Virus Means Lean Outlook for Stradey Park Hotel Investors

News: Fortunate timing for vendors

The sale of Llanelli’s Stradey Park Hotel by Gryphon Leisure, reportedly for £3.2 million to investment consultants Sterling Woodrow Ltd, is at the worst possible time for investors, to whom Sterling Woodrow has been promoting the purchase of individual rooms in the landmark building.

The promised returns of 10% a year, and buy-back at 115% of the purchase price after five years, will be difficult to achieve, given the Westminster government’s decision this month to require all hotels to close, to help restrict the spread of the Covid-19 virus.

The Stradey Park Hotel was sold soon before the order for hotels to close because of Covid-19.

Investors have paid from £59,950 per room for the 77 rooms in the hotel, in what could be labelled a variant of a crowd funding exercise.

Sterling Woodrow, based in Billericay, Essex, is a small company with 15 employees in the year to April 2019, tangible assets of £23,790, cash of £68,173 and shareholders’ funds of a negative £52,796. The company was founded in 2005, and is controlled by director Robert Horwood (56), who is also a director of new company Stradey Partners Ltd, formed in September 2019. Mr Horwood and fellow director Gareth Street jointly own Stradey Partners Ltd.

For Angela Saunders, Barry Saunders and Alison Anderson, the directors of Gryphon Leisure Ltd, the timing of the sale was fortunate in the light of the unforeseeable hammer-blow to the UK hospitality industry delivered by Covid-19.

PDR

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Opinion: Republishing Y Cneifiwr’s ‘Mark Leads Us to the Promised Land’

Excellent article by Y Cneifiwr, first published in October 2017, on the financial risks threatening the planned ‘Wellness Centre’ in a marshy area of Llanelli. Since 2017 even more black, thundrous clouds have clustered over the site at Delta Lakes.

Meanwhile, the people of West Wales face a continuous barrage of cuts to public services.

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Y Cneifiwr’s article

Mark leads us to the Promised Land

Despite all the regeneration schemes, the Valleys and the west of Wales remain some of the poorest, most disadvantaged parts of Western Europe with creaking infrastructure and heavy dependence on low-paid employment. Every year droves of talented young people leave for Cardiff and the big English cities to earn a living, while heading west is a steady flow made up disproportionately of pensioners, unskilled and poorly educated inner city families and younger people who bring their own problems with them.

At first glance initiatives such as the Swansea Bay City Region, or “the City Deal” as it now seems to be known, and the ARCH wellness village at Delta Lakes on the outskirts of Llanelli offer the prospect of many thousands of highly paid jobs. A welcome departure from Carmarthenshire County Council’s love affair with shopping centres, supermarkets and handouts to owners of holiday cottages, punctuated by grandiose development schemes built on wildly optimistic forecasts which somehow always seem to end up making pots of money for a very few, while being a drain on local government finances for decades to come.As always, however, the devil lies in the detail, and seasoned observers of the Carmarthenshire scheme could be forgiven for being more than a little sceptical when they see that we are being led into the new promised land by some old familiar faces whose track records stretch all the way back to prestige developments such as the Princess Royal Arena in Boston, the Technium fiasco(s) and other “won’t cost you a penny” white elephants.

In Carmarthenshire, all roads lead to the door of our teflon-coated chief executive, Mark James CBE, who when he is not doing his day job running the county council, is busy building up his own property empire, setting the lawyers, the courts and police on Jacqui Thompson and now also at the epicentre of both the City Deal and the ARCH wellness village – two originally separate schemes which are coalescing into Mr James’s biggest ever bid for glory.

Politicians and councillors who question these schemes, currently with a price tag of around £1.5 billion and rising fast, know that they will be accused of undermining opportunities to create jobs and transform the local economy, and the likelihood is that Mr James will ensure that they sign off a huge borrowing spree in a blitz of spin and corporate PR which will leave taxpayers in Carmarthenshire and neighbouring counties exposed to huge risks, with any upside being scooped up by private sector fat cats, many of them resident in sunny tax havens.

But there are signs of growing concern among some of the participants, with accusations of secrecy, lack of transparency and byzantine legalistic draft agreements, of “partners” not being kept informed, of chaotic planning, over-optimistic forecasts, spin and what amounts to a plan by Mr James’s authority to fleece his friends and neighbours. Add to that a lack of accountability, an onslaught against what is left of democratic oversight and cronyism.

That does not sound anything like our widely loved and admired council chief executive, does it?

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Before we take a closer look at the City Deal and the ARCH wellness village, let’s take a small detour to draw attention to a lecture given the other day by Martin Shipton, chief reporter of the Western Mail and a self-described old-fashioned journalist.The full text of his sobering address on the state of the Welsh media can be found here, and it is well worth reading.

“It is a fact universally acknowledged that a democratically elected administration must be in want of some scrutiny”, he begins before going on to examine how the Welsh Government and so many other of our public bodies like to claim that they are models of openness and transparency while being anything but. 

He details Jane Hutt’s shocking responses to the plight of NHS patients; the ways in which the Freedom of Information Act can be and is used to deny freedom of information; the Circuit of Wales fiasco with its strange parallels to what is now happening with the City Deal and ARCH schemes; legal bullying designed to silence the press, and the culture of fear and clientelism which prevents whistleblowers from coming forward.

He goes on to describe the ways in which serious news is being edged out by the revenue-driven click-bait culture of media companies, before ending with a passage from his recent book on George Thomas:

Our society continues to have too much ‘cap-doffing’ to our perceived ‘betters’ and a craving to ingratiate ourselves with them for social and career advancement. There remain, to this day, too many politicians like George Thomas, who combine a self-seeking ambition with the readiness to pretend that Britain persists in being a great power built on the remnants of an empire that makes it superior to all other European countries.

