It’s a small world
Business Review 2013
Scarborough Group International • Business Review 2013
Contents
2
Introduction
3
Real Estate, Property
Investment and Trading
6
Property Development
12
Services
20
Leisure, Football
22
Hotel
28
International, Europe
30
Betting and Gaming,
36
Far East and China
38
- Real Estate Sector
40
- Consumer Sector
44
Australia
48
Summary
50
www.scarboroughgroup.com
Scarborough Group International • Business Review 2013
Introduction
As a sizeable, privately owned
Group of companies operating
within various asset sectors not
only in the United Kingdom but
also the Far East, China, Australia,
parts of Europe and Canada, the
last six years or so have proved
to be tough and demanding.
Scarborough – be it Scarborough
Group International Limited
(SGIL) or the separately owned,
individually branded Scarborough
companies - has coped admirably
in reorganising, and in many
instances, advancing its wide
ranging global businesses during
this uncertain period of economic
decline, the effects of which still
continue in the USA, Europe and
the UK.
3
Scarborough Group International • Business Review 2013
Weathering
the storm...
4
For an experienced organisation having
to deal with the significant downturn of
property values is problematical in any
climate but the coincidental collapse of
Scarborough’s past key financier and
partner – Bank of Scotland – who via
reported prompting of the UK
Government were of necessity acquired
by Lloyds Banking Group (Lloyds) in
September 2008 created other
difficulties for us. Of particular note is
the recognition that a good portion of
Scarborough’s “old debt” related to
property transactions that were
undertaken to favourably assist the Bank
of Scotland leading to then having to
write-down the value of these assets to
our detriment and additionally at the
same time addressing with Lloyds the
reduction and eventual repayment of
“old debt”.
Alongside these problems, principally
relating to the world of Real Estate, we
had within the Leisure operations, issues
surrounding Sheffield United FC, in the
main originating as a result of the Club’s
well publicised and improper relegation
from the Premier League in May 2007
due to the infamous “Tevez affair” where
one has to say the turmoil created on
and off the field of play is taking longer
than one would wish to rectify. It is
worth repeating and emphasising that
the poor governance on the part of the
Premier League in tackling West Ham
United FC’s clear breach of the rules
relating to third party ownership of
players subsequently led to changes in
the regulations. However, for both the
Blades and Scarborough as its ultimate
owner, life has not been easy.
During these tricky and arduous times,
Scarborough Group International • Business Review 2013
Scarborough’s International reach has
proved to be of considerable benefit in
restructuring parts of the Group and
with it reducing debt. Unlike many
publicly quoted corporations - who at
the expense of their existing
shareholders have been able to raise
capital via deeply discounted Rights
Issues, thereafter utilised to address debt
repayment - as a private Group we have
worked our various business divisions to
realise cash to good effect.
The reader will acknowledge from
the contents of this Review that in
spite of the continuing
recessionary climate Scarborough
is still considered to be one of the
UK’s major private Real Estate
companies also having interests in
Services, Leisure, Energy, Betting &
Gaming and Retailing businesses
not only in its home territory but
additionally Europe, the Far East,
China and beyond.
SGIL’s financial performance for the year
would have shown profits before tax
exceeding £2m but for the losses
incurred by Sheffield United of £7m.
Thus, the actual results show a recorded
loss of £4.7m, which relate to SGIL alone
and do not incorporate the performance
of those other separately branded
Scarborough organisations.
Our assessment of the fair
combined value of SGIL and other
individually Scarborough named
corporates (outwith SGIL) exceeds
£400m after taking cognisance of
all current debt.
The reshaping and advancement of
Scarborough’s range of activities is
reported below.
5
Scarborough Group International • Business Review 2013
Real Estate, Property
Investment and
Trading
Our operations in Real Estate fall into
two categories namely:Property Investment and Trading
The Group continues to retain a
significant number of primarily
commercial income producing
properties situated throughout our
home nation that with astute asset
management, have gradually improved
the annual rental returns and with it
capital values.
In the year under review some £26m of
properties have been sold and whilst
there were no new acquisitions it is
worth noting that Scarborough
remains well placed to take advantage
of opportunistic purchases given the
headroom available from our existing
facilities with Santander Bank.
Subsequent to the year end a further
£6m of properties have been disposed
of and another £7m are under offer to
bona-fide prospective purchasers. The
majority of sales in the last two years
or so relate to properties that were
acquired to assist the “old” Bank of
Scotland, where under the terms of
our strategic agreements with Lloyds
the Group have worked to reduce debt
to accommodate the recorded joint
wishes of the Bank and ourselves.
6
The Investment and Trading Division
(be it for SGIL or our other
Scarborough separately owned
corporates) operates from five
principal UK offices in Edinburgh,
Leeds, Scarborough, Sheffield and
London employing top quality
managers in each region who oversee
some 40 commercial properties and a
residential portfolio of over 250
apartments having an amalgamated
value approaching £200m. Given the
spread of Scarborough’s portfolio
which is as far North as Inverness and
as far South as Exeter, it is clear that
these regional offices add an
invaluable service allowing us to
tactically plan and manage the assets
to constantly improve value and
ultimately sell for good returns taking
advantage of local knowledge, to
additionally buy well when deemed
appropriate.
Supplementary to our regular trading
we have undertaken a number of lease
re-gears and new lettings providing
extra rental income amounting to
£1.3m per annum over approximately
100,000 sq ft of commercial space.
This highlights our expertise to
manage assets to their maximum
potential and to ensure that the
Groups culture of “pull, push and
shove” percolates throughout all
offices.
Scarborough Group International • Business Review 2013
Pictures: Ventana House,
Digital Campus, Sheffield
7
Scarborough Group International • Business Review 2013
SGIL’s main Investment and Trading
divisions are subdivided into three
main companies, namely:• Scarborough Holdings (UK) Limited
• Scarborough Properties (UK)
Limited
• Scarborough Group Holdings
Limited
Scarborough Holdings (UK) Ltd
(SHUK)
SHUK was established in late 2009 in
tandem with Bank facilities procured
from Santander.
