The uncertainty created by the lockdown posed a challenge for Park Holidays, the UK’s third largest operator in the sector with 31 sites across the UK, and for Chris Ling, the group’s chief financial officer (CFO) who had been in the role a matter of months.
When he arrived in December 2019, there was little time to impose plans to take the finance function of this already successful private equity-owned business to the next level before coronavirus dominated the landscape.
Just as the business was about to enter its critical Spring and Summer trading period, a plan was hatched to maintain liquidity while protecting customers and staff and adhering to government regulations.
“A fourth priority was to make sure that we had a really sustainable business coming out of the other side of this,” says Ling.
Park Holidays generates revenues from four main areas: sale of caravans with a site licence of up to 30 years, annual site fees which range from £3-10,000 per year, income from their holiday fleet and sales from onsite retail operations including bars, restaurants, shops and arcades. All of its parks were closed by statute at the end of March.
“Park Holidays runs on negative working capital which is very helpful when you’re in a growing business,” says Ling.
“About half of our owners pay for their site fees in advance. We bill them in September and they pay by Christmas for the following year. That allows us to invest the money in our parks over the winter, improving facilities and infrastructure” he says.
Nevertheless, coronavirus couldn’t have come at a worse time in terms of liquidity as the cash low point is March, says Ling.
“Around Easter, the holiday fleet opens and we start to bring cash in, and we invest over the following Winter. So alarm bells started to ring for us,” he says.
Because he could see a liquidity problem coming, Ling engaged the group’s syndicate of six banks and shareholders to raise capital to see the business through the danger.
“I worked with them to raise a significant amount of money in case the lockdown was to go on for a prolonged period because I could see otherwise we would have a problem,” he says. “In the end, we didn’t have to dip into that at all.”
By the beginning of June Park Holidays was able to resume selling caravans and in stages the holiday fleet, pools and other facilities have reopened.
Park Holidays was able to help National Health Service (NHS) and other key workers by providing accommodation near hospitals and other sites.
“If people wanted to stay in a caravan rather than go home, especially if they’ve got people who needed to be shielded at home, we were able to offer them a facility to stay. Many of the more extreme cases were offered accommodation for free” says Ling.
A long history of overcoming career challenges has prepared Ling for the shock of coronavirus.
Although he studied physics at Imperial College London, he says there was always an interest in finance, given he was sponsored by an accountancy firm through his degree. Armed with “a very good analytical thought process” from studying physics, Ling headed to PwC and helped to develop an all-round experience of corporate finance and strategy. At conglomerate GE Capital he went from being European asset manager of fleet services to treasurer of insurance holdings, building blocks in a burgeoning career.
Senior roles followed at wholesale food supplier Brakes, marketing group FCB International and research firm Taylor Nelson Sofres (TNS) – the latter pushing him to deliver all external financial reporting at the firm. Ling then took on roles as financial controller at defence research group QinetiQ.
When TNS became the target of a takeover tussle between media giants GfK and WPP, eventually falling to a hostile bid from the latter, Ling became high profile. “Everyone looks at you for the numbers and everything else,” he says.
He has become used to crisis situations, par for the course in the rapidly changing business environment. “Maybe I’ll get four or five of these in my career. But I seem to have had my fair share,” he says.
Another dramatic period of his career came at British Gas, the home service provider owned by FTSE 100 stalwart Centrica, which is several years into of a vast cost cutting programme.
In six years at the firm, rising to finance director of British Gas Residential and then FD of their business-facing downstream operation, he played a key role in helping drive strategy in challenging conditions, while dealing with the two year Competition & Markets Authority (CMA) investigation in to the energy sector.
“I think that experience of going through really tough situations gives you the confidence that you can get through other difficult times, says Ling. “It teaches you to keep calm, to keep going,” he says.
His resilience was further tested at support services and construction group Interserve that along with peers saw profits crushed by weakening margins, as finance director of the listed group’s largest division. Despite his best efforts to “come up with a strategy that would work better than the existing one,” in a sector characterised by “razor thin profit margins,” he left after two years.
It’s this breadth of experiences that has shaped his view of what a CFO should be.
“The CFO is the person who’s got to keep an eye on the results to make sure that they’re coming in as expected. But it’s also about having an eye on the short term forecasts and longer term trends, where can we get the business to, and helping to map that out for the board,” he says.
When he landed at Park Holidays, Ling was no stranger to the expectations of the firm’s owners, having worked for a private equity backed structure at Brakes.
Given the position was his first CFO role in a new sector, Ling expected it would take a while to finesse the finance function of this already successful business.
“I often find it takes about three months to really start to understand the business. You don’t fully understand it probably for a year or two, especially when the business is quite nuanced and multi-faceted,” he says.
Park Holidays was founded in 1984 at a caravan park at Rye in East Sussex before expanding in the South East, then acquiring 11 parks from rival Haven in 2001. The company was acquired by PE house Intermediate Capital Group in 2017.
Ling was hired to develop a finance function that could support the growth of the firm.
“Ongoing professionalisation of the function was very much where I was focusing myself and I’m now starting to refocus myself on that task,” he says.
“That means ensuring you’ve got a really good relationship with your auditors in dealing with issues up front, making sure that the risk and control frameworks are in place and up to date and that the systems and processes are robust and lean. I also have responsibility for IT so that was a new step for me.
“The business’s enterprise value is probably around the £400m mark which would easily fit into the FTSE 250, so my role is about making sure that the finance function is fit for that level of governance and control,” says Ling.
Park Holidays is set for another burst of growth as the UK embraces the ‘staycation’ concept as the fear of quarantining is turning people off the idea of holidays abroad. It will build on the group’s most recent annual results in which it delivered EBITDA of around £35m on turnover of £150m.
Although Park Holidays furloughed 1,200 of staff, representing around 80 percent of its workforce, the company was able to manage the transition.
“Demobilisation and remobilisation is something that a holiday firm does every year, so it’s a very well-rehearsed operation,” says Ling.
Crucially, the firm kept open its telemarketing department through the lockdown period. “These are people who are monitoring web traffic for people who might be interested in buying a caravan, that they’ve been looking at online.
“We’ve sold a lot of caravans since we were able to start selling again in early June. We’re just about to have a record for August, in terms of caravan sales.”
He says Park Holidays is on the lookout for owner-managed parks that fit the geographic profile to expand the business. It sits alongside the other two legs of growth, building the caravan sales operation and continuous improvement of parks.
Despite growth, Ling is not complacent. Should another coronavirus wave hit, Park Holidays will be prepared.
“We’ve got revenue coming in at the moment, but should things get really bleak we’ve got the funding behind us to keep going,” he says.