Martin Shipton’s lecture is a cri-de-coeur for journalists to hold the powerful to account and submit them to scrutiny, and is a world away from the media’s obsession with celebrity tittle-tattle, “click-bait” online articles (“10 things you never wanted to know about Katherine Jenkins”) and the unquestioning cutting ‘n’ pasting of press releases churned out by the PR merchants employed by public bodies.

The trouble is that newspaper companies, Martin Shipton’s employers included, find it difficult to understand why resources should be devoted to the sort of hard-nosed political reporting he specialises in, when the punters prefer reading about Katherine Jenkins and Weatherspoon’s menus.

Serious journalism is, in their eyes, expensive and time consuming, and they have a point when you consider the effort needed to try to find out what is going on with schemes such as the City Deal and the ARCH wellness village.

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There are countless gushing press releases, slick videos, artists’ impressions and Twitter streams which verge on soft pornography as they record all of the conferences, lavish receptions, “envisioning days” and other junkets associated with these schemes. Everything is brilliant, inspired, fantastic, innovative and imbued with excellence. Take a look as the ARCH Programme’s Twitter feed, for example.

What you will not find are any meeting minutes, reports or sober assessments of the costs and risks involved. Even finding out who the movers and shakers are requires detective work.

Almost the only exception to this is a report published by Neath Port Talbot Council here, which was  the subject of a two-page spread in last week’s Carmarthenshire Herald and blogposts by Jacqui Thompson (here) and Siân Caiach (here). There is also an interesting piece on WalesOnline here.

The NPT report, dated 4 October 2017, shows that all is far from well with the City Deal which is relying on four county councils – Swansea, Carmarthenshire, Neath Port Talbot and Pembrokeshire – to stump up £396 million to fund an array of projects, at least some of which should be ringing alarm bells across the region. ARCH is now also touting a very large begging bowl around the region’s county halls, having discovered that the Welsh Government and the NHS are strapped for cash. Who would have thought it?

The City Deal 

In addition to the £396 million which is to come from “other public sector” bodies (that is the four participating councils), the UK and Welsh governments are expected to chip in £241 million, with a further £637 million predicted to come from the private sector for the 11 projects which make up the City Deal. The ARCH wellness village is not one of them.

The Swansea Bay City Region has been rumbling away for years, and as far as the public is concerned has so far produced nothing more than a torrent of press releases and snazzy videos. The PR orgy came to a climax in March of this year when Theresa May met Carwyn Jones to sign off an agreement.

This was just before Mrs May went for her famous walking holiday in Dolgellau and decided to call a general election. At the time the Tories had high hopes of winning seats in and around Swansea, including Carwyn’s own backyard.

We all know what happened next, and Mrs May’s love affair with Wales seems to have cooled dramatically, with the ditching of the scheme to electrify the Great Western Mainline all the way to Swansea and a distinctly chilly response to hopes that she would back the Swansea Bay Tidal Lagoon project.

The NPT report notes,

The Welsh Government wants the process led by a Joint Committee of local authority leaders (consistent with their approach to local government reform) whereas the UK Government has insisted upon a private sector led Economic Strategy Board (ESB) as part of the arrangements.

The report then tells us that an ESB was “pretty much what we had prior to 31 March 2017 in the form of the Swansea Bay City Region Board; but the Welsh Government effectively abolished it”.

Hands up all those who remember Jamie Owen telling us that Carwyn had sent Sir Terry Matthews and the other board members packing, in the nicest possible way.

That report was published at the beginning of this month, and for all we know the UK Government is still insisting on a private sector led board, or possibly an even more byzantine arrangement where an ESB exists alongside a public sector led body. Meanwhile, the councils are ploughing on with what they term a “provisional governance structure established in shadow form”.

The trouble is that after six months of wrangling and a draft Joint Working Agreement (JWA) commissioned by Mark James, the councils cannot agree on  how the City Deal should be run. Mr James’s draft, produced at no doubt huge expense with the aid of external lawyers, ran to 70 pages, with NPT saying that, if asked, its officers could not explain to councillors how the agreement would work.

Who would have thought that a legal framework drawn up under the auspices of Mr James would be so opaque?

So they have agreed to start again, although the UK Government could yet veto their efforts, especially now that the Tories’ very brief love affair with Wales has ended in heartbreak.

As things stand, this £1.3 – £1.5 billion scheme (and rising) has no formal governance structure, and Mr James has effectively replaced Sir Terry Matthews as the ring master of a shadow body made up of representatives of bodies with very different agendas.

Top slice

Even less welcome news for Neath Port Talbot, Swansea and Pembrokeshire councillors are reports that Mr James not only plans to siphon off a chunk of the City Deal money for the wellness village in his own backyard, but that he is also proposing to “top-slice” (i.e. pocket) a hefty chunk of the funds for projects outside Carmarthenshire, as well as charging them a stiff  annual “administration fee”.

It’s the not the sort of stuff to inspire private sector investors to part with their cash or the sort of thing that will improve relations with the neighbours.

This is just the tip of an iceberg of a catalogue of concerns and problems facing the City Deal and ARCH mega-schemes.

Chicken, and chicken and egg

While the shadow governance team struggles with agreeing the rules of the game, the Welsh Government has told the councils that it will not release its share of the project funding until the business cases for all 11 projects have been approved. Which comes first? The chicken or the egg?

Unless the Welsh Government drops this insistence, all 11 projects will have to move at the pace of the slowest, with NPT adding that this “could also result in the local authorities taking all the risk by funding projects up front with no absolute guarantee that the Government funding will follow immediately or at all, if one considers how they have been trying to re-write the clauses in the JWA”.

