Interview: Sir David Murray in The Murray Octopussy

[pessimistic_pete 2]

nterview: Sir David Murray in The Murray Octopussy

Published Date: 29 November 2009

By Bill Jamieson

NUMBER Nine Charlotte Square, Edinburgh, is a world away from the raw, raucous terraces of Ibrox stadium, home of Rangers Football Club. In an elegant oak-panelled drawing room, paintings by Scottish Colourists blend into a sombre brown as a bleak November afternoon light seeps through the window.

Only an occasional moan of wind down the period fireplace disturbs an atmosphere of quiet, sepulchral peace. Sepulchral, that is, until the voice of Sir David Murray, boss of Scotland's largest private company, booms from the boardroom squawk box.

"Me taking a back seat? No way. I see this period as a great opportunity. Real fortunes are made in recessions, not in boom times. I'm not going to close my head office and move to Hungary. I'm here to stay whether you like it or not."

I am in the head office of Murray International Holdings. And Murray could have boomed straight out of the pages of a Joseph Schumpeter master class on entrepreneurs and the business cycle. He is as tough, resilient and "up for it" as ever, bloodied but unbowed after the worst downturn to hit the UK economy since the Depression era.

He now senses that crucial areas of his business have turned the corner and is emphatic on the support of Lloyds Banking Group through this worst of storms.

Beleaguered is a word that could have been coined for his company. Murray is big in steel. Through companies such as Premier and Ireland Alloys, it is the biggest metals distributor in the UK with annual turnover in excess of £200 million. But the price of steel has slumped.

It's big in call centres, with its Response business handling clients such as Sky and University Grants. It employs 2,000. Here competition has never been more ferocious.

It has a venture capital business, embracing a 30 per cent stake in coach-maker Alexander Dennis. The group has been losing money and shedding staff.

It is big, very big, in commercial property – the division that accounts for the largest part of Murray's business. Its two million sq ft plus property book, which made a halved £5.5m profit in 2008 on net assets shown at £63.5m, includes Princes Mall in Edinburgh, the Kingsgate shopping centre in Dunfermline and offices in Glasgow and London. Here values, once reckoned at £640m, went into free-fall a year ago.

And it is 60 per cent into Rangers FC, one of the great Scottish national icons. It has had long periods of greatness. But the beleaguered club has also had periods when its fortunes have hovered between an animated waxworks and rigor mortis. No prizes for guessing what period it's now in.

MIH, which employs 3,300 in total and has a turnover of more than £500m, looks like a collection of business discards and castoffs from previous slumps, downturns and recessions. It is a debt-financed buy-and-hold portfolio capable, when the cycle turns up, of stunning rebounds in values and surges of profit.

But it can look exposed when the cycle turns down. Values underpinning the debt become vulnerable. And revenues needed to pay that debt interest start to fray. Diversification is no safe haven. In a foaming ebb tide like this, all the boats drop.

MIH has been through a year of fire that makes the tribulations of Rangers seem like no more than a sigh down that Charlotte Square fireplace. The club's £30m debt and ailing revenues are but a very small part of the greater problems at MIH.

It is chronically borrowed, with debts of £759m. Its revenues have plunged. Its property portfolio has looked about as safe as a house on a cliff edge with sea erosion. The group accounts have been delayed, waiting for the storm to clear, and Lloyds, the group's bankers, has also had – to put it no stronger – perturbations of its own.

But that foaming ebb tide now looks to be turning. "On property," says Murray, "we were in a worse situation three or four months ago in valuation terms. We were going along the bottom and now companies like British Land are starting to report an upturn. We are part of that.

"We are heavy in property and through time we will bring this down. We are under no pressure to do that and Lloyds Bank have been very supportive. So for the property portfolio which accounts for 80 per cent of the cash in the group, we are not dependent on any one type or area.

"One of the reasons we extended our year end (to end June] is that we expect to see some improvement in the market." Also, disposals are believed to be imminent, including a major sale in Glasgow. "We've got a couple on the go right now and have been very surprised at the prices we have got.

