Agenda item

The Senior Finance Manager (Client) introduced his report summarising the financial position of the Cobtree Manor Estate as at 31 May 2019.  The report covered the activities at the Golf Course, Kent Life, the Manor Park and the Café/Visitor Centre.  The report also included updates on the proposed Service Level Agreement between the Borough Council and the Charity, the car park loan agreement and the new financial management system.

Financial Position

The Senior Finance Manager (Client) advised the Committee that:

·  The new financial management system went live on 1 July 2019.  This was slightly later than anticipated due to the Council’s year-end accounts close-down being more complicated than in previous years.  As a consequence, the quarter one figures were still in the Borough Council’s financial management system, but they would be transferred across to Sage so that the whole year would be in the new system going forward.  Future reports would show a separate heading for the residential properties and the residual budgets for the Café/Visitor Centre would be incorporated into the Manor Park budget.

·  The summary totals showed a positive variance of £10,403 for the Charity at the end of May 2019.  The forecast for the year was for an operational surplus of £55,920, compared to a provisional surplus of £35,596 for 2018/19.

·  There were no issues to report at this stage in respect of the Golf Course.  The invoice for the first quarter of 2019/20 had been paid by MyTime.

·  Income from the car park at Cobtree Manor Park continued to be high.  The new Apprentice post was still vacant resulting in an underspend in employee costs.  There was a small overspend in controlled running costs as the new arrangements for locking the gates were not yet fully in place and the services of the security firm would continue to be used until September 2019.

·  There were no issues to report at this stage in respect of Kent Life.

With regard to the Café/Visitor Centre, the Leisure Manager advised the Committee that responsibility for running the facility had passed to DAGT Ltd in April 2018 and discussions were ongoing with the company regarding invoices for staffing costs.  Whilst there had been some progress, there were outstanding invoices and action was being considered to recover the monies owed to the Borough Council and the Charity.  It was suggested and agreed that a letter be drafted to be sent from the Chairman of the Committee to the company seeking early payment of the monies owed to the Charity.

In response to questions, the Senior Finance Manager (Client) explained that rent income of £5,300 at the Golf Course related to the siting of a mobile phone mast.  The variance in rent income for the residential properties at Cobtree Manor Park was due to them having two rent free weeks at the start of the financial year.  The variance in other income - staff recharges at the Café/Visitor Centre related to the outstanding invoices for staffing costs.  The variance in other income - profit share at the Café/Visitor Centre was because the first quarter had not yet been invoiced.

Service Level Agreement

The Senior Finance Manager (Client) advised the Committee that:

·  The draft version of the Service Level Agreement (SLA) attached as Appendix 2 to the report had been drawn up by the Borough Council’s Legal Services team using a standard template.  It had not been formally considered by the Borough Council so the contents should not be taken as representing a formal Council position on any of the matters contained within the draft.  Amendments were required to more properly reflect the nature of the relationship between the Charity and the Borough Council.

·  The intention at this stage was to give the Committee an early opportunity to consider the issues to be addressed by the SLA and make comments.  Subject to the Committee’s comments and any other issues that might be raised, it was the aim to report the SLA back to the Committee for approval in the autumn.

·  The schedule of recharges had also been updated with a view to minimising the VAT liability going forward.

During the discussion on the SLA, it was agreed that the document should be checked to avoid inconsistencies in terminology such as the Service Provider.

Loan Agreement – Car Park Resurfacing Works

The Senior Finance Manage (Client) advised the Committee that:

·  The final cost of the works was £320,643 (£289,803 for the works and £30,840 for other project management costs.  As previously agreed, the cost of these works would be funded by a loan from the Borough Council and a draft loan agreement was attached as Appendix 3 to the report together with a repayment schedule.  Subject to the Committee’s comments and any other issues that might be raised, it was the aim to report the loan agreement back to the Committee for approval in the autumn.

·  The cashflow projection had been updated.  The Committee had previously expressed a wish to repay the loan over the shortest period possible, but given other commitments and potential future issues, it would seem prudent to spread the repayments over five years to maintain adequate resources for any other costs.

During the discussion on the loan agreement it was suggested and agreed that the document should be amended to correctly define the name of the Charity.

In response to questions by Members, the Senior Finance Manager (Client) explained that the capital figures in the cashflow projection would be amended to more accurately reflect capital expenditure in relation to a power supply (50% to be reimbursed by DAGT Ltd.).

RESOLVED:

1.  That the financial position of the Cobtree Manor Estate as at 31 May 2019 be noted.

2.  That a letter be drafted to be sent from the Chairman of the Committee to DAGT Ltd., the operator of the Café/Visitor Centre, seeking early payment of the monies owed to the Charity.

3.  That the progress to date with the Service Level Agreement between the Borough Council and the Charity be noted with the proviso that the document should be checked to avoid inconsistencies in terminology such as the Service Provider.

4.  That the loan agreement between the Borough Council and the Charity should be amended to correctly define the name of the Charity.

5.  That the loan from the Borough Council to fund the car park resurfacing work should be repaid over five years as proposed in paragraph 5.4 of the report of the Senior Finance Manager (Client).

6.  That the progress to date with the new financial management system be noted.