Conservative Directors overstated assets and income for Woking Council-owned company
- New officially-audited accounts for Thameswey Limited, fully owned by Woking Council, uncover a string of overstatements of income and assets
- Conservative administration advanced the company £492 million by end-2021
- New documents reveal that the Council-owned company has negative net assets of £19.4 million, as of end-2021, rather than the claimed positive net assets
Newly audited accounts for a Woking Council-owned company, on which Conservative councillors sat as Directors, unveil shocking losses and overstatement of the financial position.
Thameswey Limited is responsible for multiple energy and housing developments in the town, and a company previously referred to as an asset for Woking Borough Council and local residents.
A "restatement" of previously published accounts also demonstrates the concern by newly-appointed auditors Menzies that old accounts were not giving a true and fair view.
The new documents demonstrate that in 2020, Thameswey Group accounts overstated turnover. Financial statements incorrectly included £30.3 million inter-company revenue (effectively an internal transfer) in the group turnover, meaning the real turnover for the year has had to be reduced from a previously-claimed £61 million to £31 million - an overstatement of almost double the actual revenue.
Net assets for 2020 were also changed from a positive £12.3 million to a negative £2 million, by the newly-published audited accounts.
The following year, in 2021, there were group losses of a further £17 million. A single loss of £13.2 million had been classified as "work in progress" when it should have been written off. Contingent liabilities relating to the "Earn Your Deposit Scheme" had not been considered. A separate £77m was incorrectly shown as work in progress when it should have been assets under construction.
In the most recent numbers, this means that, as of end-2021, the Council-owned company has negative net assets of £19.4 million rather than the previously-claimed positive assets.
During the same year in question of 2021, funding provided to the Thameswey Group company by then Conservative-controlled Woking Borough Council reached £492 million.
Cllr Ann-Marie Barker, Leader of Woking Borough Council, comments: "Just months ago we inherited enormous Conservative debts. We also knew that decades of dependency on new future debt was hard-wired into supposedly long-term projects. These two factors - debt and a dependence on debt - already presented a financial survival project.
"Yet we are now uncovering a third and potentially more worrying financial inheritance: the over-statement of asset values. Uncovering more of that reality is essential, even if it makes unpleasant reading. Though potentially more painful, financial reality is the only way we will focus on our priorities of understanding, survival and in turn recovery."
Cllr Dale Roberts, Portfolio Holder for Finance and Economic Development at Woking Borough Council, expands on the steps already taken to improve the situation: "These mis-representations are yet another example of an administration that didn't put in place the proper resources, governance, or controls to match their ambition.
"We are ending this. Within three months of taking office, the new Liberal Democrat administration approved new rules which removed all councillors from sitting on the boards of all Council companies and ending years of potential conflict of interest. We implemented an overview of all companies' activities by a Shareholder Advisory Group supported by a professional Shareholder Liaison Service. We have also already requested a major overhaul of the business models of these Council-owned companies, to focus on the delivery of appropriate returns and to identify alternatives to borrowing to sustainably fund the strategic priorities of the Council.
"My priority as financial portfolio holder is to enable Woking Borough Council to deliver the best possible services to local people. New revelations such as these make that job increasingly difficult - but only make me more focused on returning what has become a financial institution into a functioning Borough Council."
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Notes and sources from original audited accounts, Thameswey Limited:
Thameswey Group consolidated accounts for 2021 were published on 22 December 2022.
These latest accounts and the full filing history and records of Thameswey Limited (Company number 03702545) are all publicly available via Companies House: link here.
Steps taken by the new Liberal Democrat administration in beginning to stabilise Woking Council finances so far include:
- Reduced Victoria Square borrowing requirements by £13 million to date (as of 1st December 2022) compared to plans inherited from the Conservative administration
- Stopped the disastrous planned purchase of Woking's 'Red' car park from a council-owned company,
- Paused the Victoria Arch project which had already identified increases costs of over £50 million.
- Removed Councillors from roles as directors of Council-owned companies, bringing in independent management and public scrutiny (21st July 2022)
- Published the Ministerial warning letter addressed to the previous Conservative leader on financial issues, following election victory (17th May 2022)
For media enquiries please contact:
Cllr Adam Kirby, group head of publicity, Woking Borough Council Liberal Democrats