In other words, councils are having to contemplate what could be a very risky and expensive game of chicken.

If that were not bad enough, NPT, in common with all other Welsh councils, faces huge budgetary pressure, and the report warns councillors that “the City Deal featured as a potentially significant financial pressure in that [budget, Ed.] presentation (albeit largely unquantified at this stage), so this begs the question of competing priorities for prudential borrowing and finance”.

The bottom line for NPT is that it has many other pressing local priorities, that it lacks the bandwidth and resources to work on this time-consuming project, that the risks are significant and that the extent of its financial commitment is unquantifiable.

And there is much, much more where that came from, including the likelihood that there will need to be significant changes to accounting rules which would have to be approved by the government and
new legislation.

Meanwhile progress on the 11 City Deal projects is mixed. By far the most important of these is  something called Internet Coast.

Internet Coast

The centre piece of the City Deal and by far the most ambitious project would have as its starting point a trans-atlantic fibre optic cable between New York and Oxwich Bay. This project alone would account for £500 million of the £1.3 billion City Deal package, and Sir Terry Matthews, former chair of the city region board, told the BBC back in February 2016 that the aim would be to create up to 33,000 hi-tech jobs in the region over the next 20 years.

Here is what the NPT report says:

The digital infrastructure agenda was very dependent upon the active engagement of the former City Region Board Chair and his wide senior level network; but the board was abolished and that opportunity put at risk. The simple truth is that the necessary expertise (or contacts) exists neither in the Welsh Government nor local government. As a consequence, little work has been done in recent months to progress the project, although a part-time external adviser has now been appointed.

Unelected Sir Terry Matthews may have been, but he does at least come with an impressive business pedigree. In effect responsibility now lies with the equally unelected and apparently unsackable Mark James, whose first major project was what is now known as the Princess Royal Arena.

In addition to his many and varied other duties and interests, Mr James is also heavily involved with the ARCH wellness village project, about which there are almost as many worrying questions and mysteries as there are with the City Deal.

Here is what the NPT report says:

A major issue is the uncertainty around the so called ARCH (regional Health Collaboration) programme which is linked to the City Deal. A bid was submitted to the Welsh Government by the two health boards in the region in January of this year and we are well aware of the competing priorities for revenue and capital funding within the NHS. The ARCH programme has been asked to look at “alternative sources of funding”; but assumes more than £100 million from the City Deal. Increasingly, we do not believe that the ARCH programme will secure significant medium to long term funding from the Welsh Government. If so, there can be no question of Councils being invited to plug any gap. This uncertainty could, in turn, undermine the ability of projects to attract the even larger required private sector match funding. These matters therefore remain unresolved.

Bearing in mind that this quotation is taken from a report published two weeks ago, it is interesting to contrast what NPT has to say with this message currently fronting Carmarthenshire County Council’s website:

The ambitious project – which will see an investment of more than £200million – is being led by Carmarthenshire County Council in partnership with Hywel Dda and Abertawe Bro Morgannwg University Health Boards and Swansea University.

It is also a key project for the Swansea Bay City Region and is earmarked to receive £40million as part of the £1.3billion City Deal funding.

If, as NPT says, the Welsh Government is unlikely to help fund the wellness village and the councils will not plug the gap, who is providing that £40 million?

ARCH

The wellness village is just one part of a much bigger collaboration between the health boards and universities, and its origins are shrouded in Delta Lake mist.

According to ARCH’s own website, the wellness village board is chaired by none other than Meryl Gravell, representing Carmarthenshire County Council. It may be that someone has not got around to updating the website because, as a former county councillor, Meryl no longer represents anyone and is even less accountable than she was when she sat in County Hall.

The fact is that the wellness village was Meryl’s baby right from the beginning, and as one half of the Mark and Meryl dream team, there is no need for a paternity test.

One of the first clues as to what was being planned for the Delta Lakes site came in Carmarthenshire’s vast Local Development Plan. Anyone who buried deep enough in the labyrinth of documentation would have been surprised to see that the site had been ear-marked for “private healthcare”.

That was unusually and almost uniquely specific. Normally you would expect to see the much less transparent “employment land”.

The convoluted way that LDPs are put together means that the designation for private healthcare was inserted at least 5 years ago, and it suggests that some very specific discussions had taken place with unknown third parties well before then.

The wellness village, predicated on being a private healthcare development, almost certainly dates back to when Meryl was council leader.

According to the minutes of a Carmarthenshire County Council executive board meeting held in 2016, however, the idea first saw the light of day when the council was approached by the health boards and the universities in mid-2015 – well after the council had adopted its LDP and the private healthcare provision.

Like so much else in this story, things just don’t add up.

The trouble is that potential private investors would have been unwilling to stump up the money to transform a desolate brown field site. Roads, drains and other basic infrastructure don’t come cheap, and so it was an immense stroke of luck that Carmarthenshire decided that the existing leisure centre in Llanelli was no longer fit for purpose, and that the ideal location for a new centre would be Delta Lakes, well away from where most Llanelli residents live.

Around the same time, the council signed an exclusivity deal with a company called Kent Neurosciences Ltd “with a view to ensuring the aspirations of the Wellness and Science Village within Carmarthenshire”. KNS, part of a group of companies based in the British Virgin Islands tax haven, was a remarkable choice of partner, as you can read here.

It then went on to ear-mark another £7m originally allocated for a council care home to fund an “assisted living village” as part of Meryl’s vision for Delta Lakes.

Slowly but surely Mark and Meryl were scraping together the funding to make Meryl’s vision a reality, and the raid on the City Region is a part of that.

