URL: https://democracy.portsmouth.gov.uk/ieDecisionDetails.aspx?ID=1620

Decision Maker: Cabinet

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: No

Purpose:

Content: Recommended that Full Council: 1.1Approves Portico’s investment requirement of £20m over the next 10 years, to deliver an overall return at today's value (net present value) of £4.4m during the period 2024/25 to 2033/34, and agrees to finance this, as follows (subject to recommendations 2.2.2, 2.2.3, 2.2.4 and 2.2.5 below):   §  £1.9m funded from Portico’s existing loan facility; §  £13.6m funded from an increase in Portico’s loan facility; and §  £4.5m funded directly through the direct acquisition by the Council of equipment and lease to Portico on commercial terms.   1.2 Agrees that the Council's Authorised Limit (the maximum amount of borrowing permitted by the Council) and the Operational Boundary (the maximum amount of borrowing that is expected) approved by Full Council on 13 February 2024 is increased to accommodate the phasing of Portico's £20m investment requirement.   Agreed that: 2.1 The Council retain Portico and that the amended budget (Section 6, Option 1) is adopted as the Council’s preferred option. 2.2 Updated subsidy control advice is gained by the Council. 2.3 The Council loan is provided on terms and at a rate consistent with subsidy control legislation. 2.4 Any draw down on the loan facility by Portico is subject to the following:   i)               A rolling annual review of the 20 Year Business Plan demonstrating the continuing viability of Portico and that the continued operation of Portico continues to deliver the best financial return compared with all other viable alternatives ii)              The Capital Investment is necessary either for the sustainability of existing income streams or for the generation of additional income. iii)            Any proposed Capital Investment itself represents the most favourable return when assessed against the balance of: §  The financial return on a Net Present Value basis and over the whole life of the asset created versus other potential options for the same outcome. §  The relative risk of each alternative option. iv)            Approval by the S151 Officer.   2.5 Continued parent company support and the availability of the loan facility is subject to the annual review by the Company Advisory Board, and approval of a satisfactory Budget and 3 Year Business Plan, which must demonstrate to the shareholders satisfaction that:   §  The assumptions that underpin the 3 Year Business Plan are robust with a more than reasonable chance of being achievable. §  That the 3 Year Business Plan is prepared to illustrate the financial effect of reasonable optimistic and reasonable pessimistic scenarios, in order that the shareholder is aware of the reasonable range of risk associated with the "Base Case" Business Plan. §  Recognising the exposure of the company to cyclical trade factors and adverse weather, that the overall 3 to 5 Year financial results of the Company provide an overall net return to the Shareholder over the period taking into account all returns received by the Shareholder through rents, dues and all other income elements of services provided by the Shareholder (including the Portsmouth International Port (PIP)).   2.6 The Council keeps under review the returns that would reasonably be expected to be achieved from alternative uses of the site, undertaking a formal review at the earlier of every 5 years or an expectation that the financial performance set out in recommendation 2.1.1 above is unlikely to be achieved. 2.7 Portico is restructured, to include the creation of subsidiary companies and a holding company, as recommended by the independent review, to enable the business to remain competitive, and meet market needs. 2.8 It is noted that the Portico operation provides additional volumes for pilotage and towage which supports the need for a dedicated service for both aiding PIP cruise and ferry.  

Date of Decision: October 1, 2024