Agenda item

1.     The report was presented by the Commercial Accounting Manager Andrea Melvin. The following key points were highlighted to the Committee:

        a)     The Council’s wholly owned companies and joint ventures operated on a going?concern basis, had filed statutory accounts at Companies House and had been externally audited with no material concerns raised. The report was for information and included high?level financials (sales, costs and profit after tax) for 2024/25 with comparators for the prior year.

        b)     The Committee received the assurance report on the Council’s wholly owned companies and 50:50 joint ventures (with other local authorities and private sector partners). All entities had filed statutory accounts and were externally audited; no material concerns were raised by auditors.

        c)     The report included headline financials (sales, costs, profit after tax).

Year?on?year comparisons were not always like?for?like due to ongoing cost?management and efficiency programmes that had transferred

services between companies.

2.     In answer to Member comments and questions the following was said:

        a)     The purchase price of the WF Education Group was commercially sensitive and would be provided outside the meeting. Plans for the company did not sit within the presenting officer’s remit. Losses shown for December 2023 and December 2024 related to periods prior to acquisition; performance post?acquisition would be visible in future cycles.

        b)     The joint ventures formed part of an expansion leveraging recruitment systems to support other local authorities. Older ventures had performed well and newer ones had become operational only recently and were still incurring set?up costs, explaining current losses. Some entities in the structure were dormant and do not trade with KCC. Only a subset provides services to KCC.

        c)     Mr Watts reported actual and forecast returns to KCC:

                                               i.     2023/24: £7.0m

                                              ii.     2024/25: £10.0m (enhanced, to support KCC’s position)

                                            iii.     2025/26: £7.8m (forecast), then £8.3m, £8.5m, £9.0m in subsequent years (forecasts)

Continued investment was necessary to remain commercially competitive and sustain future dividends.

        d)     Due diligence was undertaken by both KCC and the company on acquisitions and investments, considering benefits to the group and KCC. The return cited by Mr Watts included dividends and contributions for managed services, and noted other financial benefits, e.g. an energy rebate of approximately £760k per annum.

        e)     Companies were arms?length and the Council could not shadow direct. The risk was managed through KCC’s Internal Audit function within the company.

        f)      Service transfers to companies had been supported by business cases and valuefor money tests to deliver Mid Term Financial Planning savings.

4.     It was proposed and seconded (inclusive of a further amendment) that:

(i)     In recognising the significant commercial risks, the oversight arrangements for the Governance and Audit Committee on County Council linked companies be reviewed and options be presented to a future meeting informed by legal and governance advice.

(ii)    The shareholder group be expanded to increase transparency and accountability.      

5.     The motion (as amended) was not carried.

6.     Mr Rayner stated that he was not assured by the report and associated updates and asked for this to be noted in the minutes.

        The Chair put the recommendations in the report to the vote and one third of the present voting membership requested a recorded vote. 

        Members voted accordingly for the recommendation included in the paper:

        For:                  Mr Mallon, Mr Palmer, Mr Kibble, Mr Cecil, Mr Chapman, Mr Paul, Mr Brown (7)

                Against:           Mr Rayner, Mr Hood, Mr Brady, Mr Samme, Mr

                                         Munday (5)

                Abstentions:    Mr Bradshaw (1)

Total: 13 (Not inclusive of Dr Horne as an Independent Member)

7.     RESOLVED the majority of the Committee noted the report for assurance.