Business Review CELEBRATING 40 YEARS

Transcription

1 Business Review CELEBRATING 40 YEARS

2 Scarborough Group International Celebrating 40 years GDV approaching 2 billion 4,500 new homes in development pipeline 4 million sq ft of commercial accommodation Leading Northern Powerhouse developer Strong links to local governments Global reach strong partnerships across the world Residential, Commercial, Retail, Leisure, Business Parks, Industrial and Mixed Use

3 Scarborough Group International Business Review Introduction 06 Scarborough International Properties Limited 07 Review Northern Powerhouse Developments 10 Middlewood Locks, Manchester 14 Hat Box, New Islington, Manchester 18 Thorpe Park, Leeds 22 Sheffield DC, Sheaf Street, Sheffield 26 Orbital 1, Stockport 26 The Mills, Congleton 26 Grand Approach, Wigan National Developments 30 Talbot Green, Llantrisant 31 Rosyth Waterfront, Fife 32 The Curve, Glasgow 33 Marina Quay, Rhyl 34 Station Quarter, Newport 35 Blackpool Road, Preston 36 Dalgety Bay, Fife 37 Property Trading 38 Esplanade Group (Scarborough) International Ltd 39 Review 40 Leisure 44 Energy & Other Related Activities 45 Betting & Gaming 46 Far East, Including China 50 Consumer 51 International 52 Charities & Community 54 Our Partners & Financiers 57 Brexit 60 Summary

4 4 Scarborough Group International Business Review 2016 Introduction The foundation of today s Scarborough Group International Limited (SGI) started some forty years ago when Kevin McCabe formed his first family owned private company, ultimately leading to the initial Scarborough branded corporation. As such, 2016 is a year to celebrate SGI s fortieth anniversary. Much has changed since the early years as during that time we have blossomed into a global organisation having at various intervals, businesses in Australia, Canada, India and more importantly Hong Kong, the People s Republic of China and many parts of Europe as well as of course, its core activities ever present here in the United Kingdom.

5 Scarborough Group International Business Review YEARS SGI has two distinct subsidiary holding companies operating independently from each other and comprising: Scarborough International Properties Limited (SIPL) itself having three key divisions consisting: UK Property Development UK Property Trading UK Asset Management Esplanade Group (Scarborough) International Limited (Esplanade) having six divisions consisting: Leisure including Hotels, Gymnasia, Business Centres and the famous Sheffield United FC Betting and Gaming Software Consumer Sector businesses Energy and affiliated businesses Far East including China in a range of businesses International It is to be noted that certain of Esplanade s activities in Betting and Gaming Software (VSoftCo), Energy (ScarDec Group), Leisure (Copthorne Hotel) and partly within the Far East, including China (ScarVic and ScarFiel) are undertaken by affiliates in which SGI either holds no direct interest or only a non controlling interest. To benefit both SIPL and Esplanade, SGI has operational bases located in Shenzhen, China; Hong Kong; Malaga, Spain; Belgrade, Serbia and within the United Kingdom at London, Manchester, Sheffield, Leeds, Edinburgh and the town of Scarborough where the roots of the Group were founded in Countries we operate in:

6 6 Scarborough Group International Business Review Scarborough International Properties Limited

7 Scarborough Group International Business Review Review Scarborough International Properties Limited (SIPL) is a specialist UK Real Estate, Development and Trading business that also earns fee income from undertaking Fund and Asset Management roles as well as Project and Development Management duties. It benefits from the long standing Scarborough name which is well known throughout the property industry having undertaken so many successful projects in Scotland, Northern Ireland, Wales and most areas of England including of late, stepping up the pace in the Northern Powerhouse Cities of Manchester, Leeds and Sheffield. The size and scale of our present Development activities alone have a planned combined Gross Development Value approaching 2 billion where it is fully expected within the next five years or so, profits of real substance will be earned by SIPL and its subsidiaries or associates. For good reasons certain of the foremost transactions are strategically structured bringing on board joint venture partners some long established and situated in the United Kingdom and others being secured due to the long standing business friendships built in the Far East, particularly Hong Kong, Singapore and China. Our Real Estate skills cover all sub-sectors of the market namely Residential, Commercial, Retail, Leisure, Business Parks, Industrial and Mixed Use projects. Outwith Development activities, Scarborough s name is synonymous with regularly enhancing value to its retained property assets many of which are traded to make constant and useful profit. Currently SIPL owns and manages a portfolio principally of Commercial and Residential properties. The policy we have of marrying highly valuable capital return based Development projects alongside securing ongoing income and trading profits from disposals should see the Group via SIPL continue its enviable track record and retain its reputation for delivering quality products to benefit itself and partners. SIPL is never short of opportunities.