SHUK is now an active property
investment and development
corporation having income producing
assets approaching £80m in both the
residential and commercial Real Estate
sectors.
Assets are situated throughout the
length and breadth of the UK and
demonstrate a healthy balanced mix
of properties.
SHUK also completed the development
of a mixed use, but primarily
residential project in Manchester,
comprising 261 apartments of which
only 15 presently remain unoccupied.
Scarborough
Properties (UK) Limited
Scarborough Properties (UK) Limited
(SPUK)
8
SPUK was formed in 2011 again with
Santander as our primary Bank and
undertakes investment and
development activities in the UK.
SPUK’s attractive investment portfolio
comprises properties at Thorpe Park,
Leeds; Digital Campus, Sheffield;
Buchanan Gate, Glasgow and Castle
Business Park, Stirling having an
overall value approaching £50m.
In addition SPUK acquired a prime
development site - Middlewood Locks,
Manchester and has consent in place
to construct some 1,700 new homes.
Within the coming months we will be
extending the infrastructure enabling
us to thereafter either sell off to other
Developers serviced plots and also
starting directly a first phase project,
recognising the Manchester residential
market has recovered well in the last
two years or so.
The Middlewood Locks scheme has an
end value of around £350m.
Scarborough Group Holdings
Limited (SGHL)
SGHL, one of our older subsidiaries, is
principally an investment and
development organisation holding
properties in the main acquired to aid
the “old” Bank of Scotland.
SGHL’s portfolio in the UK is valued at
approximately £70m divided between
income producing assets and the
prestigious development at Thorpe
Park, Leeds. Our review of the Group’s
property development activities
comment further on Thorpe Park.
The investment portfolio assets are
situated throughout the UK where it is
worth noting that, since 2009 in
conjunction with our partners at
Lloyds, we have achieved debt
reduction from disposals exceeding
£220m using our talents, expertise and
Scarborough Group International • Business Review 2013
Castle Business Park,
Stirling
9
Scarborough Group International • Business Review 2013
contacts in the industry. A number of the
remaining assets are under offer for sale
or being marketed at the present time
seeing a further lessening of debt
accomplished during 2013.
Other corporates holding quality
commercial income producing properties
either as subsidiaries of SGIL or
associated Scarborough named
companies include Scarborough
Partnership Ltd (SPL) and Scarborough
Finance Company Ltd (SFCL).
SPL’s investments also cover overseas
Real Estate assets with interests in
Australia and Canada alongside a well
spread strategic Equities portfolio
holding quoted stock in a variety of UK
Listed companies and in Fixed Income
products.
Additionally, SPL owns our 158-bedroom
4 Star Hotel at Bramall Lane, Sheffield
that is managed on the Group’s behalf
by Millennium & Copthorne plc from
Singapore.
SFCL holds some £15m of commercial
property in the UK with plans to drive
income upwards and thereafter
subsequently sell the individual assets in
the medium term to realise good returns.
Copthorne Hotel, Bramall
Lane, Sheffield
10
Scarborough Group International • Business Review 2013
11
Scarborough Group International • Business Review 2013
Scarborough remains
one of the country’s
most active development
organisations
Property Development
Scarborough remains one of the
country’s most active development
organisations with a range of projects
either underway on site or planned to
commence in the near future, having a
combined end value exceeding £1.2bn.
Much effort and expertise has been
applied in the last five years or so to
advance planning consents and the like
in adding value to our prime
development portfolio. Of notable
importance are our projects at:
Leeds – Thorpe Park
This has been an important year for
Thorpe Park, the Group’s prime
Business Park situated on Junction 46
of the M1 in East Leeds.
12
Already one of the UK’s leading
regional Business Parks, in September
2012 we submitted a Planning
Application for a major new scheme on
the undeveloped part of the site,
featuring a large Food Store, additional
Retail space, Hotels, Leisure and
Restaurant uses beside 1.1m sq ft of
further Office accommodation. Add to
this a critical piece of regional road
infrastructure, improving access to the
Park and over 500 acres of adjacent
housing land, and 145 acres of
parkland and amenity space, and the
vision for Thorpe Park’s future is clearly
to be an unequalled business
environment.
Working in close partnership with
Leeds City Council together we have
realised a shared vision for a marketleading mixed-use business
destination. The Group has developed
the design to meet complex planning
requirements whist maximising
commercial appeal.
The Planning Application is due to be
determined in September 2013.
Cardiff – Talbot Green
In July 2013 our equally owned joint
venture with Blackstone Group’s
subsidiary, Valad Property Group Talbot Green Developments (TGDL) was granted Outline Planning Consent
for the new Town Centre scheme at
Talbot Green, north-west of Cardiff.
This scheme includes a 108,000 sq ft
Food Store for Sainsbury’s, which was
also awarded Detailed Consent at the
same committee meeting.
The remainder of the project comprises
400,000 sq ft of Retail and Leisure
space, Cinema, Hotels, Offices and new
Homes. The marketing campaign for
this next phase of development will
begin towards the end of the year.
TGDL also retains its joint venture with
the Welsh Government over an
extensive area of land in the vicinity,
including 27 acres allocated for
Housing, where we anticipate bringing
forward a Planning Application in
2014.
Scarborough Group International • Business Review 2013
Main picture: Thorpe Park, Leeds
Left: Talbot Green, Cardiff
13
Scarborough Group International • Business Review 2013
Manchester (Salford) –
Middlewood Locks
The 21 acre Middlewood Locks site lies
at the western boundary of
Manchester City Centre, next to the
River Irwell and the Trinity Way Inner
Ring Road, and a short distance from
the M602, A6 and A57.
The site benefits from an excellent
high density Outline Planning Consent
for 2.6m sq ft of Residential-led,
mixed-use development which, with
the Manchester property market now
showing distinct signs of recovery, has
an increasing value and viability.
In December 2012 we completed our
pre-letting agreement with Admiral
Insurance for a new 100,000 sq ft
Office building at our Cambrian Centre
site, opposite the City’s railway station.
Construction commenced in January
2013 with Practical Completion
scheduled for August 2014 – the
building work is currently ahead of
programme.
