Agenda and minutes

The Members had before them:

A.    The Agenda papers (previously circulated); and

B.    The Minutes of the meeting held on 9 March 2018 (previously circulated).

Mr S J Mackay for Mr R C Adams.

Apologies were received from Mr R C Adams Mr A I Hardman and Mr P A Tuthill.

Members of the public wishing to take part should notify the Head of Legal and Democratic Services in writing or by email indicating the nature and content of their proposed participation no later than 9.00am on the working day before the meeting (in this case 11 October 2018). Further details are available on the Council's website. Enquiries can be made through the telephone number/e-mail below.

None.

To confirm the Minutes of the meeting held on 9 March 2018. (previously circulated – pink pages)

RESOLVED that the Minutes of the meeting held on 9 March 2018 be confirmed as a correct record and signed by the Chairman.

The Committee considered the Technical Update - EFW Plant Reporting Requirements report.

The Committee received a technical update from Jim Haywood, the Finance Director, Severn Waste Services and Mercia Waste Management (MWM).

In the ensuing debate, the following principal points were raised:

·         In response to a query, Jim Haywood explained that the financial advisor to the Lender was Deloittes. Rob Wilson added that KPMG had been commissioned to undertake a specific piece of work on the STLFA ratio calculation. It had been disappointing that during their work, KPMG had not liaised with MWM

·         Whatever the circumstances, the Committee needed to give serious consideration to an independent report, commissioned by the Council,  which highlighted some major concerns

·         It would have given an element of reassurance if KPMG had liaised with the Council to ascertain how the difference of opinion on the level of assurance had arisen. Rob Wilson responded that the crux of the issue was that there was no updated financial model on which to base the ratio testing. Basically KPMG were inferring that it was difficult to give assurances for the future based on the historical base financial model

·         A varied financial model had been presented to the Council by MWM in May 2015 and yet 3 years later it had still not been agreed. Rob Wilson commented that the next ratio review was due on 31 December. MWM would have 40 working days to provide the information. The Council would then need to have this externally verified. It was likely therefore that the outcome would be known around April 2019 however this was dependent on an agreed updated financial model. Jim Haywood added that MWM had acted within the terms of the loan contract by referring back to the base financial model in the absence of an updated model. MWM were liaising with the client side of the Council in relation to the updated financial model. In terms of the variations to controls, to date, only 2 small variations had been identified from the base model which had very little impact on ratios

·         It was concerning that the client side had not updated the financial model as a matter of urgency

·         There was no reference in the external auditor's opinion on the Accounts to the loan agreement. Was this a matter of sufficient materiality to require the attention of the external auditor. Rob Wilson responded that the Council had garnered sufficient assurance from the financial performance of the MWM from its annual accounts as well as the assurance statements provided by the company. MWM had also continued to meet their repayment obligations in full and on time. In addition, the issue had also been highlighted in the Risk Register. Both the Council and Mercia Waste Management (MWM) were aware of this issue and the likely impact that this might have on the report outcome before requesting KPMG to conduct the ratio analysis. It was felt therefore that no further action was necessary

·         A concern was expressed  ...  view the full minutes text for item 117.

The Committee considered the Risk Register.

In the ensuing debate, it was agreed that there were no matters of concern to report to Council.

RESOLVED that:

a)    the open risks set out in the Risk Register be accepted; and

b)    There were no matters of concern to report to Council.

The Committee considered the Work Plan.

In the ensuing debate, it was agreed that the Committee meeting scheduled on 14 December 2018 be cancelled on the basis that there would be nothing new to report and the proviso that if anything changed, a further meeting could be convened.

RESOLVED: that

a)    the work plan attached as an Appendix to the report be noted; and

b)    the Committee meeting arranged on 14 December 2018 be cancelled.