8 8 Scarborough Group International Business Review 2016 Northern Powerhouse Developments

9 Scarborough Group International Business Review Middlewood Locks, Manchester Hat Box, Manchester Thorpe Park, Leeds Sheffield DC, Sheffield The Mills, Congleton Orbital 1, Stockport

10 10 Scarborough Group International Business Review 2016 Northern Powerhouse Developments Middlewood Locks Location: Manchester

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12 12 Scarborough Group International Business Review 2016 Manchester: Middlewood Locks, Manchester Joint Venture with Metro Holdings of Singapore and Hualing Group of PRC Situated in Salford on the western edge of Manchester City Centre, Middlewood Locks will see the creation of a new Mixed Use community within walking distance of the Central Business District and with it the amenities provided by the UK s leading Regional City. Our 24.5 acre cleared site has Planning consent for some 2.5 million sq ft of Residential and Mixed Use development including 2,215 new 24.5 acre canalside mixed use site with a waterfront park

13 Scarborough Group International Business Review Homes and 900,000 sq ft of Commercial space, incorporating Offices, Hotel, Retail and Leisure uses. Middlewood Locks will also benefit from an attractive remediated Canal basin as a central landscaping feature of the Community, establishing high quality living space with a waterfront park and an extensive range of modern facilities to benefit residents and commercial occupiers alike. Detailed Planning approval for a first Phase of Residential development comprising 571 apartments is on site with enabling works already underway that will permit formal building activities to start during the last quarter of Alongside our two established Partners Metro Holdings and Hualing Group we also have Beijing Construction and Engineering Group International as our Main Contractor whom we are hoping to work with together on our joint venture for the next five to seven years. Together with the implementation of our new Homes at Middlewood Locks, we are now actively progressing the staged development of Commercial space with a view to commencing the first Office project during GDV: 1 billion + No. of Apartments: 2,215 Commercial space: 900,000 sq ft

14 14 Scarborough Group International Business Review 2016 Northern Powerhouse Developments Hat Box Location: New Islington, Manchester

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16 16 Scarborough Group International Business Review 2016 Manchester: Hat Box, New Islington Joint Venture with Metro Holdings of Singapore and Hualing Group of PRC GDV: 32 million Number of apartments: 144

17 Scarborough Group International Business Review Practical completion of our Hat Box development housing 144 Residential apartments was achieved in April 2016 and it is pleasing to report that all of the new homes have been sold off plan, thus producing good profits to our joint venture partners and the Group. It is to be remembered that Hat Box is the second phase of our adjacent Milliners Wharf development that consists of 261 apartments, where again all of these homes have been sold with the exception of seven apartments which have been retained and are currently tenanted. The success of both Hat Box and Milliners Wharf demonstrates the popularity of the New Islington area of Manchester where we seek to undertake further developments in the years ahead. 100 % of apartments were sold off plan

18 18 Scarborough Group International Business Review 2016 Northern Powerhouse Developments Thorpe Park THORPE PARK LEEDS Location: Leeds

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20 20 Scarborough Group International Business Review 2016 Leeds: Thorpe Park Joint Venture with Legal & General Next phase: sq ft 1.35million mixed use accommodation and 300 homes

21 Scarborough Group International Business Review Thorpe Park, Leeds is an established award winning Business Park already with a working population at the moment of around 4,500 people. The next stage of the development will build upon the Estate s strong foundation, adding to the existing 800,000 sq ft of space with a further 1.35 million sq ft of Mixed Use accommodation, and 300 homes, to create one of the largest and most diverse out of town business locations in the UK. Thorpe Park s 300 acres will, when finally completed, comprise an unrivalled mix of business and supporting amenity uses, including 110 acres of Green Park and public realm areas in an outstanding and well connected location. The Estate sits at the heart of the City Region s most significant growth area and will bring even greater diversity to Leeds offer to the local and national business community. This major city extension is to be served by the construction of the East Leeds Orbital Road (ELOR), a new dual carriageway connection to the M1 via our Estate. An extensive area to the north of Thorpe Park has been allocated for housing use to produce up to 7,000 new homes. Thus, this is the largest single area of housing proposed within the total allocation for East Leeds which stands at 11,000 new homes. Planning consent has been granted for 940,073 sq ft of Offices, 193,752 sq ft of Retail, 105,207 sq ft of Leisure incorporating Cinema/Cafés/ Restaurants, 91,236 sq ft of Hotels, Healthcare/Childcare facilities, 24,650 sq ft for Health and Fitness and 300 Homes on the second phase of the Estate. Key to Thorpe Park s success is having a progressive plan for delivering ease of commuting through effective and varied transport modes, and a managed transport planning strategy. The Estate s prominent position adjacent to the M1 at junction 46 provides immediate access to the local and national road network. The new ELOR will bring a greater connection to the East Leeds community and the City, with established bus routes providing a service every 15 minutes into the centre of Leeds. Thorpe Park is being considered as the location for a proposed new Rail Halt East Leeds Parkway and associated Park and Ride facility. Present on site activities include development platform earthworks involving mining legacy remediation. Highway design is on programme incorporating the new Rail Bridge and alterations to junction 46 plus key Gas and Electricity diversion works. Coincidentally we are midway through the construction of the first of the new premium specification Offices Building 3175, The Paradigm which will be available for occupation in late November 2016 offering 31,650 sq ft and over 100 parking spaces. Pre-development activities for our major Retail and Leisure Park have already seen formal Agreements for Lease exchanged with Next, M&S Simply Foods and Outfit. Heads of Terms are in place with a variety of other nationally known organisations for Retail, Cinema, Restaurants, Coffee Shops and other Leisure uses. A contract to conclude the sale at an attractive price of the Estate s Residential land for 300 homes to national Housebuilder Redrow Homes was exchanged earlier this year. GDV: 500 million Development site: 300 acres with 110 acres of Green Park and public realm areas Location: J46 of M1