Manchester (New Islington) –
Milliners Wharf
The Admiral building will dominate the
area around the railway station
providing a gateway landmark to the
City, and represents the first phase of
what will become the ‘Station Quarter’
development. We will progressively
develop the existing centre to provide
up to 70,000 sq ft of Leisure, Bar/
Restaurant and Retail space, and Hotel
or Student accommodation.
Milliners Wharf has had another
highly successful year in both sales
and lettings, with only a handful of
the 261 apartments built to date, yet
to find an occupier.
Notably, during the development
process, we maintain the income from
the existing tenants which include JD
Wetherspoon, Scottish & Newcastle
and Ladbrokes.
Over the course of 2013 and 2014 we
will be bringing forward development
either directly or in partnership with
appropriate property and construction
companies plus financial investors.
A second phase of development for
144 apartments in 2 separate
buildings has recently been granted
consent. This forward-thinking
scheme offers a wide range of largerthan-average apartments and
duplexes, many with striking views of
the City beyond, and features a raised
amenity area for private use by the
residents.
14
Newport – South Wales Station Quarter (Cambrian
Centre)
With Milliners Wharf’s location in the
New Islington masterplan zone, and
adjacent to the New Islington stop on
the Metro (Manchester’s tram
network), this is an excellent scheme
that the Group is looking forward to
delivering into the reviving
Manchester market, revitalising our
established “FairBriar Homes” brand.
Congleton, Cheshire –
Bridestones Centre
Despite a series of frustrations in
bringing forward the complex set of
agreements required to deliver this
Town Centre project, we now expect to
bring these to a successful conclusion
within the coming months permitting
the development to start on site later
this year.
The scheme will deliver an extension
to the existing Bridestones Centre
incorporating a 60,000 sq ft Food
Store, 5 small Shop units, over 200
additional car parking spaces, and
extensive areas for public use.
Main picture background: Middlewood
Locks, Salford, Manchester
Bottom far right: Station Quarter,
Newport, South Wales
Bottom centre: Bridestones Centre,
Congleton, Cheshire
Bottom left: Milliners Wharf, New
Islington, Manchester
Scarborough Group International • Business Review 2013
15
Scarborough Group International • Business Review 2013
Sheffield – Digital Campus
Given the success achieved in the
development of Digital Campus’s first two
buildings – Electric Works and Ventana
House, we now have commenced marketing
of our third phase development. Consent is
already approved for a 100,000 sq ft Office
project where we hope to see works
underway on site during the second half of
2014.
Fife - Rosyth Waterfront
Our longstanding joint venture with Muir
Group comprises 120 acres of land in Rosyth
having the largest waterfront site on the
East Coast of Scotland and is well
positioned for new development in the
coming years.
A claim for compensation relating to land
being utilised to assist in the construction
of the new Forth Road Bridge - under the
terms of CPOs issued in 2011, is now well
progressed and we should have a settlement
sum promoted by the District Valuer during
September, the major portion of which will
thereafter be paid in October 2013.
Proposals have recently been submitted for
the design and build of a 430,000 sq ft
manufacturing unit on 38 acres of our
Rosyth land to be leased on a long term
basis to a Blade manufacturing organisation
involved in the Hydro-Power industry. In
tandem with Scottish Enterprise, we are
optimistic that this proposal will be
accepted permitting us to commence works
in the near future.
On a smaller scale, we are completing
negotiations to design, build and lease a
35,000 sq ft industrial and office building
for an Aberdeen based oil and gas company
where we are working towards construction
operations starting before the end of 2013.
16
Main picture background: The
magnificent Firth of Forth
Below: Ventana House, Digital
Campus, Sheffield
Scarborough Group International • Business Review 2013
17
Scarborough Group International • Business Review 2013
Fife - Dalgety Bay
Our further venture with Muir Group has
seen a Planning Application for the
redevelopment of a site at Donibristle,
Dalgety Bay submitted in August for the
redevelopment of a small Supermarket,
family Pub and Drive-Thru Coffee Bar/
Restaurant along with retaining the two
existing occupiers. Contracts have been
exchanged with Aldi Supermarkets and
Marstons Pubs and Taverns who will
acquire service sites from us and we are
in the final stages of agreeing terms with
McDonalds for the DriveThru plot.
Stepps, Glasgow - Buchanan Gate
Having completed the sale to Scottish
Water for their new West of Scotland
Headquarters office last year, the final
phase of the extremely successful
Buchanan Gate is now available and
being marketed as a 40,000 sq ft Grade A
Headquarters office on the Park’s most
prominent site. In response to good
levels of interest, we intend to secure a
Planning Consent for the proposals and
begin construction next year.
18
Scarborough Group International • Business Review 2013
Other Highlights
Wigan – Consent was gained in
November 2012 for a new scheme
comprising an 80 bedroom Hotel and
16,000 sq ft of Retail space. We are in
discussion with a prospective operator and
hope to bring this development forward in
2014.
Stockport – An 11 acre site fronting the
M60 and close to Junction 1. A new
planning application for a Mixed Use
scheme featuring Retail and Motor trade
uses will be submitted in the autumn.
Rhyl – A 16 acre seafront site with
consent for a Mixed Use Retail, Residential
and Employment scheme. A new
application will be submitted in the
summer of 2013 for a revised
development, featuring a Food Store and
additional Retail.
Main picture: Buchanan Gate,
Stepps, Glasgow
Far left: Dalgety Bay, Donibristle
Centre: 80 bedroom hotel, Wigan
Right: Seafront site, Rhyl, North
Wales
Scarborough is proud to
maintain its position as
a leading UK property
developer stretching back
to its initial roots in the
mid-1970s. We have
the ability to tackle all
aspects of Real Estate
and whilst we may not
at times undertake the
largest projects, the great
number of developments
successfully carried out
be it in England, Wales,
Scotland or Northern
Ireland speaks for itself.
Our track record is one of
the best!
19
Scarborough Group International • Business Review 2013
Services
Forsyth
Our Serviced Offices division, Forsyth
Business Centres UK Limited (Forsyth)
has been in operation for some 22
years and continues to manage a
network of 16 Serviced Offices in key
regional centres throughout the United
Kingdom. Lead by a robust and
experienced Management Team,
Forsyth serves a diverse customer base,
ranging from SMEs to large multinational blue chip organisations.