Meanwhile, the cost and scope of the wellness village have soared. Early in 2016 it was put at £60 million. By the middle of that year it had risen to £100 million. Now the council puts the figure at £200 million.

Perhaps a little too confidently Mr James told the press a couple of years ago that he did not think he would have to put the project before councillors for their approval, presumably because he was not planning to have to get them to stump up the (borrowed) cash.

Now, to soften them up, they are to be treated to a special slide show. We can expect a report asking them to sign off on a hefty loan not long thereafter.

If Mr James gets his skates on, councillors can expect to be told that not only will the wellness village deliver untold thousands of new jobs, but that the cost of borrowing is at an all-time low – for now, although the Bank of England may have other plans.

Perhaps we should all suspend disbelief, but past experience and the typically Jamesian way in which the wellness village has taken shape, with all its contradictions, mysteries and evasions, do not inspire confidence.

Latest Wellness Village Wobble

Three of the six directors of Sterling Health Security Holdings Ltd, the private-sector company sourcing investment for the proposed Wellness and Life Science Village at Llanelli, have now resigned.

They are cardiologist Dr Phyllis Holt-Dickmann, Swansea entrepreneur Kevin Smith and former Carmarthenshire County Council leader Meryl Gravell. The appointment terminations of Dr Holt-Dickmann and Mr Smith were announced in September, and Mrs Gravell’s just last week, on November 6th.

Sterling Health Security Holdings, owned by Phyllis Holt-Dickmann and Franz Hermann Dickmann, is Carmarthenshire County Council’s private-sector partner in the £250 million ‘Wellness Village’ plans for low-lying Delta Lakes, on the coast at Llanelli.  The company is a resurrected version of the dissolved Kent Neurosciences Ltd, the county council’s original putative partner in the project.

The three remaining directors are Franz Dickmann, James Dickmann, and Rupert Knight Harrison.

Kevin Smith’s entry on the professional website LinkedIn says he is the founder or co-founder of six technology healthcare and wellbeing ventures since 2000. He attended Penlan Comprehensive School between 1975 and 1980, and then Swansea Institute of Higher Education, where he studied mechanical engineering. He did not serve on the board of Kent Neurosciences, but the Dickmanns did.

Sterling Health Security Holdings had a negative value of £137,722 at October 31^st 2017, according to the published accounts, and the company is dependent on a loan from the directors.

The director who seems to specialise in finding finance is Rupert Knight Harrison, also managing partner of Tower Growth Management LLP, a small company started in November 2016 and showing a marginal operating loss of £4,019 in its first trading period, to December 31^st 2017.

Rupert achieved the International Baccalaureate in 1978 at UWC Atlantic College, St Donat’s Castle, Llantwit Major, speaks German, has bachelor and masters law degrees from the University of London, and barrister experience at the Inns of Court School of Law.

So far, any major successes in attracting investment into the Wellness Village have not been publicised or quantified.

The Llanelli project was thought up before Hywel Dda University Health Board revealed its money-saving plans involving the removal of acute and emergency care from Withybush Hospital, Haverfordwest, and West Wales General, Glangwili, Carmarthen. Hywel Dda has overspent its budget by more than £150 million in the past three years, has both acute and chronic difficulties in attracting permanent staff, and is also a partner in the Wellness Village, alongside Abertawe Bro Morgannwg University Health Board and Swansea University.

Just a thought, wouldn’t it make better use of resources to invest in protecting the existing, under-funded health services in West Wales, instead of seeking to promote a speculative new venture?

PDR

Company Backing Llanelli ‘Wellness Village’ is Broke

Kent Neurosciences Ltd, the company which Carmarthenshire County Council signed up in 2016 as a partner for the Llanelli ‘Wellness Village’ project, is in the process of being struck off by the Registrar of Companies.

Striking off results in the company being dissolved. If any assets are left, they pass to the Crown.

It was on May 23^rd 2016 that the county council’s Executive Board entered into an exclusivity agreement with Kent Neurosciences Ltd “with a view to ensuring the aspirations of the Wellness and Science Village within Carmarthenshire.” See here for the background story. It appears that the county council quietly shelved the partnership deal in 2017.

The directors of Kent Neurosciences Ltd, which is based in Maidstone, Kent, applied for voluntary dissolution on January 31^st 2018. The last published accounts, for the year to July 31^st 2016, show that there were no funds attributable to shareholders, only a deficit of £128,917.

Sister company Kent Neurosciences Property Ltd is under threat of being struck off, and has overdue accounts.

PDR

Councillors back flats plan for disused Llanelli church

See the Carmarthenshire Herald, August 19 2016, p.15. The yawning gap between conservation regulations and resources for conservation means that historic buildings can be left to fall down because the owners cannot afford to renovate them according to conservation rules. This conflict was aired by Carmarthenshire’s planning committee last week.

The issue has featured in this blog before — see https://westwalesnewsreview.wordpress.com/2015/08/18/poisoned-chalice-of-owning-a-historic-building/

Councillors rejected planning officers’ advice on Thursday (August 18) and approved a plan to construct nine flats in the disused All Saints Church, Goring Road, Llanelli.

The church, built in 1872 for £4,800, around three times more than the typical Victorian church of the time, is a listed building with stained glass windows, much interior ornamentation and a protected monument in the churchyard. The building closed in 2011.

Planning officer John Thomas told members of Carmarthenshire County Council’s planning committee that the church had been marketed for a number of years, with very little interest shown by potential buyers. The application would not alter the external appearance of the church, but he recommended refusal for several reasons including advice from the council’s Conservation Officer, and objections from the Victorian Society and the Ancient Monuments Society.

Councillors, though, feared that the alternative would be for the church to stand empty until it became so dilapidated that it would have to be demolished.

