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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
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

case study discover leisure plc1
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

case study business restructuring actions
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

case study operational improvement actions
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