Cornwall Council’s private company Corserv is currently running at a £4-million loss and will not pay dividends to shareholders until the financial year of 2025/26.

The local authority’s corporate finance scrutiny committee heard the stark figure this week on Tuesday while signing off the company’s four-year business plan. 

The deficit is due to “ongoing challenges” within the Corserv Group’s facilities division and continuing support of Newquay airport’s costly operating subsidy.

Corserv is a diverse group of Cornwall Council-owned businesses providing infrastructure, engineering, jobs, social care, facilities management, inward investment, transport and other essential services to Cornwall and beyond. The group includes Cormac, which manages and maintains 7,500km of roads in Cornwall as well as delivering major construction and engineering work; as well as Corserv Facilities & Fleet and Corserv Care, which includes STEPS, Care and Support, Trefula House, Lifeline and Assisted Living Services.

The group has also created Corserv Solutions, a unified commercial entity with two subsidiaries, Cornwall Airport Newquay and Corserv Contracting, which it says is laying the groundwork for a more commercially-driven enterprise.

The Corserv group as a whole operated at a deficit of £4.1-million in 2023/24 and is expected to run at a loss of £895,000 in 2024/25, following the expected transferral of the airport to a new company.

Corserv’s interim chief executive Paul Cooper told the meeting its business plan for 2024-28 assumes the airport will leave the Corserv Group on December 31, 2024 to be taken over by a financial partner being sought by Cornwall Council. It currently looks as though that will be American property investment company Westcore.

That would save Corserv a considerable amount of money, as would the refocusing of its facilities business. This would include the possibility of transferring Private Rented Accommodation (PRA) properties back to the council. A decision will be made on this before September.

Revenue within the Corserv four-year plan is expected to reduce from £230-million to £222-million in 2028 with the forecast loss of revenue from the airport and the transition seen in facilities. Despite this reduction, it is expected that margins will improve and profit before tax will rise from a deficit position of £4.1-million to £8.2-million by 2028.

Mr Cooper told the meeting there was actually “a close to £1.2-million expectation” for shareholders in the period to 2025 rather than the end result of no payout. However, he added a “strong return” was forecast from 2025/26, delivering a shareholder dividend in excess of £3.3-million by 2028. 

Labour councillor Stephen Barnes asked Mr Cooper what element within Corserv gave him most concern, to which he replied “effective management over the next 12 months, so for the facilities company to manage its exit from loss-making contracts”. 

Cormac aims to deliver a programme of £60-million infrastructure for Cornwall’s growth through successful bidding on local authority work during the 2024/28 period. It aims to deliver a profit of £7-million by 2027/28.

Independent councillor Adam Paynter said: “For many years we have been told that Cormac will gain work in other areas and bring in other work outside its direct council work. That is difficult because of where Cornwall is, with only one border.”

Mr Cooper told him the aim was a 50/50 balance between external and council work for Cormac by 2028. It currently operates with 20 per cent of external work, including for the Environment Agency and South West Water.