Meeting documents

Councillor Mordue

Cabinet Member for Resources, Governance and Compliance

To consider the attached report.

Contact Officer:  Caroline Wheller (01296) 585185

(a)          Decision(s)

That the decision of the Vale Commerce Board to move the company into a state of dormancy and transfer the assets and appropriate IP brands, website etc. back to the Shareholder, and transfer all assets and appropriate IP such as the brands and website back to the Shareholder be acknowledged.

(b)          Reason(s) for Decision(s)

To meet the requirements of the Shareholder Agreement under the Reserved Matters.

(c)        Alternative Options Considered

The option to continue to run Vale Commerce has been considered but discounted noting that at the time of setting up the company the Council’s own commercial function was in its infancy.  The core Council’s capability in this area has grown immeasurably since 2015.  Given the current maturity of the Council’s commercial approach the Vale Commerce concept has been superseded by the delivery opportunities now available to the Council as a whole including the success with My Account.

(d)       Relevant Scrutiny Committee

Finance and Services.

(e)        Conflicts of Interest / Dispensation(s)

Councillor Mrs J Blake, as a company director, who did not vote on this item.

In December, 2015, the Council had agreed to the establishment of a wholly owned company subsequently registered as Vale Commerce Ltd as a vehicle to deliver new commercial services to residents and businesses in the District.  Vale Commerce had gone on to develop a household brand ‘Limecart’ and a business brand ‘Incgen’ and had been successful in securing a small number of subscription customers for both Limecart offering a subscription package based around household cleaning services and Incgen offering business incubation services.

During 2016 and 2017 the business had developed offers that were taken to market and refined accordingly with customer feedback. Unfortunately, it had not been possible to scale the activity in accordance with initial targets.

Vale Commerce had been started to test if conceptually it would be possible to run subscription services for additional residential and business services and this had been achieved.  However, the marketplace was congested and also challenging in terms of a subcontracting model.  To make a success of the approach would require a significant cash injection.  However, on balance and considering the viability of the business and receptiveness of the marketplace, the associated risks and costs of doing so were outweighed by the benefits.  As such the Board had recommended to the Shareholder that the company trading was suspended and the company put into a dormant state.

A copy of the Board report had been circulated as part of the confidential section of the Cabinet agenda.

The Company did not employ staff directly but used fulfilment partners to deliver the services.  High level lessons learnt from running the company included maintaining quality though partners, scheduling to meet customer requirements, understanding the market appetite, and the need for speed of reaction to changes in the market.  The experience developed through running the company and the wider commercial activities across the council would be shared with Members at a future seminar.  It would also feed into the Audit ‘review’ following Council’s resolution in December 2017.

The Council, as the shareholder, had agreed a loan to Vale Commerce Ltd of £50,000.  This had been used to fund equipment, the development of brands and the website as well as the development of the services that had been offered.  At the end of the first year the company recorded a loss of £37,000 which was not unusual for a start up company.

In the current financial year the company had traded and generated new income through the AVDC commercial team, mainly through Council to Council to sales.  The total council spend since its creation of £115,000 was netted off by the commercial team income for the year.  The income invoiced and committed would be sufficient to cover a final loan repayment to the Council to ensure the company was left without liabilities and in a neutral financial position, thereby enabling it to enter dormant status.

The company’s Board of Directors had met on 13 December, 2017, and had decided to move the company into a state of dormancy and transfer assets and appropriate IP such as the brands and website back to the shareholder.  However, any change to the status of an AVDC company was a reserved matter under the Shareholder Agreement.  The assets could be used in the future by the new commercial team and plans were already under development as to how to maximise the value of the brands.

RESOLVED –

That the decision of Vale Commerce Ltd’s Board of Directors, taken at their meeting on 13 December, 2017, to move the company into a state of dormancy and transfer assets and appropriate IP such as the brands and website back to the shareholder be acknowledged.

NOTE:  Councillor Mrs J Blake declared a personal interest in this item as a director of Vale Commerce and did not vote thereon.