All Saints Church, Llanelli: dilemma of listing without financial backing. Photo from Wikipedia

Cllr John Jenkins (Ind, Elli) pleaded “don’t leave us with another large derelict church in Llanelli town centre”. Cllrs Terry Davies (Lab, Gorslas) and Peter Cooper (Lab, Saron) thought there was a high risk of the building being left to fall down. Conservation specialists are “so narrow-minded they don’t move at all”, said Cllr Davies, worried that conservation zeal without financial resources resulted in disused buildings remaining disused.

No committee member voted against giving permission to the applicant, P W Jones Contractors of Pear Tree House, 3 Harris Lane, Llanelli. Five abstained, and the majority voted for P W Jones’s proposal.

The application will now be referred to CADW, the Welsh Government’s historic environment service, because the committee rejected planning officers’ advice.

PDR

Loss-Making Private Hospital Link to Llanelli’s Planned Wellness Centre

Carmarthenshire enters exclusive agreement with Kent Neurosciences

A chain of companies and directors link the proposed Wellness Centre in Llanelli to a private hospital in Maidstone and to the tax haven of the British Virgin Islands.

The chain includes Kent Neurosciences Ltd, potentially a partner for Carmarthenshire County Council in the Wellness Centre planned for Delta Lakes.

The council’s Executive Board unanimously resolved, on May 23^rd, to enter into an exclusivity agreement with Kent Neurosciences Ltd “with a view to ensuring the aspirations of the Wellness and Science Village within Carmarthenshire”.

Kent Neurosciences Ltd is one of a clutch of companies with various directors in common, now or in the recent past. Kent Neurosciences Property Ltd, KIMS Hospital Ltd, KIMS Property Co Ltd, and KIMS Property Holdings Ltd, have been variously concerned with the development, construction and operation of a private hospital in Maidstone, Kent – the KIMS Hospital, KIMS standing for Kent Institute of Medicine and Surgery.

KIMS Property Company Ltd owns the hospital, which is leased to and operated by KIMS Hospital Ltd. KIMS Property Holdings Ltd is the parent company of KIMS Property Company Ltd, and the ultimate parent of KIMS Property Holdings Ltd is Mercury Management Enterprises Corp, a company registered in the tax haven territory of the British Virgin Islands.

Here we enter the world of the leaked Panama Papers, which show that Mercury Management Enterprises Corp is a shareholder of Petrel Investing Ltd, also in the British Virgin Islands, and Petrel is a shareholder of Mercury. Petrel Investing has connections with other offshore companies – OMNI Capital Assets Ltd, OMNI Management Consultancy FZE, ONTARIO Inc, Sarama Beta Ltd – and an individual, Alexander Timofeev of Toronto, Canada, in linkages that are visible to the public only because of data breaches.

Private hospital required £20 million refinancing deal

The private hospital, which opened in 2014, has been struggling. Original estimates of income from the NHS and self-paying patients were over-optimistic. The initial management team – Franz Dickmann and James Dickmann, solicitor Steven Bernstein, and chief executive Jayne Cassidy – departed from the hospital operating company and new personnel took over. In March 2016 the Kent Messenger newspaper reported[i] that in its first-year, to April 2015, the hospital’s losses were over £15.2 million, nearly twice as great as the revenues, and so a refinancing was urgently sought from its major investors, Realta Investments Ireland Ltd and Regional Healthcare Ltd. Realta Investments Ireland had negative net worth of nearly €5 million in 2014. Regional Healthcare Ltd in the UK was dissolved in April 2015 (but a Cyprus company of the same name remains active).

The hospital refinancing, worth around £20 million in total, included a rent holiday until April 2019, so the intended rent recipient, KIMS Property Company Ltd, will itself have a big income hole to try and fill.

KIMS hospital pioneer Franz Dickmann, and Phyllis Holt (who is also consultant cardiologist Dr Phyllis Holt Dickmann) are the major shareholders in Kent Neurosciences Ltd, according to Companies House on June 1^st, with 8,535 and 9,040 shares respectively. Consultant neurologist Dr Mun Seng (Sam) Chong and ASB Law each owned 2,500 shares, and Richard Gullan, consultant neurosurgeon, and Alan Day, retired professor, owned 1,000 apiece.  ASB Law, a legal firm operating in Sussex and Kent, is the company secretary, and Dr Sam Chong, Richard Gullan and Alan Day are all current directors of Kent Neurosciences Ltd.

Head of Swansea’s Business School was on board of Kent Neurosciences

Why should Kent Neurosciences be interested in a start-up venture in Llanelli? There is a link in the accomplished person of Professor Marc Clement, Head of the Business School at Swansea University’s School of Management. Llanelli-born Professor Clement was a director of Kent Neurosciences between December 16^th 2014 and August 21^st 2015.

Currently Professor Clement, holder of patents relating to medical devices, is a director of nine companies, including four based at Technium 2 in Swansea – Cyden Ltd, Ipulse Direct Ltd, Ipulse Ltd, and MC500 Ltd, concerned with the supply of medical and dental instruments. The other five companies are Life Sciences Hub Wales Ltd, Arthurian Life Sciences Ltd, Swansea Innovations Ltd, WWII Ltd and Calon Cardio-Technology Ltd.

Swansea University is part of ARCH – A Regional Collaboration for Health – alongside Hywel Dda University Health Board and Abertawe Bro Morgannwg University Health Board. ARCH is behind the plan for a Wellness Centre at Llanelli, a venture for which Carmarthenshire County Council would provide the land. The ball-park cost of the project is £60 million, money which has to be raised. Abertawe Bro Morgannwg (ABM) University Health Board reckoned, in a press release dated December 2^nd 2015, that “funding could come from the EU but also from private investment and match funding in various forms”.