22 22 Scarborough Group International Business Review 2016 Northern Powerhouse Developments Sheffield DC Location: Sheaf Street, Sheffield

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24 24 Scarborough Group International Business Review 2016 Sheffield: Sheffield DC Joint Venture with Metro Holdings of Singapore GDV: 45 million Next phase: 131,000 sq ft in two office buildings

25 Scarborough Group International Business Review Sheffield DC is already recognised as the City s most iconic Office location, unquestionably one of the prime Northern Powerhouse developments. DC is located not just within a stone s throw of the City Centre, but also adjoining the Railway Station and Bus Terminus connecting within seconds to the Parkway which in turn links in to the M1 and other national Motorway routes. In past years we have developed at DC, the Electric Works, and Ventana House, both of which are fully occupied and are now well progressed with the construction of Acero Works, an Office Building of some 80,000 sq ft of the highest quality accommodation being constructed over six floors and ready for occupation during the second half of We are confident that the six storey Acero Works will secure prime occupiers during next year, and thus are planning the final phase of DC, being Vidrio House which will be an eight storey, 51,000 sq ft building where enabling and substructure works have already been undertaken. Acero Works 80,000 sq ft and Vidrio House 51,000 sq ft of Grade A Office Space

26 26 Scarborough Group International Business Review 2016 Stockport: Orbital 1 GDV: 20 million Cheshire: The Mills, Congleton New development: 50,000 sq ft Greater Manchester: Grand Approach, Wigan Proposed scheme: 150 apartments

27 Scarborough Group International Business Review In mid 2016, Scarborough Development Group Limited (SDG) was granted Planning consent by Stockport City Council for a 12.5 acre development on our Orbital 1 site situated on Junction 1 of the M60 Motorway in South Manchester. The project is to be Mixed Use comprising Industrial Trade Counter and Retail buildings in this most sought after area of the North West, within easy reach of Manchester City Centre. Nearby occupiers include Audi, BMW, Volkswagen, B&Q, The Co-Operative Bank and Pets at Home. Facilities are in place with Investec and preparatory works have commenced on site ensuring we are ready for the main construction activities to start within the coming months. The first Phase is likely to consist of some 55,000 sq ft of Retail accommodation alongside key infrastructure work to complement the rest of the Orbital 1 land. Orbital 1 has a GDV exceeding 20 million and at completion is expected to create more than 300 jobs for the Stockport region. The Mills is prominently located at the centre of Congleton Town Centre and will see an under-utilised site redeveloped into modern, high specification retail and leisure space of some 50,000 sq ft, together with a new public square and realm at the heart of the development. Work on site is due to commence second quarter of In recent times we have reconsidered SDG s proposals for the development of the land situated alongside the Grand Arcade Shopping complex. Wigan is seen as an excellent location with ease of access to travel by road or rail to other areas of Greater Manchester as well as Liverpool.

28 28 Scarborough Group International Business Review 2016 National Developments

29 Scarborough Group International Business Review The Curve, Glasgow Marina Quay, Rhyl Talbot Green, Llantrisant Blackpool Road, Preston Station Quarter, Newport Rosyth Waterfront, Fife

30 30 Scarborough Group International Business Review 2016 South Wales: Talbot Green, Llantrisant Our site in Llantrisant extends to some 20 acres of land over which we already have Planning consent permitting around 450,000 sq ft of new Retail and Leisure areas to be developed in the years ahead. The first phase of our Talbot Green shopping complex sees infrastructure works progressing well, ready to permit a handover of the land to J Sainsbury plc, who thereafter are obliged to develop a circa 100,000 sq ft Foodstore within the coming years. It has been extensively recorded within the media over the last few years of the change of emphasis being applied by the nation s premier Foodstore operators and thus we are presently in dialogue with Sainsbury as it may wish to reorganise the present arrangements in respect of its development requirements for Llantrisant. This is temporarily affecting progress with the development of the second phase at Talbot Green where we anticipate constructing approximately 350,000 sq ft of Shopping and Leisure space recognising the demand that has been expressed by many National Retailers who wish to come to the Llantrisant area. Outwith our future Shopping Centre, the joint venture with partners at Valad Europe Talbot Green Developments Limited (TGDL) controls substantial areas of residentially designated land in Llantrisant owned by the Welsh Government. Thus we are working with them to secure formal Planning consents in the years ahead, allowing TGDL to then benefit from profit-share arrangements generated from eventual sales. GDV: 90 million Development site: 20 acres Joint Venture with Valad Europe Group

