Sir David Murray warns of slow recovery as MIH takes £59m hit on Rangers exit

SIR David Murray’s dwindling business empire revealed that it took a final £59 million hit on the sale of Rangers Football Club as he insisted that the group had made “good progress” in its last financial year.

But the metals and property tycoon warned that a return to growth for Murray International Holdings (MIH) would “take longer than all would have predicted or wished”.

The group also revealed that its long-standing lender, Lloyds Banking Group, had upped its stake in the firm with a further £117.m debt for equity swap in March.

The group first agreed a £150m debt swap with Lloyds in 2010, which diluted the Murray family’s ownership of MIH from 88 per cent to 70 per cent.

But a spokesman for the group yesterday said that Murray’s stake in shares with voting rights would remain at 70 per cent, although he declined to confirm how much the bank now owns of MIH. Sir David Murray insisted that yet more debt swaps was always part of the plan.

He said: “It was envisaged at the time of the original restructuring that a further debt-to-equity conversion would be required to secure the platform for the group’s overall debt reduction and divisional strategies.”

The group yesterday released only certain figures relating to its financial year ended 30 June, 2011, ahead of submitting its annual report and accounts for 2011.

The firm said it made an operating profit – before exceptionals – of £11.4m, almost half of the £21.1m it reported in the same period last year. It gave another figure, profit before interest and taxes (PBIT) also before exceptionals, of £14.9m.

The statement said its results were “marked” by £54.3m exceptional costs related to the ongoing restructuring, which will have driven the group firmly into red. Last year MIH made £69m losses on a pre-tax basis.

Added to this is a further £59m one-off exceptional “non-cash” write-off on the disposal of Rangers to Craig Whyte.

Sources confirmed that this was part of an overall £100m loss that MIH had taken on Rangers in the 23 years the club was part of the group.

MIH comprises a range of businesses under its metal division, its commercial property division, PPG, a housing development arm Murray Estates, as well as Response, its outsourcing business which recently lost its most lucrative contract with broadcaster Sky to a rival.

Murray Capital, a small family investment firm, is no longer part of the group.

Employee numbers at MIH have fallen from 3,500 in 2010 to a current 2,700.

Murray said that the “defensive measures” it has so far undertaken – including debt reduction, property sales, and “rationalisation and efficiency measures – would only be realised when the economic recovery gained momentum”.

He said: “Our overall medium-to-long-term strategy remains geared towards asset realisation and reduction, particularly in relation to property.

“The phasing of implementation and the ultimate values realised will be determined largely by wider economic conditions.

“A return to growth is undoubtedly going to take longer than all would have predicted or wished. The financial restructuring and measures introduced over recent years will enable us, however, to weather the economic issues until improvements materialise.

“The group’s long association with Rangers has now ceased and we hope that the administration process will come to a successful conclusion to the benefit of the fans, employees and other stakeholders.”

Group turnover was down 15 per cent at £394.6m, reflecting a combination of the recession and lower property sales.

Turnover from continuing operations of £341m was £55.7m lower.