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USC posts £18m loss as Ashley takes over

RETAILER USC posted an £18.5 million loss during the period Sir Tom Hunter's West Coast Capital sold it to Mike Ashley's Sports Direct International.

RETAIL: Tycoon Mike Ashley owns Sports Direct and Newcastle Football Club. He also has a stake in Rangers. Picture: Getty
RETAIL: Tycoon Mike Ashley owns Sports Direct and Newcastle Football Club. He also has a stake in Rangers. Picture: Getty

Accounts filed at Companies House show West Coast Capital (USC) fell into the red in the period between February 2011 and April 29, 2012.

It had posted a pre-tax profit of £753,440 in the 12 months to January 2011 on the back of a near-£70m turnover.

Turnover in the most recent trading period was at £77.6m, but administrative expenses leapt more than £18m to £52.8m, while the cost of sales was up from £34.4m to £43.2m.

Sports Direct took an 80% share in USC in July 2011 before buying the remaining 20% in January 2012.

In the accounts, the directors said: "The company has observed a deterioration in the retail trading environment during the period and has recognised onerous lease and dilapidations provisions totalling £6,634,576 and written down tangible assets to a value of £3,121,834.

"The deterioration in trade has also resulted in the acquired goodwill being impaired by £1.1m. A post-acquisition strategic review has been implemented with a new stock management system and e-commerce portal put in place. The company expects the 2013 financial year to see improved trading and results."

The company also said the accounts had been prepared on a going concern basis as Sports Direct International had agreed not to withdraw finance for the "foreseeable" future.

The cash position reduced from £756,345 to £55,994 while shareholder funds fell to a deficit of £7.9m after the trading loss had been absorbed. USC ended the period with a greater level of stock with the valuation of that up from £8.8m to £15.9m.

Staff numbers grew from 1044 to 1184 through the addition of 114 people in distribution, administration and other areas. That pushed employee costs up from £10.3m to £12.8m although directors' remuneration fell from £120,000 to £75,000.

USC was formed in Edinburgh in 1989 by Angus Morrison and David Douglas.

West Coast Capital paid around £45m for the business in 2004 which was trading from 40 locations at that point.

At the end of 2008 the company was put into administration with the loss of around 300 jobs, although 43 of its 58 stores were sold to Sir Tom's Dundonald Holdings in a pre-pack deal.

Sports Direct bought USC from West Coast Capital and Cruise from Sir Tom in a bid to improve the company's upmarket retail offering.

In August 2011, Sir Tom bought 392,156 shares in Sports Direct which cost around £1m.

Sports Direct is also involved in a retail joint venture with Rangers Football Club.

Mr Ashley, who owns Newcastle United, also has a minority stake in the Ibrox club.

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