The Wellness Centre would probably include a new leisure centre, a “wellness education centre”, hub for out-of-hours GP services and various therapies, a hotel and conference centre, and a Hywel Dda branch of Swansea University’s Institute of Life Science, which is based in the College of Medicine. The Institute of Life Science is a partnership between the university, the Welsh Government and ABM University Health Board.

ARCH itself “breaks free from an outdated healthcare system designed over 50 years ago and replaces it with an accessible one specifically planned for today’s needs”, according to ABM University Health Board’s December press release.

The practical benefits for the people of Carmarthenshire are not yet clear.

Echoes of Technium?

A millennial plan for entrepreneurship centres – called Techniums — throughout Wales did not live up to the original aspirations. Wales used to have 10 Technium centres, modelled upon the first, which was set up by the now-defunct Welsh Development Agency (WDA) and by Swansea University in 2001. They were small science parks, intended to foster local innovation and entrepreneurship in a programme which cost around £111 million, but the majority were not a success and in November 2010 the Welsh Government decided to close six of them, including one for performance engineering based in Llanelli, which Carmarthenshire County Council took over and renamed the Beacon Centre. It is now a conference and meeting centre.

Four Techniums remained, two in Swansea, including Technium 2 (the address for four of the companies on which Professor Clement sits as a director), and one each in St Asaph and Cwmbran.

An evaluation by property consultants DTZ indicated that each job created under the Technium programme cost, on average, £190,000 from public funds.[ii]

The inspiration for the Technium project came from a small group of people including Swansea’s Professor Clement and Professor Ken Board, and the WDA’s Gareth Hall (who was the Agency’s final chief executive, between 2004 and closure in 2006).

Professor Clement’s own role in higher education finance expanded in 2007, when he became pro vice chancellor – the chief executive — of the University of Wales, which at the time represented nine higher education centres in Wales. The University of Wales was raking in £ millions from accrediting degrees overseas, in a much-criticised programme which prompted half a dozen leading vice-chancellors to call for the University of Wales to be abolished. In 2011 the University of Wales was subsumed within the colleges of Saint David, Lampeter, and Trinity, Carmarthen, and Swansea Metropolitan University, in a sort of reverse takeover. Professor Clement returned to Swansea University, to be Executive Chair in the Institute of Life Science.

Now, his jobs include board membership of the ARCH programme.

The concept of a medical research centre in Llanelli, raising the profile of Wales as a country of scientific excellence and innovation, has a definite allure. Even so, and allowing for  Professor Clement’s recent involvement with Kent Neurosciences, is this company – full of medical expertise but light on proven business success in the ‘wellness’ arena – the most appropriate partner for Carmarthenshire County Council in the Wellness Centre project?

And, perish the thought, could the Wellness Centre be a conduit for public money to flow through networks of companies into far-away entities registered in the British Virgin Islands and other tax havens?

 

PDR

 

 

 

 

 

 

 

 

[i] ‘KIMS Hospital in Maidstone sought £20m hand-out after making huge loss’. by Chris Price, March 11^th 2016.

[ii] ‘What we can learn from £100m and 10 years wasted on the Technium programme’ by Dylan Jones-Evans, Wales Online, June 1^st 2013.

Stadium Casts Long Shadow Over Scarlets’ Financial Outlook

With a lot of support from deep-pocketed directors, the Scarlets rugby region soldiers on. The accounts for Scarlets Regional Ltd to June 30^th 2015, signed off in March 2016, reveal a net loss of £987,615 — nearly £1 million — and net liabilities of £4.543 million.

The Scarlets, currently fifth in the Guinness Pro 12 league of Irish, Welsh, Scottish and Italian clubs, is the best-performing Welsh club of the season, only two points behind fourth-placed Ulster, and the players and coaching staff have worked heroically to keep the squad at the pinnacle of Welsh rugby, but the stadium is, like gravity, continually pulling them back down the mountain.

The Parc y Scarlets stadium at Llanelli’s Pemberton Retail Park, seating 14,870 people, is valued in the accounts at just on £9.621 million. The auditors, Broomfield & Alexander, point out that: “The trading conditions referred to above [in their report], along with the other matters explained in the accounting policies to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the carrying value of the stadium. Were these key assumptions to which the accounting policies refer not realised, the result would be a requirement to reduce the carrying value of the stadium.”

The average gate in 2014-15, according to the chairman, Welsh Whisky Company’s Nigel Short, was 7,000. That’s less than half capacity, and less than 2012-13’s average of over 8,000, but not bad at all considering that the whole population of Llanelli town and the surrounding urban area is only around 45,000.

This begs the question: why was such a large, expensive stadium constructed, when filling even half of it with local paying customers would require one in six of the urban population – from babes in arms to centenarians – to buy tickets? The business plan was just too rose-tinted. And would anyone else be willing to pay £9.621 million for the stadium, on land which the Scarlets do not own?

The debts exceed even the optimistic £9.621 million valuation of the stadium. Scarlets Regional Ltd’s debts, repayable after more than a year, rose to £12.194 million from £12.037 million the previous year.

The crunch year will be 2023, when £2.614 million should be repaid to Carmarthenshire County Council (which also provided the land for the stadium, at a nominal rent for 150 years, and allowed the club to sell part of the site to pub chain Marstons for £850,000 and to keep all but £200,000 of it).

It’s hard to see where the money to repay the county council is to come from. Scarlets Regional’s turnover did rise almost 13% in 2014-15, to £8.977 million from £7.953 million the year before, and the loss for the year almost halved from £1.746 million to £987,615 – but it was still a loss, and to repay its debts in the crucial year, 2023, the company has either to generate profits exceeding £1.5 million for each year between 2016 and 2023, or raise the money on assets, essentially the stadium.

