looks like those that pre-ordered and paid have been getting their caravans still.