The company has experienced
significant growth in recent years,
increasing turnover and profitability
through the identification and
development of several strategic sites.
At the present time Forsyth operates 6
key sites in London, Edinburgh,
Sheffield and Exeter, whilst managing
an additional 10 sites on behalf of
Landlords on an operational contract
basis. This has proved to be an
attractive solution for Real Estate
owners as it can provide increased rent
when compared to traditional leases. A
finely tuned business model has meant
that management contracts have
proved to be a reliable source of
income for Forsyth without the risk of
increasing overheads as all staffing and
maintenance costs are met by the
Landlord.
20
Forsyth increased its 2012 turnover by
£1.8 million to over £8 million in 2013,
generating an EBITDA in excess of £2
million and with additional site
development planned for 2014, it is
estimated that turnover will improve to
£17 million by 2018, thus generating
an EBITDA of £7.7 million or thereby.
It is intended that we will seek to
secure further Serviced Offices venues
in London and other key provincial
cities together with increasing
management contracts throughout the
nation.
Property Services
Scarborough regularly utilise on behalf
of our joint venture companies and at
times for third parties the skills and
experience we have in Development,
Project, Asset and Property
Management. Likewise given our past
history, Fund Management particularly
in the raising of capital for investment
in certain of our international ventures
is also being progressed.
Recognising the continuing dislocation
in the real estate funding markets, the
Group has made great strides in
forming important strategic
partnerships with well capitalised
funding partners. In particular there
are many opportunities to acquire,
challenging portfolios and other nonperforming funding structures.
Scarborough’s ability to partner with
experienced investors to provide
property expertise needed to extract
value at asset level represents an
exciting new business opportunity,
leveraging off our strong track record
in the UK. Work is presently underway
to identify and transact on appropriate
portfolios.
Scarborough Group International • Business Review 2013
Forsyth: The Podium,
Euston
21
Scarborough Group International • Business Review 2013
Leisure
Football
Unfortunately yet another promising
football season 2012/13 ended in a
Football League play-off semi-final
defeat – the seventh in Sheffield
United FC’s (SUFC) recent history
– and thus we continue life in League
One for a while longer.
It was recognised that there was
the need for change and thus a
further overhaul principally affecting
the football management and the
reshaping of the first team squad has
occurred during the close season. This
has been concluded and with David
Weir as our Team Manager we have
in place a much more intellectually
astute individual at the helm with
excellent leadership qualities.
Success to our fine and proud Club
will be delivered in the years ahead.
22
Scarborough Group International • Business Review 2013
23
Scarborough Group International • Business Review 2013
We are now in the process of
restructuring and improving the
management of SUFC’s major off-thefield activities where at Bramall Lane
there are the most extensive
conference and banqueting facilities
in Sheffield, itself England’s fourth
largest City. Additionally within the
confines of the stadium, we have our
own restaurants, public bars, meeting
rooms, executive boxes, superstore
and a duel museum/function areas.
These top class operational assets
continue to under-perform –
whichever League the Blades are
playing in – and so this time around
extensive efforts are in hand to create
further revenue streams the profits
from which can then be used to assist
in funding first team and youth
football.
Likewise at the Academy and our
Junior Development Centre new
initiatives are planned to better
generate commercial returns.
A Club of our stature – albeit presently
playing in League One – should even
in these times of recession be able to
24
secure better
commercial earnings
from all forms of
sponsorship and
product sales. In addition
to working harder on our contacts in
the South Yorkshire region, attempts
are in hand to extend our reach within
the UK and Internationally.
In these times of
change it is reassuring
to know that our new
partners in SUFC fully
appreciate the criteria
and need of
maintaining a safe and
sustainable football
organisation
It is pleasing to note that SUFC’s
security and stewarding subsidiary –
Premier Sports and Events – has
begun to extend its operations to
venues other than those controlled by
the Club. It is hoped that this business
Scarborough Group International • Business Review 2013
Main picture background: The Jessica
Ennis Stand
Left: Our renowned Academy facilities
25
Scarborough Group International • Business Review 2013
in itself can become profitable again
realising monetary returns to aid
funding our core first and youth team
football.
As has been reported to shareholders
of Sheffield United plc (SUplc)
commencing in 2012 we have worked
at separating the football and
operational side of SUFC from that of
real estate, which remains with SUplc
and this was duly achieved earlier in
the year. The key reason was to assist
in our continued efforts to attract
investors to the Football Club in order
to achieve our stated aim of
reclaiming a Premiership place in the
coming years recognising that
Sheffield United, unlike many English
Clubs, has a top class football
infrastructure not only at Bramall Lane
– the world’s oldest football stadium
where we recently hosted an Under 21
International watched by 27,000
supporters between England and
Scotland - but also a 20 acre Academy
that has received EPPP Category 2
status, and a Junior Development
Centre located within separate parts of
the City of Sheffield. The Club is
acknowledged as having some of the
finest facilities in the country where in
past years we have added the
commercial benefits of an Enterprise
Centre and a four star Hotel both of
which adjoin the Stadium and are in
the separate ownership of
Scarborough branded corporates.
Finally I am delighted to advise that
we have completed a transaction
which sees His Royal Highness Prince
Abdullah bin Mossad bin Abdulaziz Al
Saud of Riyadh, Saudi Arabia
becoming our partner in the
reorganised “stand alone” SUFC.
Discussions with our new colleagues
commenced in January of this year
26
leading to many get togethers to talk
through all aspects of the Blades
business and thereafter detailed
negotiations ensued allowing a formal
Agreement to be concluded at the end
of August.
The key stated intentions of what has
become an equally owned Club is to
strive and work jointly to achieve the
promotion of Sheffield United FC back
to the Premier League in the
forthcoming years. To this end our
partner’s funds will be primarily
utilised to enhance and improve first
team football. This “globalisation” of
our fine and proud club – founded in
1889 – is of significant
importance and will bring with
it variations to the running and
performance of both our on and
off-the- field divisions.
