Discover could return to the acquisition trail

The East Yorkshire firm was last year saved from collapse with a Company Voluntary Arrangement (CVA), after tumbling consumer confidence eroded sales.

It had to shut 11 sites and make hundreds of job cuts, but the deal saved the group from administration. However, unsecured creditors had to write off almost 80 per cent of the debt they were owed.

Now Discover, whose original stated intent was to lead consolidation in the caravan industry, is considering resuming acquisitions after setting the business on an even keel.

"We believe this is an excellent set of results in the circumstances," said chief executive Trevor Parker. "It's steady as she goes. We want to get this into profit and move on from there.

"We're not going to do anything drastic or rash, but clearly, as the year develops, opportunities are going to arise.

"Your're not going to see us running back down to the south of the country. There may be infill opportunities but there's nothing immediate. Clearly if there's a no-brainer, we will do it."

The company now trades from five sites in its Northern heartland – in Birtley, Chorley, Darlington, Delamere and York. These sites accounted for 60 per cent of turnover prior to the CVA.

Mr Parker said any acquisitions will be on a freehold basis.

Discover made a 1.9m pre-tax loss in the six months to the end of February, compared with a 9.5m loss a year earlier. Its 18.2m sales were less than half the 40.7m figure achieved a year earlier, once the closures were taken into account.

The industry saw sales of touring caravans rebound over the winter as retailers restocked relatively empty sites. Figures from the National Caravan Council showed UK sales between September and February were 25 per cent ahead.

But Discover believes underlying retail demand is yet to grow as fast as trade demand.

Industry figures also showed sales of higher-priced motorhomes "remained weak" over the six months and were 12 per cent down on a year ago.

"It's not back up to the heady days but we are performing well in touring caravans," said Mr Parker. "We are seeing smiling faces and good footfall across our business. We're probably taking more than our fair share of the market. As we sit right now it is not doom and gloom."

Despite these "few early signs of recovery", Discover said the second half of its financial year is hard to predict – although it will be better than last year.

"Our operating model is far more flexible in dealing with the seasonality of the industry, but also flexible enough to keep up with any upturn in the market should it happen," said Mr Parker.

The group said total costs have been cut by almost a quarter, or 1.5m. "That has not been a hack and slash exercise," said Mr Parker. He said the group has focused on specific skills, cutting bureaucracy, and improving IT.

"We have focused in on changing the operating model so that we have more people that are more focused on the technical aspect."

Discover has also modernised its stock of touring caravans and motorhomes to make it more attractive to customers. It has cut the number of last year's models by 79 per cent, meaning this year's range now accounts for 90 per cent of its stock. "That stock profile is unheard of in our industry," said Mr Parker.

The company has also rebuilt "very good" relationships with stakeholders, with most of its accessory suppliers restoring credit facilities.

Net debt has been cut by 2.4m to 12.9m thanks to the sale of surplus properties and streamlining. Subject to planning permission it has sold its Portsmouth site for 1.65m, and there is "serious interest" in its Weston-super-Mare site.

Serving the leisure sector

Discover Leisure was originally incorporated as WC Co in April 2003 to exploit opportunities in the leisure market.

It changed its name to Titan Move in January 2004 and acquired York Boat in November 2004.

Titan Move floated on AIM in May 2005 and then made a series of acquisitions to build a core business in caravan, motor home, leisure clothing, accessories and after-sale service. In 2005 it bought the company which owned Harringtons Caravans. Its biggest acquisition was Barrons Holdings for 20m in July 2007.

Last year it was forced to downsize significantly as consumer

confidence slumped. A Company Voluntary Arrangement allowed it to restructure its debts and shrink to five sites, from 16 at its peak.