31 Scarborough Group International Business Review Scotland: Rosyth Waterfront, Fife Situated on the northern shore of the Firth of Forth, Rosyth Waterfront occupies a magnificent Gateway position with prime visibility from the new second Forth Road Bridge Crossing which is due to open in May 2017 as well as having access to the M90 from junction 1. It is to be remembered that the Group s involvement with Rosyth stretches back some twenty years having in past times developed new Office accommodation and Warehousing units on the Europarc section of the Estate. GDV: 200 million In conjunction with our partners Muirs, we are progressing pre-development activities to develop 135 acres of the Estate with a Mixed Use Masterplan incorporating a Waterfront Village comprising Residential homes and adjoining amenity space alongside Offices, Warehousing and Industrial accommodation. Development site: 135 acres Joint Venture with JW Muir Group plc

32 32 Scarborough Group International Business Review 2016 Scotland: The Curve, Buchanan Gate, Glasgow The Business Park at Buchanan Gate has been developed by the Group over a number of years. The Business Park is prominently situated near to the M80 Motorway, around ten miles from Glasgow City Centre. Our intended project will provide much needed Grade A Office accommodation to an area where there is continued demand. A new Application has recently been submitted with a view to construction of the Office scheme being underway by mid 2017 and ready for occupation during GDV: 7 million New development: 30,000 sq ft office building

33 Scarborough Group International Business Review North Wales: Marina Quay, Rhyl Construction operations are underway on site for the staged development of 132,000 sq ft of Retail and Leisure space within the Marina Quay area of Rhyl. Enabling works and Phase One building activities with a pre-let in place to The Range, Farmfoods, Poundland, Burger King and Greggs should see Practical Completion achieved around mid Funding from our partners Investec has been agreed and within the next two to three years we envisage all Phases of Marina Quay including a Foodstore and Retail Store, together with fast food facilities will have been developed and become operational. Completion: Mid 2017 New development: 132,000 sq ft of retail & leisure

34 34 Scarborough Group International Business Review 2016 South Wales: Station Quarter, Newport SDG successfully completed last year the development within the Station Quarter complex of a prime Office building of 80,000 sq ft leased to Admiral Insurance and thereafter sold the investment to a USA Institutional Fund. Since then we have been progressing a second Office building of some 50,000 sq ft over six floors which received Planning consent earlier this year and where terms of letting are at an advanced stage for the majority of the building to be occupied by the University of Cardiff. Additionally at Station Quarter SDG is progressing the upgrading of the existing Retail and Leisure space, parts of which already have pre-lets in place to Leisure users. It is anticipated that between now and 2018, upgrading of the whole of our Station Quarter complex including new buildings will have been completed. Phase 2 completion: 2018 Prime office building: 50,000 sq ft

35 Scarborough Group International Business Review Lancashire: Blackpool Road, Preston Vacant possession of the premises on SDG s Blackpool Road site previously leased to Perry s Group was achieved in mid 2016 and we are now in dialogue with the Local Planning Authority with a view to undertaking a new Retail development scheme, likely to comprise of a 15,000 sq ft Foodstore and circa 25,000 sq ft of non-food space. Foodstore: 15,000 sq ft New development: 25,000 sq ft

36 36 Scarborough Group International Business Review 2016 Scotland: Dalgety Bay, Fife A gateway development situated on a key route into a highly regarded Fife town. The project has planning for an Aldi Foodstore, a Marston s family pub and 14,000 sq ft of Retail and Commercial space with construction commencing this year. Development site: 4 acres Completion date: Autumn 2017

37 Scarborough Group International Business Review Property Trading Within the last year, the Group has been successful in disposing of properties pre- Brexit at a gross price exceeding 50 million. We have attractive medium term Facilities in place with the Group s key Financier, Santander Bank and are presently in dialogue with them to hopefully increase and extend the arrangements as we seek to purchase new commercial income producing assets within those territories well known to Scarborough and where we have within a short distance, our operational bases. Thus, post-brexit and in the coming years the Group aim to become more active and aggressive in acquiring new stock taking advantage of the uncertainty that pervades the market, using its asset management skills to enhance value before then disposing of individual properties to make constant and regular profits.

38 38 Scarborough Group International Business Review Esplanade Group (Scarborough) International Limited

39 Scarborough Group International Business Review Review Esplanade s varied business portfolio both National and International has, in the main, experienced a difficult few years during which time our colleagues have worked fastidiously in expectation that within the next three years or so, Esplanade can expect profit and/or cash returns of substance thereafter to reinvest in selected business sectors.