In these times of change
it is reassuring to know
that our new partners
in SUFC fully
appreciate the criteria
and need of
maintaining a safe
and sustainable
football organisation
alongside
remembering and
retaining what the
Blades stand for as a
community and family
orientated Club
steeped in history and
heritage. These virtues
are not forgotten.
Scarborough Group International • Business Review 2013
Main picture background: Bramall Lane
the World’s oldest Football Stadium
Far Left: Our latest shirt sponsorship deal
with Top Spring
Left centre: His Royal Highness Prince
Abdullah bin Mossad bin Abdulaziz Al
Saud and Kevin McCabe at Bramall Lane
27
Scarborough Group International • Business Review 2013
Hotel
It is pleasing to note that as a result of our
operational partner – Millennium &
Copthorne plc of Singapore - changing its
General Manager there has been much
progress made improving the level of
service and overall guest satisfaction at
the Copthorne Hotel, Bramall Lane,
Sheffield.
A number of key personnel have also been
replaced and a more structured revenue
and result based culture instilled in the
Hotel’s day to day operations. It is
heartening to see that guests have
indicated an improved level of service and
satisfaction, namely:• Internal objective overall guest
satisfaction has increased from
85.2% to 89.4% as at July 2013
• Trip Advisor ratings have increased
from 89.9% to 92.8% on the year to
date
• The Hotel has been awarded the Trip
Advisor Certificate of Excellence for
the period from July 2012 to June
2013, recognising the Copthorne
rating within the top ten percent of
hotels worldwide for guest
satisfaction.
Thus, all areas of operation have
been reviewed and re-standardised
with the Management Team being
monitored and measured by specific
target Key Performance Indicators.
The Hotel pursues maximising
income from events such as the Tour
de France, British Squash, Schools’
Games, Football fixtures at both
Bramall Lane and Hillsborough and
functions at all local venues. Further
initiatives which target food and
beverage revenue will hopefully bear
fruit in the second period of this year
and in particular:28
• Development of a Members Bar to be
operated within the first floor area of
the Hotel on Sheffield United match
days, targeting season ticket holders
and offering reduced beverage pricing
with food and entertainment. Annie’s
Bar – to tie in with the famous Blades
anthem – is due to open in September
2013
• The Festive season provides an
opportunity to realise significant food
and beverage income and as a result
of a focussed approach to marketing
so far this year we have already
secured 36% of the target for the
Christmas period
• Due to the success of an advertised
“Take That” tribute night, scheduled
for November, and which was sold out
by early August a further second date
in early December is now also being
promoted
• An intensive campaign to acquire
additional inclusive business from
sources such as group travel
companies and coach operators in an
attempt to grow lower rated based
business but with guaranteed food
and beverage income, is underway
• Asian weddings and related functions
are proving to be further expanding
markets for the Copthorne. To date
these activities are 100% increased on
2012 and expected to improve with
the proposed development of a
kitchen server on the first floor of the
Hotel as part of the current capital
expenditure programme.
Consequently, our Copthorne Hotel is
forecasted to exceed the agreed
budget of both Gross Operating Profits
and EBITDA. Equally, it is anticipated
that the core business segments will
continue to expand and increase our
market share. Guest satisfaction will
of course be maintained and more
than likely improve as we introduce
Wi-Fi in all rooms and improved
lighting as from September 2013.
Scarborough Group International • Business Review 2013
It is
heartening to
see that guests
have indicated an
improved level of
service and
satisfaction
29
Scarborough Group International • Business Review 2013
Developing
partnerships
around the world
International
design and construction management
services.
Energy and other related
operations
South East European Consultants
(SEEC)
Our joint venture activities in Serbia
and adjoining countries, principally
undertaken in partnership with the
Belgrade based Sekrevski Family and
generally branded under the ScarDec
group name, have progressed well. We
anticipate during 2014 seeing not only
substantial cash returns emanating
back to certain of our Scarborough
corporations, but also good profits
being earned from the businesses as
detailed below.
Our Consultancy business – founded in
September 2002, provides Energy
Consultancy Services covering:-
Europe
Decotra Power (DP)
Formal Heads of Terms were exchanged
in 2012 with the Gazprom Corporation
of Russia for them to acquire a majority
shareholding in DP which is the owner
of the Loznica Power Station, where
consent and licences are approved to
upgrade and extend to produce a 243
megawatt CHP Power Plant.
30
We are now close to completing the
formalities of an Agreement with
Gazprom permitting the redevelopment
of Loznica to take place during 2014
and beyond. Other than providing for
ScarDec and the Group cash benefits
emanating from the sale of a significant
stake in DP, there are also fees to be
earned by sister companies for the
• Hydro Power and Water
Resources
• Thermal Energy and Energy
Efficiency
• Electric Power Systems
• Renewable Energy Sources
• Environmental and Spatial
Planning
SEEC has ongoing contracts with a total
project value exceeding 4m€ where this
work should generate around 1m€ of
revenue for us during the second half
of 2013. Additionally, new contracts
are anticipated to go in place within the
coming weeks providing a further
500k€ from an increased clients list
which already includes RWE of
Germany, Technor Energy AS of Norway,
Fichtner GmbH of Germany and World
Bank of USA. These contracts are for
projects situated not only in Serbia but
also Bosnia & Herzegovina and
Montenegro.
SEEC is headquartered in Belgrade with
its own experienced, professional staff
supported by external consultants as
and when required.
Scarborough Group International • Business Review 2013
Pictures above: Power Station at
Loznica, near Belgrade,Serbia
31
Scarborough Group International • Business Review 2013
32
Scarborough Group International • Business Review 2013
Decotra Engineering (DE)
Established in 2003, DE provides
services to the South Eastern
European energy sector across four
streams, namely:• Engineering and Design
• Engineering and Procurement
• Engineering and Consulting
• Project Management
DE is ISO 9001 quality certified and
can offer a “one stop shop” option to
clients giving it a significant
competitive edge compared to
competitors. It owns its principal
office building situated in Belgrade
and has secured contracts so far in
2013 providing fee income of
approaching 11m€ DE has established
long term partnerships through signed
Co-operation Agreements with:• RWE – the second largest
electricity producer in Germany
• Alstom – a French multinational conglomerate
• Technor – a Norwegian multinational conglomerate
• Rafako – a Polish company
specialising in the energy sector
where Decotra has a form of
joint venture
Our projections for the years ahead
show steady profit growth from this
principally fee earning business.
