The Sutton Shareholdings Board met on Tuesday 4 November 2025 to review the mid-year performance and finances of its subsidiary companies, Sutton Living Ltd and Sutton Decentralised Energy Network (SDEN), as well as Cognus, a company delivering education support services. The Board noted the performance updates for Sutton Living and SDEN. For SDEN, the Board agreed to seek external investment, with a commercial consultancy to be employed to evaluate the company's potential and approach the market for investment partners. For Cognus, the Board noted its mid-year progress and financial position, noting the recommendations related to these updates.

Sutton Living Ltd Mid-Year Performance and Finances 2025-26

The Board received an update on the mid-year performance and finances of Sutton Living Ltd. Ferris El-Sheik, Managing Director of Sutton Living, presented the company's business plan progress, highlighting the acquisition programme which is on track to reach 100 homes by the end of the financial year. These homes are being let as affordable housing, with the council benefiting from savings on homelessness budgets, projected to be £780,000 according to Councillor Sunita Gordon's medium-term financial plan. A portion of the portfolio includes providing interim homes for Elm Grove leaseholders during their estate's regeneration.

The development programme continues with the Grove House scheme, which involves converting a Victorian building into 10 apartments for private sale. Despite some cost increases and delays, improved sales expectations and early purchase reservations have offset these issues.

The proposal to establish Sutton Living as a Registered Provider (RP) is being considered to access additional affordable housing grants and potential tax exemptions. Legal advice is being sought, and an update will be provided in the new year.

Financially, Sutton Living reported a turnover of £550,000 for the previous financial year, resulting in an operating loss of £80,000 and an underlying operating loss after interest of £530,000. For the current financial year, Sutton Living forecasts a turnover of £2 million, with a small operating profit of £70,000 but an operating loss of £510,000. This is attributed to income slippage into the next financial year due to development scheme sales receipts being recognised only upon realisation. The longer-term forecast remains largely unchanged, with the company expecting to generate profit and increase budget savings as the acquisition programme expands.

Councillor Jake Short, Chair of the Housing, Economy and Business Committee, inquired about the company's preparedness to take on a larger portfolio of properties, potentially 200 homes, supported by the Local Authority Housing Fund (LAHF) programme. Ferris El-Sheik confirmed that Sutton Living has a resourcing plan and is operationally prepared, with a strategy to scale up resources as needed.

The meeting moved into an exempt session to discuss the risk register.

Sutton Decentralised Energy Network Mid-Year Performance and Finances 2025-26

David McEntorner, Managing Director of Sutton Decentralised Energy Network (SDEN), presented the company's mid-year performance and financial update. The Board was asked to note the performance update report, the company's risk register, and the draft annual accounts for 2024-25. A key recommendation was to seek approval for the council to employ a commercial consultancy to explore external investment for heat network expansion.

For Phase 1, the New Mill Quarter development has achieved 100% supply reliability. The primary heat source connection with Viridor is in the design phase, with a target connection date of April 1, 2027, which will support the expansion of the heat network. Two significant legislative changes were highlighted: Ofgem assuming the role of regulator for heat networks from January 2026, focusing on customer service, pricing, and efficiency, and the introduction of heat network zoning legislation, which will prioritise heat networks over alternative energy solutions in designated areas.

In Phase 2, SDEN has entered into contracts with the Royal Borough of Kingston (RBK) to manage the operation and maintenance of their new heat network on the Cambridge Road estate. SDEN has also secured £877,000 from the Green Heat Network Fund and a loan of over £1 million from the Green Finance Fund for the Clarion Lavenders connection. Discussions are ongoing with the London Cancer Hub and the NHS for potential connections to Croydon University and St Helier hospitals.

Financially, SDEN reported a loss of £100,000 for the year, attributed to significant investment in equipment upgrades and servicing. Councillor Tim Crowley raised concerns about the sustainability of the business model in the face of warmer seasonal conditions impacting heat demand and questioned the long-term return for external investors. It was noted that the company needs to grow its revenue stream and diversify to ensure future business sustainability. The Board agreed to seek external investment, with the understanding that a commercial consultancy would be employed to evaluate SDEN's potential and approach the market for investment partners. The cost for this consultancy is estimated at £120,000.

Cognus Mid-Year Performance 2025-26 and Finances 2024-25

Joanna Cassey, Managing Director of Cognus, presented the mid-year performance and financial update for Cognus Limited. Cognus, a Local Authority Trading Company (LATC), delivers Sutton's education support services. The company has taken on responsibility for free school meals registration and participation for children in care, including oversight of the Children in Care Council. A pilot for auto-enrolment for free school meals identified an additional 182 children eligible, leading to increased Pupil Premium funding for schools.

Cognus has also been involved in developing local area community fundamentals and co-developing the delivery model for the government's Family First programme. The company has seen positive performance in its Therapies team, with a high conversion rate of locum staff to permanent positions, saving £131,000 over two years. The timeliness of EHCP advice submissions has significantly improved.

Elective home education referrals have increased, with 308 children currently home-educated. The Traveller Education Service reports a high percentage of traveller children receiving suitable education, improving from 86% to 94%. Sutton's rate of school exclusions has significantly reduced, now placing it mid-table nationally. Attendance rates in primary and secondary schools are higher than the London and national averages.

Financially, Cognus concluded the previous financial year with an operating deficit of £410,000, an increase from the previous year, largely due to additional statutory expenditure for the Therapies team related to the growing number of Education, Health and Care Plans (EHCPs). Despite this deficit, trading income has shown consistent year-on-year growth. The company forecasts an operating surplus of £256,000 for the current financial year, which would strengthen its reserves.

The Assisted Travel team has achieved a forecast underspend of £600,000 due to route optimisation and the implementation of a new Travel Assistance Policy. Councillor Tim Crowley sought a breakdown of this saving between route optimisation and the new policy. The Board noted the recommendations to note the mid-year progress and financial position updates.