40 40 Scarborough Group International Business Review 2016 Leisure Sheffield United FC Location: Sheffield

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42 42 Scarborough Group International Business Review 2016 Sheffield United FC Copthorne Hotel Cherry Street

43 Scarborough Group International Business Review Stadium Capacity: Plans are in place to increase capacity of The world s oldest professional Football Stadium to 45,000 We have enhanced our It is both frustrating and disappointing to report on another unsuccessful season for Sheffield United FC, where, put simply an expensive First Team squad underperformed ending up in its lowest League position for over 30 years. This was in spite of the Blades having at or about the highest player wage bill in the League. The real on the field achievement was the Club s Youth Development system, with the Under 18s and Under 21s both appearing in their Divisional Play-Off Finals, albeit losing either by a single goal and/or a penalty shoot-out. What is heartening to report is that the strong support of Blades fans remains, with the startling figure of an average redevelopment proposals for surplus areas of land around Bramall Lane gate at Bramall Lane the home of football approaching 20,000 people per match far higher than any other Club in League One and most of those in the Championship and three or four playing in the Premiership: a reminder of Sheffield United s massive potential and the impetus to strive ever harder to regain our Premier League status in the years ahead. So, as the season ended in early May it was necessary to quickly make decisions and adjust the structure of the Blades First Team management. This duly took place and by mid May a new Team Manager was selected who is getting to grips in reshaping the squad ready for a positive challenge in Season 2016/2017 to see us back in the Championship come May of next year. After a sticky start to the new campaign, the squad is now shaping up giving much optimism to both Esplanade and its joint owner of Sheffield United FC His Royal Highness Prince Abdullah Bin Mossad Bin Abdulaziz Al Saud. We retain not only the iconic Bramall Lane Stadium and its Academy at Shirecliffe in Sheffield, but also the Copthorne Hotel, Enterprise Centre and other adjoining properties adjacent to the Stadium. Additionally, we have enhanced our redevelopment proposals for surplus areas of land around Bramall Lane with the intention of starting the first Residential project of circa 50 Apartments next year.

44 44 Scarborough Group International Business Review 2016 Energy & other related activities Power plant commencement: 2017 Terra Production Can Filling: Turnover grew by 22% The 230 million project to develop a 240MW combined cycle natural gas fuelled heat and Power Plant in Loznica, Serbia continues to make slow but encouraging progress. In July 2016, an Engineering, Procurement and Construction Agreement with the Chinese state owned China National Electric and Engineering Co was signed. At the same time General Electric was selected as the supplier for the main equipment. China Development Bank is lined up to provide project finance and negotiations are underway with the Serbian Energy Ministry regarding the operation of the Power Plant. We hope that the latter part of 2016, will see all necessary agreements going in place to allow construction to commence in Terra Production Can Filling operations continue to go from strength to strength with new customers such as Monster Energy adding to the string of big name customers which already include Heineken, Rauch, Carlsberg and Orangina. Almost 50 million cans were filled in 2015 and turnover grew by 22% on the previous year. Forecasts for 2016 show the number of cans filled could approach 65 million was a particularly tough year for ScarDec Engineering and Development and SEEC, which provide consultancy services in the appraisal, design and management of Energy projects, due to a lack of new projects being commissioned in the region. The picture is improving during 2016 and both businesses should in due course make a significant contribution to the Loznica project. Issues which had been delaying the opening of a prime Car Park, located within the centre of Belgrade, have been resolved and the facility opened in November 2015 to much fanfare.

45 Scarborough Group International Business Review Betting & Gaming VSoftCo & VStriker VSoftCo: Moves into profitability for the first time During the year VSoftCo moved into profitability for the first time. The efforts of new management and the Malaga Team have ensured that revenue streams continue to grow whilst outgoings remain well controlled. The number of shops, particularly in Eastern and Southern Europe that feature our Fantastic League product have significantly increased over the past twelve months. Revenue expectations for 2017 and beyond are even higher, given the division should enjoy further income streams from a joint venture in the USA with Four Corners Interactive that goes live in late 2016 and new contracts in the lucrative UK market and elsewhere in Europe. Moreover, we have developed a new VStriker game which combines our Virtual Football product with the Striker franchise offering players the unique opportunity to play the world famous Striker Comic branded game on platforms from December Looking further ahead, plans are afoot to increase our gaming product range including an exciting penalty shoot out game, and a revamp of our Spot the Ball game.

46 46 Scarborough Group International Business Review 2016 Far East, Including China Espuma Coffee Houses & Novell Coffee ScarNov & ScarVic Location: HQs in Hong Kong and Shenzhen

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48 48 Scarborough Group International Business Review 2016 Far East, including China Espuma Coffee, Hong Kong, ScarNov & ScarVic 2016: 6 new Espuma venues The importance of the activities past and present undertaken via our Far Eastern colleagues located at their headquarters in Hong Kong and also Shenzhen cannot be underestimated. During the global financial crisis which massively affected the United Kingdom, Europe and North America it was necessary for the Group to alter course and this meant having to reorganise investments made into Real Estate initiatives principally within the People s Republic of China and also Hong Kong and Myanmar, with the simple task of securing monies to then remit cash back to the United Kingdom enabling us to reduce Group debt and restructure Facilities with the Banks that went bankrupt. For Scarborough as a whole this policy now sees our UK division in good health having retained through the period of downturn,

