Agenda item

To provide an update regarding the performance of LeisureSK Ltd.

Note:  Philip Knowles, Paul Sutton, Debbie Roberts, Patsy Ellis and Matt Chamberlain returned to the Council Chamber.

Members received an update regarding the performance of LeisureSK Ltd.

Debbie Roberts, Chairman of the LeisureSK Board presented the projected outturn for 2023/2024, and highlighted the following points:

·         There was a deficit position, but the company was bearing this overspend and was not requesting any additional management fee from the Council at this point in time.

·         There are a number of things for the Committee to note regarding the end of year position to the 31 March 2024:-

1. Fitness income received at 31 March 2024 was more than the original budget.

2. Swimming income received at 31 March 2024 was more than the original budget and continued to perform strongly.

3. Children Income received at 31 March 2024 was below budget as parties and other children’s activities were being coded to other cost centres. This had been rectified.

4. Indoor activities income received at 31 March 2024 was very strong and above expected budget which was primarily due to the receipt of room hire income at Grantham The Meres and an increase in income from main hall activities at The Meres and Bourne Leisure Centre.

5. Gross Profit was above budget at 31 March 2024 primarily due to the variances detailed above.

6. Total Payroll Costs - the overspend at year end was due to increased costs for Swim School wages which was linked to the increased income from swimming and insufficient budget for National Insurance. Salaries had also been reforecasted to include redundancy and restructure costs.

7. Utilities – the overspend at year end was due to utility costs being higher than originally budgeted.

8. Premises costs were underspent at year end.

9. Marketing and Communications Costs were overspent at year end, but this overspend related to the campaign in January 2024 with Big Wave.

10.Central costs – there was an overspend at year end. This was primarily due to an increase in the amount of irrecoverable VAT and the budgets for software and professional fees not being sufficient to cover the costs of the Gladstone system, the charges from Analytics 4 Energy relating to energy savings and the support provided by the Council to the company for Finance and IT. The company had since reviewed the Building Management System contract and had since cancelled it.

11.Contract Surplus/Deficit – the deficit at 31 March 2024 was an overspend on the budgeted deficit but as stated earlier in this report the company are reviewing this and bearing this cost.

·         In March and April 2024 there was an increase in fitness memberships, and sales were in line with expectations.

During debate, further information was highlighted:

·         Big Wave, a marketing consultant had recommended a mix of digital and physical communications from LeisureSK to residents. Officers distributed leaflets to 10,000 homes in Grantham and did the same in Bourne and Stamford. Also targeted digitally would be those individuals within the target demographic for leisure centres.

·         Previously the leisure centres had been advertised in SK Today, the Council’s newsletter. It was possible to restart this as well as advertising in many more places but the budget had to be managed responsibly.

·         There was no substitute for word of mouth – the best way was for residents and members of the public to experience the leisure centres and look to receive positive feedback.

·         Social media was a useful tool to advertise services.

Note:  At this point in proceedings it was moved, seconded and AGREED to exclude the public and press from the meeting as commercially sensitive information may have been revealed to them had they remained.

·         Whilst it was very difficult to project to the year end, there were forecast underspends in energy costs.

·         Appropriate controls were in place for the receipting of goods and accounting. All staff of LeisureSK Ltd. had been trained on how to raise orders, and this had been completed within the last two months. The Financial Regulations had been shared with the Senior Team at LeisureSK Ltd.

ACTIONS – there was an action to circulate the financial information contained with an Excel document to Members. There was also an action to to determine the breakdown of the split between price and usage for utility costs.

The report was NOTED.