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Case Study – Discover Leisure PLC

Case Study – Discover Leisure PLC. 3 core objectives Improve under-lying profitability – ability to service debt Improve working capital management Reduce debt holders total exposure Set within a framework of control (impact on rest of the industry) and declining economy.

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Case Study – Discover Leisure PLC

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  1. Case Study – Discover Leisure PLC • 3 core objectives • Improve under-lying profitability – ability to service debt • Improve working capital management • Reduce debt holders total exposure • Set within a framework of control (impact on rest of the industry) and declining economy www.trevparker.co.uk

  2. Case Study – Discover Leisure PLC Position in Q4 2008 • Start of market collapse – volumes off 20% • TOTAL BANK DEBT £49m • £16m Senior Debt exposure v. property valuations of £10m - £6m exposure • £32m Stock funding including £8m with no recourse • £1m of HP financing, predominantly through Senior Debt provider • Operating from 17 sites – EBITDA FY 2008 £0.9m loss Position in Q4 2011 • TOTAL BANK DEBT £17m – debt reduced by 66%, debt serviced throughout (£3m) • £10m Senior Debt exposure v. property valuations of £7m - £3m exposure • £7m Stock funding including £3m with no recourse (but funding at 70% of cost) – no exposure • PE backed Offers to acquire the business – Banks chose administration • Operating from 6 sites – EBITDA 200k Summary – successful CONTROLLED WIND-DOWN www.trevparker.co.uk

  3. Case Study – Business Restructuring Actions • Business restructuring actions/achievements:- • Closure of 11 poor contributing operations and exiting the business from the South [industry capacity removed] • CVA – compromised £10m of debt for £2.5m (primarily HMRC), removed 4 leasehold liabilities – no Bank write-downs; • Disposal of 7 surplus properties – generating £6m of proceeds for senior debt • Improved stock turn from 2.8 to 4.2 - overall stock reduced from £41m to £10m www.trevparker.co.uk

  4. Case Study – Operational Improvement Actions • Operational improvements – Business re-engineering • Re-engineered business away from traditional department constraints removing £1.7m of costs (30% LFL); • Developed seasonal business structure – 15% of wage structure flexible • Installed a cost ownership with the business at all levels – reduced operating costs by £1.5m (32% LFL) •  Operational improvements – Business improvement • Business strategy focussed on growth and profit opportunities in service rather than commodities – LFL after-sales improved by 33% with margins improved by 17% to 46% • Built an own-brand retail insurance proposition from 0 to 2,500 customers in 12 months • Improved customer service rating to 89% and thereby reducing compensation costs by 29% and increasing market share (out-performed market by 3%) www.trevparker.co.uk

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