49 Scarborough Group International Business Review its portfolio of properties and projects and to be active again within the Northern Powerhouse Cities where we have a reputation as a longstanding and active Developer. The network of contacts we have in Singapore, Hong Kong and China led and instigated by our senior Far Eastern colleagues has seen certain organisations become Partners and Investors with us in major projects being carried out in Manchester, Leeds, Sheffield and beyond. Thus, Esplanade s executive team in Hong Kong who started with us some fourteen years ago, have reshaped and concentrated their efforts in the last few years not only in supporting our UK operations by constantly sending funds back from East to West, but working assiduously with much reduced financial resources in building new businesses principally around Consumer Sector and Retailing opportunities. Via Hong Kong, in 2013 a joint venture with the Novell Family from Barcelona, Spain aptly titled ScarNov was formed to distribute and sell Coffee products throughout the Far East, primarily in China, but also in Hong Kong, Singapore and elsewhere. Alongside distribution, we have additionally established Espuma Coffee Houses and Restaurants which have already made their mark in Hong Kong opening and successfully trading from venues situated in the Tsim Sha Tsui, Wanchai and Central districts, plus a smaller trading Kiosk where their popularity has far exceeded expectations. Likewise, during 2016, two Espuma venues at Xixiang and Nine Square in Shenzhen have been opened and if these achieve the anticipated target performance levels, then further Espumas will be appearing in the coming years. The intentions behind Espuma and indeed the Coffee Distribution business is to look towards Listing the ScarNov corporate on the Hong Kong GEMs Exchange within the next three to four years. Our ScarVic Retail Management (ScarVic) business was set up in venture with the state owned enterprise AVIC Group of China over five years ago. Whilst there have been management issues to address along the way, nonetheless via its subsidiary ScarFiel Retail Management Limited (ScarFiel), we have in conjunction with their partner, Grupo Cortefiel of Madrid, Spain opened around fifty venues under the Springfield and PdH brands in Shenzhen, Humen, Shantou, Beijing, Tianjin, Hangzhou, Suzhou, Ningbo, Yueqing, Ninghai, Wuhan, Xiangtan, Nanning, Beihai, Ji an, Jiujiang, Chengdu and Guiyang. Presently we are in discussions with colleagues at AVIC on a restructure of ScarVic and ScarFiel which may lead to corporate rearrangements, hopefully permitting our Hong Kong division to see a suitable return from the investment and efforts applied since 2011, and with an interest in the ongoing Popularity has far exceeded expectations association with Grupo Cortefiel and certain Consumer sector businesses controlled by AVIC involved in Food and Beverage plus Sports Leisurewear. The challenge for our Far Eastern team is to utilise their undoubted creativity, energy and management skills to move the existing businesses forward and come up with additional initiatives in the Support Services sector. They also continue to aid other Divisions of Esplanade working with colleagues at VSoftCo to exploit the China Market within the Gaming Sector and seeking both sponsors and prospective Investors to help the future of the Sheffield United group.

50 50 Scarborough Group International Business Review 2016 Consumer Novell Coffee From a zero starting position: A reasonable flow of new customers every week As a result of the successful progress made in our ScarNov Hong Kong business during 2015, a second venture with the Novell family of Barcelona our UK equivalent was launched to distribute Novell coffee products throughout the UK. From a zero starting position the enterprise is making steady progress attracting a reasonable flow of new customers every week. We view the future of ScarNov UK with much optimism.

51 Scarborough Group International Business Review International An expanding business We retain our interest in Bridge Capital an Asset Manager based in Delhi, India and are hoping that via its key management they will at long last be able to secure new commissions to see profitability achieved and to bring Investors from this evermore prosperous nation to join in certain of Esplanade and SIPL s business activities. Our interest in seeking sensible acquisitions in tandem with Partners in North America particularly Canada remains active.

52 52 Scarborough Group International Business Review Charities & Community The Group either directly or via Scarborough Group Foundation, the independent Sheffield United Community Foundation and our Football Club, fully recognise the importance of serving the various communities it represents and supporting both Local and National charities. Involvement and engagement with communities is a key factor providing help and funding for cancer and medical research, hospices and hospitals alongside working with children and young peoples organisations. Our duties in Sheffield see the utilisation of Sheffield United FC s facilities for holiday football camps, Walking Football events, disability programmes that involve those suffering from Down s Syndrome and allow so many to enjoy the experience of playing the game. Health initiatives are also in place to address weight management issues both for school pupils and those aged 45 plus, via a Fit for Fans programme that has recently been launched using the inspiring environment of Bramall Lane. A further aim is in donating to a number of selected charities situated throughout the country.