Titan Developments (Titan)
Main picture background: Car Park
building at Baba Visnjina, Central
Belgrade, Serbia
Left: Bottling Plant at Indjija,near
Belgrade, Serbia
Titan, a company in which ScarDec via
an associate controls a 50% interest,
has been developing the first private
owned Car Park in Central Belgrade
where after a series of delays, works
on site were finally completed in mid2013. Located in the Baba Visnjina
area and formally opening in
September 2013, the car park has 388
car spaces, 12 motor cycle spaces and
is spread over eleven and a half floors.
Some 49 spaces will be available on
monthly subscription for 12 hours
overnight and a further 49 available
for exclusive 24 hour a day usage by
the subscriber. It is envisaged that
subscribers will be local residents
living in the exclusive surrounding
apartments.
There are an estimated 19,000
residents and 8,400 employees in the
gravitation zone of Belgrade’s CBD
area equating to the usage of
approximately 6,000 cars. In addition
to the parking, there are 350 sq m of
Class A business premises to be leased
alongside a car wash and a news
stand which will provide further
income streams to Titan. JKP Parking
Services have now been formally
appointed to operate the car park for a
fixed fee of 5,000€ per month plus a
variable fee amounting to 5% of
revenue. Excellent projections of
profitability are estimated for the
coming years.
Terra Production (Terra)
Scarborough is in advanced stages of
agreeing to take a major interest in
Terra - a Beverage Can Filling
operation located in Indjija, some 30
km from Belgrade, and alongside
Corridor 10 – one of the key PanEuropean transport highways. This is
the first bottle filling facility in Serbia
and has the key advantage of being
within a Custom free access zone to
serve around 15% of the world
market. Commencing in 2009, the
facility is located within a state of the
art building having a can filling
capacity of 32,000 cans per hour,
together with a beverage mixing
capacity of 15,000 litres per hour.
The fully automated line can handle
slim line 15cls and 25cls cans, sleek
33
Scarborough Group International • Business Review 2013
line 25cls and 33cls cans and standard 33cls
and 50cls. Terra provides contract filling
services for most beverage types including
energy drinks, non-alcoholic carbonated and
non-carbonated soft drinks, beers, wine
mixes, iced tea drinks and mixed drinks. At
Indjija is Terra’s own Laboratory helping to
provide advanced quality control where
successful annual audits have been
performed in 2012 by Coca Cola, Carlsberg,
Heineken, Rauch and Quality Austria
amongst others.
Terra has a strategic partnership with Ball
Packaging Europe (the biggest can producer
in Europe) and under this arrangement, a
good discount on filling prices is given to
customers of Ball with Terra receiving
favourable supply conditions in return. Our
principal service contracts are with Coca
Cola, Heineken and Carlsberg and
negotiations are well advanced with
Monster Energy and due to be completed in
September.
We are in the process of
planning the extension of
the premises at Indjija to
allow the filling capacity to
increase from 70 million cans
to 170 million cans per
annum. The extension will
cost in the region of 4m€
where Ball Packaging have
agreed to assist us in
securing the construction
funds.
Terra’s potential profitability
in the years ahead highlights
increases of substance.
34
Scarborough Group International • Business Review 2013
Pictures: Bottling Plant
at Indjija,near Belgrade,
Serbia
35
Scarborough Group International • Business Review 2013
Cutting Edge
Technology
Betting & Gaming
VSports Games (VSG)– the new name
of our considerably reorganised Betting
and Gaming Software company continues to specialise in the global
virtual gaming market circulating its
products to the industry via multiple
distribution channels. Within the last
few years the company has developed a
highly sophisticated suite of products
focused on virtual football, having
recently updated the graphics and
animations to HD quality. VSports
Games Fantastic League is recognised
as the most modern and technically
advanced virtual fixed odds football
game offering action packed live
football every 5 minutes, 7 days a week,
22 hours a day.
The games are broadcast live and in
real time, each combining full match
betting markets including singles,
doubles, trebles, accumulators, goal
cast, home-away-draw, and all the
betting requirements expected from the
real game. There are a number of ways
to play Fantastic League - via internet,
broadcast, betting shops and single
game - and it is sold on licensing
distribution contracts with bookmakers
determining the odds for each game.
36
At the beginning of 2013, we made the
decision to restructure the business
enabling us to realise its true potential
in what is a billion Pound per annum
industry. In March of
this year, the first change
was brought about,
engaging a new top team
led by an independent Chief
Executive Officer and new Chief
Commercial Officer. The company has
gone through a programme of positive
adaptations resulting in the
repositioning of its headquarters
offices to larger space in Malaga,
Spain. Coincidentally, we have created
a new cutting edge image/brand for
VSG with a completely new interactive
website
(www.vsportsgames.com).
VSG is currently embarking on an
extensive sales drive that is leading to
business in Russia, South Africa,
various countries in North Africa, Italy,
Peru, Argentina, Brazil, Serbia,
Lithuania, United Kingdom, China
and other parts of Asia.
Furthermore, the company is
considering external
investment opportunities
which should augment
VSG’s international
expansion plans into
both new markets
and new products.
Scarborough Group International • Business Review 2013
37
Scarborough Group International • Business Review 2013
38
Scarborough Group International • Business Review 2013
Far East and China
Scarborough Holdings Ltd (SHL) has been headquartered in
Hong Kong along with an office in Shenzhen, China since
2002. During this time, Scarborough’s businesses have
flourished and whilst still concentrating on Real Estate, we
have diversified into the Consumer sector in order to take
advantage of China’s buoyant twelfth Five Year Plan. Our
activities therefore incorporate Fashion Retailing, Medical
and Beauty Services together with new prospective ventures
into Coffee wholesaling and retailing in the People’s
Republic of China (PRC) and beyond.
