Council company Oportunitas will not generate sufficient profit to meet its operating costs until 2031

Updated 23/03/23 @ 18:30

Back in Sept 2022 we pointed out that Oportunitas Limited a company wholly owned by Folkestone & Hythe District Council was incorporated unlawfully and unconstitutionally.

Oportunitas Ltd for those of you not aware, purchases property with taxpayers money and rents them out at market rent to local people. So for instance they purchased No 19 Castle Hill Avenue (pictured) for £1.2m in 2017 plus other properties as well

Now since its incorporation it has yet to turn a profit.

When one looks at the Oportunitas Business Plan 2018/19 it states at 5.1:

It will take about a further 4 years from the completing the acquisitions to generate sufficient operational profits to absorb the forecast accumulated loss of around £300k

So according to the 18/19 Business plan, Oportunitas would turn a profit in 2022/23.

The company’s net operating loss at 31/03/2015 was (£58,524) for the same date in 2016 (£65,894) and 2017 (£70,814) and at 31/12/2017 the net operating loss was (£28,162). The cumulative loss then by new years eve 2017 was (£223,394).

Put simply, the company’s trading activities in letting residential property and providing grounds maintenance services did not generate sufficient profit to meet its operating costs. That was after four years worth of trading.

Fast forward to 22 March 2023, at full Cabinet, so yesterday, and the Oportunitas Business Plan 2023/24 states at 4.2.4 of the report:

It remains the company’s aim to reduce its accumulated operating loss over time and to generate a return a surplus that could allow it to make a dividend payment to the Council as its shareholder or consider further property investments. Indicatively it may take between 6 to 8 years to offset the accumulated operating loss. However, this will be dependent on the outcome of the stock condition survey in particular.

So it was incorporated in May 2014 and has yet to pay a dividend to its shareholder, the Council. Its accumulated operating loss has increased to (£446,351), a 100% increase since new years eve 2017.

Oportunitas will not clear it’s operating loss until 2031, or 17 years after the company was incorporated we are now told. Yet we were told in the 2018/19 business plan it would clear its operating loss at the end of this financial year 31/03/23.

But then again, clearing the operating loss by 2031, might not happen as the council couch the language with the modal verb “may” in the 2023/24 business plan. One uses “may“ to indicate that something will possibly happen or be true in the future, but you cannot be certain. All rather vague indeed.

The only reason Oportuintas continues to be a “going concern” is because the Council continue to back the company financially. 

Now Cllr Tim Prater (Lib Dem) questioned the operating loss at yesterday’s Cabinet meeting in  Report Number C/22/104.  He made it clear, you the local ratepayer are continuing to subsidize Oportunitas Limited operating losses.

Cllr Patricia Rolfe (Con) and the lead Director of the Company mentioned unrealized increases in the property portfolio. As Cllr Prater makes clear they are just that unrealized, until one sells, a property/ies, so cannot take those unrealized increases into account.

Now to steal a quote from elsewhere:

Our Council officers need a clear mandate from the next generation of Councillors to do more than endorse the estate agent function of the current administration.

The Council needs to close down Oportunitas; which was once the intention of Cllr Connor McConville (Lab) prior to his election in 2019, and who is now a director on its board. [Update] Prior to Cllr McConville becoming Chairman of the Finance and Performance Scrutiny Sub-Committee, he received an annual payment of £1,388, as a director.  Once he became chairman of the committee, he lost this income. That said in the last set of accounts (31 March 2022) it states at page 4:

No employee may be elected or hold office as a member of the local authority by which they are employed.

So the question has to be asked, if Directors are employees of the Council, how can they be Cllrs as well? No employee of the Council can be a Cllr. Strange indeed how the four directors of Oportunitas can be both, when this is NOT allowed [Update ends]. 

It is strange though how once in power, some Cllrs, not all, so often do something so utterly different from what their stated intentions were prior to their election. 

But back to Oportunitas. Given it won’t clear its operating loss until 2031, should it be shut down sooner rather than later, or do we let it drift into further operating losses, and no profits, for another eight years?

We’ll leave you to mull that over.

The Shepway Vox Team

Journalism for the People NOT the Powerful