53 Scarborough Group International Business Review Jeff Stelling Men United March for Prostate Cancer, March 2016

54 54 Scarborough Group International Business Review Our Partners & Financiers Strategic Co-Investing Partners Listed on the Mainboard of the SGX-ST in 1973, Metro Holdings was founded in 1957 by the late Mr Ong Tjoe Kim. Starting out as a textile store on 72 High Street, Singapore, Metro has grown over the years to become a property development and investment group with a broadened and diversified asset portfolio, backed by an established retail track record, with a turnover of S$145.8 million and net assets of S$1.4 billion as at 31 March Today, the Group operates two core business segments property development and investment, and retail. It is focused on key markets in the region such as the People s Republic of China, Indonesia and Singapore. The Group has also expanded its geographical presence to the United Kingdom. Metro has already invested or committed to invest over 50 million into Scarborough projects in Manchester and Sheffield. Hualing, established in 1988, is a private group based in Urumqi, Xinjiang, China. The Group mainly operates in the fields of construction, managing and renting of trade centres, wholesale markets and hotel construction and management. It is also engaged in foreign trade, the development of a modern livestock industry, mining, foreign resources, project development and is the largest shareholder in a bank in Georgia. Their total gross assets are approximately USD3 billion, with a net value of USD1 billion. Hualing have already invested or committed to invest over 30 million into Scarborough projects in Manchester and Leeds. Legal & General Investment Management (LGIM) is the investment management arm of Legal & General Group, a FTSE 100 company. LGIM is one of Europe s largest institutional asset managers and a global investor, with a heritage dating back to LGIM manages 499 billion in assets for more than 3,000 clients. It has a specialist real estate investment and management division and is a major investor in UK real estate. LGIM are the Group s joint venture partners for Thorpe Park, Leeds and have committed 150 million project finance.

55 Scarborough Group International Business Review The JW Muir Group plc is a family owned business, headed by the Group Chairman and founder John Muir. The group is involved in projects across the development spectrum and has a reputation for quality and client focus. The Group employs net assets of around 67 million with an annual turnover exceeding 93 million and a current property value of approximately 30 million. Valad Europe is a leading European multi-let real estate investment manager specialising in multi-let commercial properties in the UK and Continental Europe. Valad has 5.3 billion of assets under management, of which 1 billion is held in development projects. Strategic Lending Partners Investec is an international specialist Bank and Asset Manager that provides a diverse range of financial products and services to a niche client base in three principal markets in the UK, South Africa and Australia. Santander UK plc is a UK bank, wholly owned by the Spanish Santander Group. Santander UK plc manages its affairs autonomously with its own local management teams responsible solely for its performance. Santander provides debt finance for the Group s investment portfolio and development finance for the Hat Box Residential project in Manchester. Strategic Construction Partners Beijing Construction Engineering Group Co., Ltd (BCEG) was founded in Over the past 60 years, it has been a constant leader in the industry and has become a conglomerate that is competitive in the global market. The BCEG is a Global Top 225 international Contractor, a China Top 500 Enterprise and China Top Ten International Contractor. Its Beijing Construction Engineering brand is well established. Its annual projects completion amounts to 3 million sq m. GMI was formed in 1986 and has grown to become a well-established, successful building and construction services company with a proven track record for delivering award winning projects for an international portfolio of developers, public sectors and blue chip companies. GMI is a long-standing partner of SIPL and the wider Scarborough Group.

56 56 Scarborough Group International Business Review 2016 Strategic Government Department Partners A commercially focused department of HM Government, the UKTI team brings together private sector capital and UK projects and businesses. In particular they are mandated to drive the delivery of major regeneration schemes in the UK, which bring forward housing, infrastructure and substantial job creation. The local authority for the City of Leeds in West Yorkshire. Leeds is a City of approximately 800,000 people and contributes over 20 billion per annum to the UK economy. Leeds is one of the key cities in the UK Government s Northern Powerhouse initiative, which will result in major regeneration, housing delivery and job creation projects. Leeds City Council is a vital partner for the delivery of Thorpe Park and future projects in the region. The LEP s purpose is to unlock the Leeds City Region s vast economic potential by enabling businesses and enterprise to thrive. Working with public and private sector partners, the LEP provides support and funding to help businesses grow, attract new investment to the region and develop the skills, energy and digital infrastructure to create jobs and prosperity. Manchester City Council is the local government authority for Manchester. It manages planning policy and permissions, the provision of public services and promotes inward investment to the region. Manchester is a city of over 520,000 people and Greater Manchester over 2.7 million. As a city, Manchester contributes circa 16 billion per annum to the UK economy and is a key city within the Northern Powerhouse. Salford City Council is the local authority for Salford, a city and metropolitan borough of Greater Manchester. The population is over 200,000 and is now home to the BBC (the UK s national broadcasting body), as well as renowned education establishments. The Middlewood Locks project sits within Salford City. The city council for the City of Sheffield in South Yorkshire, SCC has been a long-term strategic partner for SIPL, given its historic activity in the City. Sheffield s population is over 560,000 and the City contributes over 11 billion per annum to the UK economy. It enjoys a long track record for educational excellence and forging international investment partnerships. Sheffield is a leading location in the UK Government s Northern Powerhouse. Established in 1999, The Welsh Government is the devolved Government for Wales consisting of The First Minister, Welsh Ministers and Deputy Ministers and The Council General. The Welsh Government are separate from The British Government and can develop and implement policy for Wales, set up governance of key areas such as the healthcare, education and Local Government and propose Welsh Laws. The Welsh Government has an annual budget of over 15billion which it has complete discretion over. They are working with us on the development at Talbot Green, Llantrisant.