In January 2016, before the latest Scarlets Regional accounts were released, its formerly dormant subsidiary Llanelli RFC Ltd suddenly increased the director count from one, Huw Dewi Evans (to whom Scarlets Regional owes over £2.179 million) to six, four of whom – Huw Dewi Evans, Phillip John Morgan, Jonathan David Daniels and Richard Meurig Griffiths – are also directors of the parent company. The flurry of new directors suggests that a revitalised role for Llanelli RFC Ltd may be in the offing.

While Mr Evans has more money outstanding to Scarlets Regional than any other director, according to the 2014-15 accounts, Mr Timothy Philip Griffiths, chief executive of the Jersey-registered Cpaush Ltd and of 17 other companies in addition to Scarlets Regional, is owed nearly £1.003 million, Mr Granville Harold Wise £1.491 million, and real estate company Nednil Ltd, £2.117 million. Nednil’s chief executive Philip James Davies is also on the Scarlets Regional board. Three more directors have smaller loans to the company, ranging from £40,000 to £420,000.

The Trostre steelworks,  put on the market by dumping-damaged Tata Steel Europe, are over the road from the Scarlets’ stadium. Trostre’s uncertain future is casting a shadow over the stadium — and over the whole of Llanelli.

Tata Steel Europe’s Trostre steelworks, close by the Scarlets’ home at Pemberton Retail Park, could well play a role in the future of this story. Tata has put its UK steel operations onto the dumping-deluged market, and the approximately 650 jobs at Trostre, home of tinplated steel, are by no means safe. If Trostre went, the economic impact on Llanelli would be horrible, and Scarlets Regional would not be able to escape the hurt.

Of course, the steel crisis might moderate, but even if Llanelli escapes an economic mauling, the Scarlets’ own stretched finances cast a long shadow over the club’s prospects.

 

 

 

 

‘Wellness Centre’ to Worsen Financial Starvation?

Part 1

Talk of a £60 million ‘Wellness Centre’ in Llanelli is not unalloyed good news because such a major complex would bring with it major running costs – when public authorities of all kinds are having to axe services because they have no money.

Cllr Meryl Gravell (Independent, Trimsaran),  Carmarthenshire County Council’s board member in charge of regeneration and leisure, spoke in quite rapturous terms in praise of this flagship/iconic project during Wednesday’s council meeting.

The Wellness Centre would be linked to ARCH, ‘A Regional Collaboration for Health’ between the health boards Abertawe Bro Morgannwg and Hywel Dda, and Swansea University. The £600 million ARCH plans include expansion of services at Morriston and Singleton hospitals, a medical science park at Swansea University, and the Wales Centre for Rural Health on sites across the Hywel Dda area of Carmarthenshire, Ceredigion and Pembrokeshire.

The Wellness Centre would be funded with the help of grants from the European Union, and built in the Llanelli area, possibly the Old Castle Works ex-tinplate factory site, which Carmarthenshire County Council bought in 2005 intending to build a leisure village for which funding never materialised, or at the Delta Lakes industrial park.

The Wellness Centre would incorporate a replacement for Llanelli’s leisure centre, and probably a day centre, health and social services and occupational therapy. The town’s existing leisure centre in Park Crescent, which had expensive repairs last year after storm damage, appears more conveniently sited for townspeople, though.

But of course everyone visiting a Wellness Centre for occupational therapy, or to see their social worker, would both own a car and be able to drive it, wouldn’t they? Well, no – there would be big public transport implications. Centralisation of services shifts transport costs (and time) onto the ‘clients’ or ‘customers’, often to the detriment of their ‘wellness’.

And what happens when the council’s share of the running costs starts to appear in the accounts? The portents are not good, as if there is no interest from the private sector, projects which turn the revenue accounts red are either closed or passed to community councils or voluntary groups, for them to contemplate the gaps between expenditure and income. Currently Carmarthenshire is trying to offload 96 parks and playgrounds, and this week confirmed a decision not to prioritise saving the meals on wheels service (now costing £3.70 a time). A hot meal delivered to the door, and a local park in which to take the air, both contribute to ‘wellness’. If the county council can’t guarantee these basic services, what chance is there of contributing to keep a Wellness Centre, somewhere outside Llanelli, operating as comprehensively as its founders would wish?

Grants for the capital costs of new projects can turn into fool’s gold if there are scant prospects of the projects operating at a profit, and there are insufficient subsidies towards the running costs.

Despite our ageing population, Carmarthenshire County Council plans to cut spending on social care, health, housing and leisure by a net 6.4%, £5.8 million, between 2015-16 and 2017-18, which can hardly be done without also cutting ‘wellness’. A huge cut in home care services run directly by the council will reduce net expenditure from £5.568 million this year to £530,000 in 2017-18. The work will go to the private sector, who will get £3.561 million-worth of extra work – but this still means an overall budget cut of almost £1.5 million.  How this will assist ‘wellness’ is, as yet, a mystery.

More coming in Part 2  

PDR

East Gate Subsidies to Help Generate Profits for Standard Life

East Gate, the leisure/retail/commercial development in Llanelli in which Carmarthenshire County Council was a partner with Henry Davidson Developments, has been sold to Ignis UK Property Fund for £14 million.

The county council’s share of the proceeds is £0, zero.

Press officer Ron Cant explained that the council’s aim had been to secure the redevelopment of the run-down site, a search that had taken years until Henry Davidson came along, ready to be persuaded to take on the £15 million project.

