Shareholder Executive

Covent Garden Market Authority

Purpose

Covent Garden Market Authority (CGMA) is responsible for the management of New Covent Garden Market. It provides essential services such as the management, supervision and security of the site, heating, electricity, cleaning and refuse disposal and maintenance of buildings and roads. The Authority lets trading premises and offices to tenants, but takes no part in the actual trade of the Market which is the responsibility of individual traders, nor in inspection or collection of price information which is the responsibility of Defra.

Legal Status and Ownership

The Covent Garden Market Authority is a statutory corporation whose duties are set out in the Covent Garden Market Acts. The Authority is responsible for providing facilities for a bulk horticultural market. It owns and manages the freehold of the 57 acre site at Nine Elms to which the old Covent Garden Market moved in 1974 from its original home in London WC2.

Government Objectives

CGMA earns revenue from renting office and retail space to market traders, wholesalers and related fresh produce businesses. It is required to ensure that its revenues are suffi cient to cover costs and break even taking one year with another. Historically surpluses have been paid to Defra. However, since 2000 these have been retained to assist with the Authority's investment needs.

It is Defra's long-term aim to transfer control of the Market from the Authority into new ownership so the Market can be run independently of Government. However, this can only be achieved with primary legislation. Defra recognise that the Authority is well placed to lead the redevelopment of the Nine Elms site, and indeed has a legal duty to secure the future of the Market. For this reason, Defra will defer the request for legislation to change the Market's ownership for the foreseeable future so the redevelopment project can proceed unhindered.

Financial Performance

£m	2008	2007	2006
Turnover	14	13	11
Operating Profit	0	(0)	0
Profit/(Loss) for the year	1	0	1
Net Cash flow	0	(0)	0
Net Operating Assets	5	7	7
RONA	5.1%	(0.1)%	6.8%
Shareholders' Funds	17	16	16
Dividends	-	-	-

Commentary

2007-08 saw the Authority's income grow to £14.6m (2006-07: £13.4m). Overall, the Authority reported an operating profit of £0.262m (2006-07: operating loss £8,000) after charging the costs of the redevelopment project of £1.2m (2006-07:£0.3m). In terms of the market traders' activities, wholesale distribution grew by 17.1%, with Fruit and Vegetable wholesaling remaining relatively static at +0.5%. The Flower Market, which remains under tough competitive pressure, experienced a decline of 5.3%. Trading space occupancy levels grew to 95% (2006-07: 92%), driven by the strength of the wholesale distribution business, and offi ce space occupancy grew from 53% to 60%.

In September 2006, the Authority announced the start of a two year programme to agree how to replace the Market's 35-year-old infrastructure with modern facilities. Considerable work has been undertaken to progress the project since the last report. During 2007, the Authority completed the viability testing for the redevelopment and developed a Business Case and procurement strategy. An Integrated Design Team was procured and appointed in April 2008 to develop a Design Brief.