39
Scarborough Group International • Business Review 2013
Real Estate Sector
Scarborough’s 10 year partnership
with Top Spring International Holdings
Limited (Top Spring) – now a Hong
Kong Listed corporation – see us
presently holding shares amounting to
approximately 15% of the company. I
retired from the Board of Top Spring
in June of this year but the close
relationship with Chairman Mr C H
Wong and his key business colleagues
continues. Our intentions are to
steadily and sensibly dispose of most
of the quoted stock in the years ahead
both for reasons of repatriation in part
of funds to the UK but also permitting
investment into ventures planned
within China, Myanmar and other
regions of the Far East. Top Spring is a
proud football shirt sponsor of
Sheffield United FC demonstrating the
friendship between Chairman Wong
and Scarborough.
In Hong Kong, earlier this year,
disposal took place of the remaining
units owned in Shun Tak Centre just
prior to the imposition of double
stamp duty. We took advantage of the
then positive market and the sale
realised excellent profits for SHL
approaching HK$100 million.
40
We have decided to branch into the
exciting Myanmar region – formally
Burma – where the recent lifting of
sanctions by the USA, Europe and the
United Kingdom has created huge
business opportunities. Since the
beginning of this year, the Hong Kong
team have conducted in-depth
research of the real estate market in
Yangon and is examining various
potential property development
opportunities. A trusted association is
being built with the Yangon based JL
Group – whose principal businesses
are in the Timber, Hotel and Travel
industries. Scarborough, in tandem
with Hong Kong based Marga
Properties, has recently concluded an
Agreement to purchase a 22 acre site
situated at the junction of U’ Hiaung
Road and Zoological Garden Road
within the commercial heart of
Yangon - the largest city in Myanmar.
We have lodged an Application with
Myanmar Investment Commission for
a scheme comprising of in excess of
1000 new homes in a series of 12 to
16 storey towers, supplemented by
Serviced Apartments,Offices, Club
Houses, Medical Centre and Retail
outlets.
Scarborough has a 25% holding in
venture with Marga Properties, which
in turn holds a 70% interest in the
Yangon transaction. We also play an
active role at Board and management
levels.
Our intentions are for SHL to open an
office in Yangon in the latter part of
2013.
Scarborough Group International • Business Review 2013
Main picture background: Shun Tak Centre
- Scarborough’s Hong Kong headquarters
Above top: Rainbow Department Store,
Shenzhen
Above: Top Spring proudly displayed as
Sheffield United’s away shirt sponsor.
Picture opposite page: Residential project
at U’Hiaung Road, Yangon, Myanmar
41
Scarborough Group International • Business Review 2013
Main picture top: Shenzhen Water
Flower Garden
Left: Springland, Shenzhen
Bottom left: Chengdu Landmark,
Chengdu
Bottom centre: Shenzhen Landmark,
Shenzhen
Bottom right: Tianjin Le leman City,
Tianjin
42
Scarborough Group International • Business Review 2013
43
Scarborough Group International • Business Review 2013
Consumer Sector
The Group still maintains an indirect
interest in Rainbow Department Stores –
an organisation listed on the Shenzhen
Stock Exchange - which now has over
60 outlets operating in major cities of
PRC. Our relationship with Rainbow and
in particular their principal shareholder
AVIC Group, is very strong and this is
demonstrated by ScarVic Retail
Management Services Limited (ScarVic)
which was founded in mid-2011 with
the purpose of providing a “one-stopshop” for UK and European retailers
wishing to expand into China. In turn
this led to the formation of ScarFiel
Retail Management Services (ScarFiel)– a
venture between ScarVic and Cortefiel of
Madrid, Spain to bring their two key
brands namely “Springfield” and “Pedro
del Hierro” to PRC. As at mid-2013
stores have been opened in Shanghai,
Beijing, Guangzhou, Shenzhen,
Chongqing, Ningbo, Hangzhou and
Suzhou. Before the end of this year we
anticipate some 25 Springfield and
Pedro del Hierro shops to be trading in
China.
Scarborough are highly
regarded in PRC, Hong
Kong and now
Myanmar, having been
one of the first privately
owned UK companies in
the 21st century to be
actively involved in the
Real Estate and
Consumer markets.
44
Scarborough Group International • Business Review 2013
With growing awareness of self-image in
Hong Kong and China, Scarborough has
also entered into an agreement to invest
in UMB Limited – a Medical Beauty
Services organisation with some 33
outlets in Hong Kong, 3 in Macau and 8
in China. UMB is embarking on an
ambitious expansion programme which
will see them as a leading player in PRC
in the years ahead, utilising their 3 key
brands – “Dr Pro”, “Dr Reborn” and “Be a
Lady”.
Lead by our Hong Kong team we recently
exchanged detailed Heads of Terms with
the Novell family of Barcelona to “bring
Coffee to China”. The Novell’s established
their business in 1958 and bring with
them as our partners wealth of
knowledge and experience in the “world
of coffee”,operating in Spain and Italy
specialised Coffee Houses as well as
distributing their branded products to
hotels, restaurants and shops. It is
interesting to note that the current
coffee consumption levels in PRC
amounts to only 5 cups per capita – an
exceedingly low level - and thus the
growth potential is vast. The market size
for coffee drinking is expected to reach
RMB1 trillion within 10 years and RMB2
trillion to RMB3 trillion by 2030.
Scarborough are well regarded in PRC,
Hong Kong and now Myanmar, having
been one of the first privately owned UK
companies in the 21st century to be
actively involved in the Real Estate and
Consumer markets. Background
knowledge and experience in turn should
be a stepping stone for the success of
Scarborough Oriental Ventures Limited
(SOVL) – the renamed China Growth
Opportunities Limited,
Scarborough
Oriental Ventures Limited
45
Scarborough Group International • Business Review 2013
46
Scarborough Group International • Business Review 2013
Our AIMs listed company, in which we took a 29% shareholding in mid-2012. SOVL
is in the process of being re-launched with a view to providing its shareholders with
exposure to high quality growth companies in selected sectors of the China and Far
Eastern markets. The investment strategy is to take meaningful minority stakes in
profitable, well managed companies, primarily in the Retail, Consumer, Real Estate
and Services markets, working with the management teams of those businesses, to
help them achieve their strategic objectives. A typical hold period for targeted
investments is 3 to 5 years and the Directors will create a portfolio of assets with a
sensible spread of risk.
