SIR David Murray's metals-to-property empire is enjoying significantly better times and expects to be in the black after interest payments in its current financial year, The Herald can reveal.
Accounts being filed with Companies House show that Murray International Holdings, which has undergone major restructuring and last year received a £150m injection from Lloyds Banking Group in a debt-for-equity swap, moved to a profit before interest and tax of £21.6m in the year to June 30, 2010, excluding exceptionals. This was a dramatic turnaround from a loss of £20.5m at this level in the prior 17-month accounting period to June 2009, a period in which MIH’s metals and property businesses were hammered by the fall-out from the global financial and economic crisis.
In his report on the accounts, Sir David says: “This significant turnaround reflects the strength of our underlying business and the benefits of the efficiency savings realised from our ongoing rationalisation programme.”
Mike McGill, finance director of MIH, told The Herald the group made a “small pre-tax loss” before exceptionals in the year to June 2010, and added this was a “substantial” improvement on its result at this level in the prior accounting period.
And he expects MIH to be in the black in the current financial year to June 2011 at the profit before tax (PBT) level after interest payments, excluding exceptional items, based on the position after nine months.
Mr McGill said: “We should be back in PBT profit for the year. We would hope to be back in PBT profit for the year, before exceptionals.”
MIH’s net debt fell from £942m to £713m during the 12 months to June 30 last year.
This reduction in net debt reflects the £150m equity injection from Lloyds and cash generation during that financial year.
Mr McGill highlighted progress right across the MIH business, which comprises commercial property, residential property assets, metals, a Premier Hytemp business which makes parts for well-heads for the oil and gas sector, an outsourcing services division which includes the RESPONSE call-centre operation, and Rangers Football Club.
He said: “The key bit is each business is either on plan, or ahead of plan. We have done the restructuring. Having done that, the group is on track for a recovery going forward. We do need the global economy to pick up to really benefit from all the things we have done, but we believe that will come in time.”
In the accounts, Sir David says of the outlook: “I remain confident that recovery will materialise, albeit slower than commentators have previously predicted. I firmly believe that the financial restructuring and measures introduced over the last two years will enable us to survive until then and thrive upon subsequent improvements in market conditions.”
Sir David says in the accounts that “praise is again required” for MIH’s 3500 employees.
Mr McGill highlighted MIH’s good relationship with Lloyds, which raised its stake in the group from 12% to 30% through its injection of equity.
The stake of Sir David and members of his close family fell from 88% to 70% at this stage.
Mr McGill said: “We have got a good relationship with Lloyds. That has continued. No doubt about it.”
He added that the medium-term strategy remained the same, asset realisation and debt reduction, especially in property.
In terms of asset sales in property, Mr McGill emphasised MIH had a “stable base to do that on a medium to long-term basis”.
Property writedowns were only £6.2m in the year to June 2010, much less than the £154.5m figure for the prior 17-month period.
Mr McGill highlighted opportunities for the MIH oil and gas business around the globe, and the strong expansion of this division’s operation in Singapore. He flagged diversification by the metals division, which has reduced its reliance on the construction sector.
Referring to Rangers, which is 85%-owned by MIH, Sir David says in the accounts that he remains “committed to finding a long-term investor capable of developing the club further going forward”.
Businessman Craig Whyte is in make-or-break negotiations about a potential takeover of Rangers.
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