Blades blamed for losses of £54.5m at parent

Kevin McCabe
Kevin McCabe
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Sheffield United’s owner Scarborough Group International posted a hefty £54.5m pre-tax loss following high wages and reduced turnover at the football club.

The figure recorded by the property group for the year ended February 28 2011, was an improvement on the £133.6m loss posted the previous year but it also lost almost a third of its turnover, which fell from £53.2m to £36.8m.

Founded by chairman Kevin McCabe in 1980, Scarborough has grown from a UK-based real estate developer and investor into a global player which today has real estate, retail, energy, financial products and leisure interests across the world.

Sheffield United was blamed for much of the group’s losses. The Blades’ annual accounts for the year ending June 2011, which were announced last November, revealed a 20 per cent fall in turnover to £16.2m, from £20.5m, and a pre-tax loss of £13.6m compared to an £18.8m loss the previous year.

Last year it was understood to be paying wage bills of around £10-11m a year.

In 2010, the group completed the refinance of the club.

In its latest group accounts filed at Companies House this week, Scarborough said a £7.5m write-down in its real estate and football holdings in Hungary and a £2.3m write-down of development land within its joint ventures had also contributed to the overall loss.

But the directors’ report said although trading conditions in the UK property market had remained tough since the year end, the group was in a much better position following the completion of two major strategic objectives.

The group’s investments in the Far East have now floated. It has a 6.5 per cent stake, worth about £140m, in department store chain Rainbow Stores, which trades on the Shenzhen Stock Exchange, and an 11.5 per cent stake, worth about £100m, in property developer Top Spring, quoted on the Hong Kong Stock Exchange.

The report said: “Despite further deterioration in the group’s balance sheet position in the year, these two major events should contribute to an improvement in the current year and mean that the group is well placed to benefit as the global economy continues to stabilise.”

In addition, it created a joint venture with state-owned AVIC International Shenzhen in China to create a ‘one-stop shop’ for British and European brand retailers looking to set up in China as its economy continues to boom.

The group recently restructured its UK bank debt with Lloyds Banking Group.

In November 2011, Santander also provided a £43.5m loan to enable Scarborough to buy a 21.3 acre brownfield development site in Salford and to buy the remaining 50 per cent interest of its joint venture at Digital Campus in Sheffield.

In the chairman’s statement, Mr McCabe said there had been no further reductions in the value of its property portfolio, which resulted in a £97.7m impairment charge the previous year.

He added that its serviced office provider Forsyth continued to “flourish” and recently completed the acquisition of a new building in Moorgate, London. Forsyth, which celebrated its 20th anniversary in 2011, also took over the Blades Enterprise Centre in Sheffield.

In line with the previous year, the directors did not recommend the payment of a dividend.

Speaking to the Yorkshire Post, director Simon McCabe said he was excited about the group’s prospects for the year ahead. “We have spent the last couple of years restructuring the business and it’s been very tough in the UK real estate market,” he said.

“But we’ve had a very positive start to 2012 and we have exciting developments happening within the group going forward as well as the hope that Sheffield United will be promoted again.”

A global player

Scarborough Group International was set up in 1980 but can trace some of its roots back to the 1960s.

The group has grown from a UK real estate developer and investor into a global player which has real estate, retail, energy, financial products and leisure interests across the world.

Today most of its British operations are based in Scarborough, Leeds, London, and Edinburgh.

Scarborough is owned by the McCabe family and Kevin McCabe is chairman.

He also runs the international arm of the group and is the plc chairman and owner of Sheffield United Football Club.