Scarborough – utilising its understanding of the Far East and with an extensive
network of contacts and resources available via our long established team will create
an attractive deal flow and thereafter actively manage investments made through to
exit. Since acquiring its stake in SOVL, the team has focused on setting the platform
for the re- launch including changes to the Board, initial investor soundings and a
rebranding of the business. Additionally, there has been a significant effort to
develop a strong pipeline of opportunities to ensure that the new fund will be
energetically invested in from the start. The Group is now engaged in the capital
raising programme with an initial target fund of between £50m - £75m.
47
Scarborough Group International • Business Review 2013
Australia
It is frustrating to report that due to serious
mismanagement and improper activities
undertaken by the key executives managing
our joint venture company – Scarborough
Pacific Group Pty Ltd (SPG) – (now renamed
FGHA Pty Ltd ) we have decided to withdraw
from the Australian market. SPG’s primary
asset at Double Bay, Sydney is in the process
of being sold with completion due in
September 2013. We are vigorously pursuing
the two executives for compensation via the
Courts as a result of their actions where it is
abundantly clear that certain of SPG’s funds
were used for activities outwith the
company’s ownership. We expect to secure
compensation in due course.
The interest we have in Central Coast
Mariners FC (CCMFC) – via the Mariners Trust
– was sold in July 2012 but I remain as a
Director of the Football Club and thus would
hope that the link between the Mariners and
the Blades in the years ahead can be
strengthened. Scarborough retain a profit
share arrangement in the Mariners leisure
related project situated at Tuggerah, North
Sydney where construction work continues to
be at or about on programme. Apart from
the provision of training facilities for CCMFC
the project includes a commercially run 5-aside football, an Aquatic Centre, Hotel, Office
premises and Club House.
48
Scarborough Group International • Business Review 2013
49
Scarborough Group International • Business Review 2013
Summary
The second half of 2013 should see the successful
completion of our recently negotiated revised agreement
with Lloyds pretty much addressing the problematical part
of SGIL and allowing colleagues to then spend more time in
advancing the property trading, investment and
development business in the UK. From the collapse of SGIL’s
past key financier, excellent new and healthy relationships
have been formed with Santander and Investec in support
of a good number of our UK transactions. Likewise in the
Far East, HSBC continue to assist Scarborough.
Our travel overseas – for Scarborough to become global –
started in the 1980s with property projects embarked upon
in Houston, Texas USA stretching all the way to Antwerp,
Belgium – still the location of our Group’s international
headquarters. Over this period the weight and balance of
UK to global ventures has changed dramatically alongside
the extension of our range of activities beyond that of real
estate. Personal sacrifices aside, Scarborough’s far
sightedness and vision of some four decades ago to
“become international” have seen a noteworthy level of
business undertaken particularly in Europe and the Far East.
In today’s ever changing world our ability to adapt remains
critical.
Hard work and consistent effort are natural within the
Scarborough organisation and the lessons learned over
some forty years or more of business means we can never
be complacent thus our “pull, push and shove” maxim is not
to be forgotten.
I express my sincere gratitude to all members of the
Scarborough team around the globe for their constant
endeavours and good spirit.
Kevin McCabe
Chairman
50
Scarborough Group International • Business Review 2013
Panoramic view of the City
of Sheffield showing Digital
Campus ( in the foreground)
and the home of football,
Bramall Lane.
51
Scarborough Group International • Business Review 2013
52
Scarborough Group International • Business Review 2013
A panoramic view of
Scarborough Bay taken from
Europa House where the
roots of Scarborough Group
began before the wings flew
53
Scarborough Group International • Business Review 2013
Scarborough’s History
UK - 1966-76
UK/Europe - 2000
Europe - 2004
UK - 1976
UK - 1980
Ancient Mariner
Properties Limited
UK - 1989
UK - 2004
UK - 2000
Full control
Scarborough
Development Group plc
UK - 2001
Europe - 2005
UK - 1990
UK - 2002
China - 2006
UK, Hong Kong/China - 1991
Hong Kong/China - 2002
Australia - 2007
UK - 1991
Scarborough
Holdings Limited
Hong Kong/China - 2002
International - 2007-2008
UK - 1995
Scarborough International
UK - 2003
China -2008
China - 2003
Hungary -2008
UK - 1997
UK/Europe - 2000
54
Scarborough Group International • Business Review 2013
Serbia/Italy- 2011
India -2008
China - 2011
Spain - 2011
FairBriar
UK - 2012
Australia -2009
Hong Kong/China - 2011
Scarborough
Listed on the Hong Kong Exchange
Scarborough
Oriental Ventures Limited
China - 2012
Holdings (UK) Limited
UK -2009
Scarborough Capital
International - 2012Limited
China - 2011
Scarborough United Group
Limited
International - 2012
Canada-2010
China - 2011
Hong Kong/China - 2012
Australia -2010
ScarWyn
Hong Kong - 2011
UK - 2012
Scarborough
Development Group
UK - 2010
Scarborough
Properties (UK) Limited
ScarNov Coffee Group
UK - 2011
International - 2013
55
UNITED KINGDOM
London
T: +44 (2)20 7127 9170
Leeds
T: +44(113) 284 0800
Edinburgh
T: +44(0)131 240 1230
Scarborough
T: +44(0)1723 500208
Sheffield
T: +44 (0)871 995 1889
EUROPE
Brussels, Belgium
+32 (0)2 550 3557
Belgrade, Serbia
T: +381 11 244 22 44
La Manga, Spain
T: +34 968 175647
Malaga, Spain
T: +34 686 395 141
Malta
T: +356 2577 0000
Milan, Italy
T: +390 27 82 399
FAR EAST/CHINA
Hong Kong
T: +852 2869 9683
Design: saltmerdesign.co.uk
China
T: +86 755 82116991
www.scarboroughgroup.com