News: Rotherham Council passes external audit

External auditors have concluded that Rotherham Council has made proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the first time since Government-appointed commissioners were brought in.

The authority was deemed "not fit for purpose" by the Government in 2015 and a statutory inspection by Louise Casey, a government official and director general of the Troubled Families board, found a "complete failure of political and officer leadership in Rotherham."

The review came after a 2014 report into child sexual exploitation in Rotherham that described how vulnerable children had been repeatedly failed by the Council.

At the same time local councils are using external auditors from the private sector to assess their abilities in areas such as meeting legal requirements, financial statements, value for money and financial resilience.

The auditors need to be satisfied as to whether there have been effective arrangements to secure economy, efficiency and effectiveness in the use of resources. External auditors at KPMG concluded that this has been the case for 2016/17. It was not for 2013/14, 2014/15 and 2015/16.

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The Council employs around 8,000 staff and spends around £667m per year.

The external auditors, who charged some £156,000 for the report, said: "We have concluded that the authority has made proper arrangements to ensure it took properly-informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people."

It comes at the same time as further powers were returned to the Council by the Government. The move brings all functions aside from children's social care back under the Council's democratic control.

The Government-appointed commissioners have been given until March 2019 to improve and hand back all services. They have been working in an advisory capacity in recent months as the Council's cabinet makes decisions, including in areas such as regeneration and the local economy.

The governance arrangements were assessed by the external auditors who concluded that "the number of functions that have been returned to be the responsibility of the Council demonstrates the progress that the Council has made since the initial [Casey] report was published."

Rotherham Council recently drew criticism after publishing a number of independent investigation reports that concluded that no charges would be brought against any senior figures despite "various and substantial organisational failings" being found.

Images: RMBC

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News: Garnett Dickinson downed with £25m pension deficit

Problems with an investment in a new press led to the administration of Rotherham print group, Garnett Dickinson, documents reveal.

And the administrator's proposals also show a pension scheme deficit of £25m listed amongst the unsecured creditors.

Jonny Marston and Howard Smith of KPMG, were appointed as joint administrators to the business on January 24 2017 after the business ran into cash flow difficulties due to operational issues.

The joint administrators confirmed that Garnett Dickinson was sold in a pre-pack deal to GD Web Offset Limited, a vehicle incorporated for the purposes of the acquisition.

Based in a £20m state-of-the-art facility in Manvers, the group specialises in large run multi pagination printing and customers include high profile monthly magazines and luxury catalogue brands.

Garnett Dickinson Print Ltd had a turnover of £17.2m and made an operating loss of just over a £1m in the year to September 30 2015. KPMG highlighted that the financial position of the business deteriorated due to the poor performance of a newly installed printing press.

KPMG stated: "The Group invested in a new press in September 2016 to provide increased capacity, however operational issues encountered during the installation and subsequent use of the press resulted in high levels of outwork, overtime, paper usage and production overheads that were not sustainable. As a result of the operational issues, losses of approximately £1m were made in the first quarter of FY17 and this resulted in acute cash pressure.

"The directors of the Group were forced to enter into discussions with key suppliers, HM Revenue & Customs, its landlord and the Secured Creditors as the Group was struggling to generate sufficient working capital to continue trading."

Previously a board member, Nicholas Alexander bought Garnett Dickinson Group, with the exception of its digital operation, for an undisclosed sum in 2015 and instigated a restructure of the operations.

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KPMG was engaged by the group in December 2016 to provide advice on options for restructuring its defined benefit pension scheme following a meeting with Alexander.

The cash pressures led to an exploration of options available in respect of investment, refinance or a sale, and to run an accelerated mergers and acquisition process. No offers were received for the Group so six trade competitors were identified and contacted regarding the opportunity.

GD Web Offset Limited was the only offer to come forward and the deal saw all of the trading business and assets sold to the new company whose directors are Paul Mursell of EWO Media in Essex and Jeremy Spring of Aspenlink, a company that converts some twenty five thousand tonnes of paper a year.

KPMG documents show that three connected Garnett Dickinson companies have left a shortfall of £29m, including a £25m pension deficit and £4.1m owed to trade creditors including finance providers RBS and Lombard.

The documents show that KPMG has been "liaising with the trustees of the defined benefit pension scheme, the Pensions Regulator and the Pensions Protection Fund concerning the changes caused to the pension scheme as a result of our appointment."

Accounts filed at Companies House for 2015 describe the defined benefit pension scheme as having a £6m deficit. The scheme was closed to future accrual in 2009 with no further contributions made by the company. A defined contribution scheme was set up and the company entered into an agreement to make good the deficit on the group pension scheme.

The original Garnett Dickinson business started in 1858 in the back of a busy stationary shop where it first published the South Yorkshire Advertiser. The Rotherham Advertiser is now published by Regional Media Ltd, a company which also has Alexander as a director and acquired the publishing business and assets from Garnett Dickinson in 2015.

Garnett Dickinson website

Images: Garnett Dickinson

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