"On the metals business it does rely heavily on the construction industry and there has been a heavy fall. What has affected more than anything has been the price of steel. A year ago the selling price was over £700 a tonne. In July that had fallen to £450, a huge drop. At any one time we will have 40,000 to 45,000 tonnes of steel in stock. What happened was that, like property, we were caught short in the middle of the year.

"But there is no doubt that it has bottomed. I said in March that I did not expect to see steel making a recovery until the end of this year or the early part of next year and I've predicted it quite well. We have started to see a profit again and we have held our market share. Another great barometer is the price of scrap and prices here too are hardening again."

The Response call centre business has a spread of clients. "It's not very profitable at the moment," says Murray, "but we are now putting in new business plans. In ten years it has been profitable in seven. There is a lot of competition in Glasgow and empty call centres across the UK. It's the business that employs the most people but gets the least return."

He has put in business turnaround specialist Donald Muir to look at overheads, costs "and leave no stone unturned". The wiry 50-year-old accountant, who has previously worked with companies ranging from Alcatel, BT and Cable & Wireless, has also been put on the Rangers board – and is paid by Murray, not Lloyds Bank.

The club has yet to attract a single expression of interest from a prospective buyer, Murray reveals, dismissing talk of an approach from a Florida millionaire, or other rumours that have surfaced recently.

Rangers is a small part of the group in revenue terms but accounts for by far the greatest share of press publicity – and speculation about the club's financial health and future has been intense.

He also slapped down reports that Lloyds Bank was effectively running the club. This year "we are hoping to go into break-even and make a small profit. It's not going to be a lot, but there will be no further losses."

"I've made it quite clear," Murray added, "that with the banking facility the club would have to work within its financial means. When the speculation got mischievous was when people started talking about mysterious Florida millionaires. It was unbelievable.

"For the record, I will repeat that I am totally prepared to sell the club. Price is important but it is not the most important factor, as long as you hand it over in the best interests of the football club.

"Rangers is no different from any other business. Lloyds has given us a facility and we are no different from a household or a business. The club must work within that.

"We collectively must run our football clubs within their financial means. If people don't like that, they are not living in the real world. Every other football club has gone the same way. I find it amazing that a football club like Ipswich can have a greater debt than Rangers and it doesn't appear on the radar. Preston lost £10m."

Company doctor Muir is now on board. "Donald was a pal of Alex McLeish, so we knew him through football. He's helping me with change. He'll help to teach an old dog new tricks."

Murray Capital, run by Murray's son, David Murray Jnr, has three big businesses under its wing – the electronic cables business Brand-Rex at Glenrothes, computer servicing concern Competo and a 30 per cent stake in Alexander Dennis with partners Brian Souter and Sir Angus Grossart. It employs 2,000 and is one of the largest manufacturing facilities left in Scotland. "I think if we were purely in the property and metals sectors we would be vulnerable to more pressure. But we are like an octopus with tentacles and I think that's what carries us through.

"We have had four or five quite big meetings with Lloyds Bank and they have been supportive at every stage. I have to say they have been quite reasonable in price terms, I have no major concerns. I can only talk about my position because you do hear stories that are not very pleasant.

"But I have to say that it's down to how you deal with the banks. Do they believe you? My great belief is that it is entrepreneurs in Scotland who can make a difference and if the banks are not going to support us we might as well go home and throw away the key. We can't live in a country where we are 50 per cent reliant on the civil service."

As for the future? "I've never seen more opportunities come across my desk than in the past six months. But we have to keep our powder dry.

"We see the biggest growth in the metals business. It's what I started off with, and it's where I see growth in the future. But going forward we will be cautious and analytical in expanding our business.

"We all believe in the future and in our own ability and if we didn't believe that we wouldn't be here."

http://sport.scotsman.com/rangersfc/Interv...y-in.5867157.jp

[CanadianBacon 2,088]

As puff pieces go.....that's a belter.

Champagne all round. :pierre:

[Jimfanciesthedude 24,775]

murray must stay