57 Scarborough Group International Business Review Brexit Although the result of the UK Referendum in June was something of a surprise, this does not mean that the country now faces a long term crisis or indeed any kind of crisis. Whilst much has been said about the importance of access to the European Single Market for the continued well-being of the UK s economy, we believe that the exit vote will not lead to the UK being disbarred from this market. Already, political negotiations have commenced and will surely lead to satisfactorily accommodating the UK within the Single Market. We should remember that other non-eu countries such as the United States already have very positive Trade Agreements allowing access to the Single Market and the UK will be afforded the same. It is also wise to reflect as to how important the UK is as a trading partner to many European countries for example over 20% of all Mercedes Benzes and BMWs are sold in the UK and as such Germany would certainly not wish to jeopardise that and any other strong relationships with our nation. From a Real Estate perspective, little has changed on the back of the exit vote. The only softness thus seen has centred on London, where some investors raise questions over demand for London City Offices. This relates to a specific uncertainty around whether the major Banks will need to relocate certain of their trading and regulated businesses to EU countries (European legislation currently dictates that trading in certain European financial instruments must be carried out from an EU base). As such, we have seen a small number of City Office Investment and Development deals paused until the position becomes clearer and this is certain to have played a part in UOB of Singapore recently suspending its London property loan programme. Turning to Real Estate Development and the wider UK perspective, the fundamentals remain the same. Having emerged from the global financial crash which saw many schemes abandoned for the best part of seven years, there remains a shortfall throughout the nation of new, quality properties across the sectors.

58 58 Scarborough Group International Business Review 2016 Middlewood Locks, Manchester

59 Scarborough Group International Business Review Many of the UK s major cities, particularly those situated in the Northern Powerhouse region continue to drive growth. At the same time, they all share the same position in terms of an undersupply of housing relative to both pent up demand and increasing demand. Significantly, the requirement for new housing is not predicated on huge numbers of migrants from other European nations, but is far more driven by local and regional needs from the country s working population. To support this view, Transport for the North published its Northern Powerhouse Independent Economic Review on 30th June, setting out the trajectory for the North of England economy to add 97 billion of value and over 850,000 new jobs by The long term picture, especially within the Northern Powerhouse region therefore remains robust and exciting. Middlewood Locks, Manchester has been well profiled by the UK Government as one of the key projects in this economic region and is seen as a unique transaction in terms of both scale of residential development and its proximity to the major city centre of Manchester. This does not change, irrespective of the UK s status in Europe. The housing dynamic in the Greater Manchester area, the continuing trend for commercial occupiers to move either all or substantial parts of their businesses to the region coupled with the ever improving transport and infrastructure which surround our project combine to further underpin the economic and regenerative status of Middlewood Locks. The position in Leeds is much the same, where Thorpe Park s wider strategic significance to Leeds regeneration drive is undiminished. The economic benefit to be derived from this substantial landmark development, through housing delivery, infrastructure, Retail, Leisure and Commercial uses, as well as public amenity, means that Thorpe Park s position as one of the North s most important transactions is secure for many years to come. With Legal & General on board as our joint venture partner, the Group benefits from a UK-centric funding institution with long-term capital and an equally long-term outlook. Equally, the Chief Executive of our anchor Retail tenant, Next plc, has already publicly stated his positive vision post-brexit for the UK, and a desire to get on and do business. We highlight Middlewood Locks and Thorpe Park as Scarborough s two most significant current transactions but the position is the same across our entire development portfolio. Progress continues adhering to the business plans we have in place for the Group s prime projects.

60 60 Scarborough Group International Business Review Summary It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change. Charles Darwin

61 Scarborough Group International Business Review Scarborough is a Group that has maintained its presence both Nationally and Internationally effectively since 1976 and as such has seen and adapted itself on a good few occasions and particularly in recent times as a result of the global financial crisis leading to the worst recession since the Second World War. During this period Scarborough as a private family owned corporation was not in the same privileged position as Listed companies, who were able to raise capital on the Market by heavily discounting the potential value of stock in order to secure funds needed to repay Banks who went bankrupt. The Group has had to withstand this storm on its own, frequently changing course to suit the whims and fancies of our previous principal Bank in order to reduce debt but at the same time shrewdly retain its key properties and development stock using astute business management to enhance value whilst awaiting better times to return. We have adapted to change and in spite of Brexit issues, are optimistic that within the coming five to seven years mainly from transactions underway in the Northern Powerhouse Cities, that significant profits and cash returns will be the order of the day. Scarborough has been around for a long time and has a wealth of experience led by hardworking and dedicated management teams and supported also via a network of first class National and International partners, investors and professional advisers alongside ever strengthening links with the UK s Government. The ingredients for future success are clear to all. My sincere gratitude to colleagues at all our operational bases, be it in the Far East, Europe or the United Kingdom. Our pull, push and shove motto mixed with good humour and spirit really does make us different from the rest. Kevin McCabe Chairman