Final planning approval was given in February 2011, and work was quickly under way. Jonathan Fearn, the council’s head of corporate property, was quoted in the Llanelli Star[i] as saying that, by November 2012, financial support by the council for the scheme amounted to £3.4 million.

Ongoing commitments include rent of £100,000 a year for the car park, and rent currently £250,000 a year, for the 20-year agreement to take the 1,989 square metres of office space in the Landmark Building, which works out at nearly £126 a square metre.

This is a big premium over typical Swansea Bay rents for modern offices. Examples today include £91.51 a square metre for 371 square metres in Dafen, £91.62 per square metre for 461 square metres in Swansea, and £98.44 a square metre for 64 square metres in Gorseinon. The council is now advertising to sub-let the office space at £12.50 a square foot, which is £134.55 a square metre, an even greater premium above the typical local rate.

Apparently the council committed to renting the offices, large enough for about 200 staff, to ensure that the development went ahead, and that Llanelli would become another hub for international brand names like Costa Coffee, Nando’s and Odeon. The Scarlets rugby region is there too, with a shop and café, the fitting of which was paid for, indirectly, by the people of Carmarthenshire. Henry Davidson Developments lent the Scarlets £280,000 for the fitting out of the premises, and the loan was repaid with £280,000 from the £850,000 proceeds of selling part of the Scarlets’ car park to the pub chain Marstons. The proceeds should have been shared between the county council – the landowner – and the Scarlets, but after the Scarlets claimed for the costs of fees and expenses, including the repayment of the £280,000 for kitting out a shop nowhere near the stadium in Trostre, the council received only £200,000.[ii] In the end, the argument that East Gate needed the Scarlets’ shop to increase footfall, and thus to help attract tenants to vacant units, was given greater weight than the fairness argument for an equal distribution of the land sale price.

Scarlets Regional Ltd, which already owed £2.616 million to the county council, has not yet filed accounts for 2012-13, and is late doing so. The accounts should have been filed by March 31^st 2014, which was a month after the company’s auditor resigned on February 27^th 2014.

Meanwhile, Ignis UK Property Fund, proud new owner of East Gate, is itself part of a change of ownership. Ignis UK Property is part of Ignis Asset Management, which has been owned ultimately by Jersey-based Phoenix Group Holdings. In a deal in March 2014, Phoenix agreed to sell Ignis Asset Management for £390 million to Standard Life Investments, part of Edinburgh-based Standard Life plc.

Profits from the East Gate development should in future go to shareholders in Standard Life. They will not flow to the people of Carmarthenshire. As in the asymmetrical Scarlets arrangement, the council, representing the residents, is subsidising the private sector — but there is no matching requirement for a share of profits to be returned to the community.

 Pat Dodd Racher

[i] ‘Council defends £5m office rental decision’, by Alana Lewis, www.llanellistar.co.uk, November 28^th 2012.

[ii] ‘Call for investigation into £850,000 land deal between Scarlets rugby region and Carmarthenshire council’, by Martin Shipton, Western Mail, April 23^rd 2014.

BIG bad news?

by Pat Dodd Racher

Here in Carmarthenshire, sports clubs await huge rises in fees to use county-council owned venues, after the said council has given at least £160,000 and perhaps £200,000 to Clays Golf of Wrexham, the firm which has walked away from Garnant Golf Club, just as the BIG subsidies from the council were coming to an end.

As for the one-way money pipeline between the county council and the Scarlets rugby team, it is hard to see how this arrangement can have a happy ending. The whole Llanelli Scarlets debacle seems to illustrate the hazards of relying on BIG ‘prestige’ projects to provide regeneration.  Instead, they tend to provide years of bills to be paid by the hapless public. Llanelli is saddled with an unwise housing development at the Scarlets’ old stadium, Stradey Park, which threatens to increase the flood risk for the existing homes and other buildings nearby, while the new Parc y Scarlets is unaffordable for a club with an average gate of about 8,000 – usually less, but the average is boosted by higher gates for the most important matches. In addition, the adjoining retail park with its free parking has removed trade from the centre of town, which is replete with businesses signalling hard times – pay-day loans, pawnbroking, charity shops.

The county council’s munificent support for the Scarlets since 2008 is in the order of £20 million. A BBC news story, ‘Llanelli Scarlets £20m aid by council concerns raised’, by Steffan Powell and published on December 17^th 2013, points out that the council provided £18.3m of the £25.4m cost of the new stadium, which seats almost 15,000 people – nearly double the average gate. The council retained the freehold of the land – on which the Scarlets have a 150-year lease — but unlike local sports clubs there is no charge to the team for using it. The team would pay only in a rose-tinted future of bounteous profitability. And then, as another example of  generosity, we have the sale of the council-owned overspill car park there for £850,000 – some £600,000 of which found its way into the Scarlets’ sparse coffers, instead of helping Carmarthenshire to avoid alarming cuts in public services.

Eastgate, Llanelli, and another strange deal. The council is renting offices in the (to my eyes) unlovely development, paying £250,000 a year for 20 years – but the offices are not required! It is a case of shifting staff from elsewhere, and facing the issue of what to do with vacant offices. Knock them down, perhaps, like the plan for Llandovery’s well-maintained and locally valued comprehensive school?  The council wants to build houses on the school site, while 11 to 18-year-olds from the town and its hinterland will face a daily trek to the other side of Llandeilo, where a ‘super school’ – the seduction of BIG, again – is to be constructed by the river Tywi. Flooding? Not in the council’s vocabulary.

I could go on about the phoney attractions of BIG, but no one in the county council is listening. BIG means kudos (until it all goes wrong), and often it means BIG MONEY too.

But  I don’t think there are any matching BIG benefits for residents.