Agenda item

The Management Committee gave consideration to a report of the Managing Director which provided an update of the actions and progress made since the previous ESPO Management Committee held on 31 March 2026. A copy of the report, marked ‘Agenda Item 5’ is filed with these minutes.

 

Arising from the presentation of the report and discussion, the following points were made:

 

i.        ESPO delivered a record financial performance for 2025/26, with an £8.3 million trading surplus, ahead of budget, the prior year and the Medium Term Financial Strategy.

 

ii.        The expected dividend pool for member authorities was £6.2 million, subject to Finance and Audit Committee and Management Committee approval.

 

iii.        Sales totalled £86.4 million, below budget and the previous year, due to continuing pressures on schools and reduced discretionary spending.

 

iv.        Despite lower sales, ESPO maintained its market position, with resilient gross margins supported by pricing, margin management and stable supplier conditions.

 

v.        Framework rebate income was strong at £13.8 million, helping to offset reduced catalogue volumes.

 

vi.        Expenditure was £28.4 million, £2.3 million below budget, reflecting tight cost control and ongoing efficiencies.

 

vii.        ESPO Trading Limited and Eduzone had a mixed year, with international trading affected by Middle East disruption and customers sourcing closer to origin.

 

viii.        Eduzone was fully integrated into ESPO Trading Limited by 30 March 2026, with customers transferred and the ESPO Early Years brand launched.

 

ix.        ESPO remained financially secure, self-sufficient and did not rely on external borrowing.

 

x.        Warehouse picking remained above target at 37 lines per hour, and carrier and fleet delivery both achieved 98% on-time performance.

 

xi.        Stock availability was strong at 99.17%, with the top 100 lines at 99.6%.

 

xii.        A guaranteed next-day delivery service was introduced to strengthen ESPO’s customer offer.

 

xiii.        Fleet replacement continued, including four new vans, two of which were electric, and six replacement large goods vehicles.

 

xiv.        Customer Services handled nearly 3,000 calls and around 4,000 emails in April, with 96% of calls answered and an average wait of 27 seconds.

 

xv.        Customer satisfaction remained high, with a 96% Feefo rating and Feefo Platinum Trusted Service Award status for 2026.

 

xvi.        Facilities work included statutory inspections, repairs and installation of a new vehicle wash facility.

 

xvii.        One health and safety injury was reported, and a safety bulletin on trip hazards was issued.

 

xviii.        Progress continued towards ISO 14001 accreditation, with a stage 1 audit scheduled.

 

xix.        IT support continued, with the Microsoft Secure Score improved to 86.89% and cyber security training completion increased to 97.6%.

 

xx.        Members noted 36 starters and 34 leavers in 2025/26, with turnover at 9.3%, well below the 27.4% national average. Over 58% of staff had five or more years’ service, and recruitment interest remained strong.

 

xxi.        Stress, depression and mental health remained the main cause of absence by days lost, though this had reduced in 2025/26. Seasonal and viral absences increased, with wellbeing support planned for 2026/27.

 

xxii.        A Member requested further information on the procurement of new fleet vehicles, including cost and range comparisons for diesel and electric vehicles and how this would inform future replacement decisions. Members were advised that vehicles were selected on value for money and operational suitability. The recent procurement included two electric and two diesel vehicles, and further detail on costs, range and future planning would be provided.

 

xxiii.        A Member asked how the reported surplus translated into the dividend pool and linked to the capital plan. It was agreed that this would be addressed under the relevant later item.

 

xxiv.        A Member asked whether the proposed pence-per-mile tax for electric vehicles from 2028 would affect ESPO’s fleet plans. Officers confirmed this would be included in the further information on fleet costs, range and future planning.

 

xxv.        In response to a question on marketing spend, Members were advised that there had been no significant overall increase, although expenditure had shifted towards digital activity.

 

xxvi.        A Member asked whether ESPO was considering further accreditations, including ISO 50001, B Corp or cyber accreditation. Members were advised that relevant accreditations would be considered where there was a clear business case, with Cyber Essentials or Cyber Essentials Plus being the next potential option.

 

xxvii.        With regard to staffing, a Member asked about reasons for staff leaving. Members were advised that voluntary leavers generally cited a new role, better hours or location, higher salary, or a change in career pathway, rather than organisational culture.

 

xxviii.        Members sought assurance on cyber security risks. They were advised that cyber security was monitored through the corporate risk register and supported by penetration testing, internal audit, staff training, Microsoft Secure Score monitoring and access to IT helpdesk support. Officers confirmed that current penetration testing was mainly technical, while previous internal testing had included staff awareness exercises. It was agreed that formal social engineering testing would be considered.

 

xxix.        A Member asked about the use of artificial intelligence to support efficiencies. Members were advised that ESPO was developing an AI roadmap, policies, guidance, a use case register and a steering group. Some low-level automation was already in use, supported by staff training and a budget allocation for AI and wider strategic initiatives.

 

It was moved by Cllr Wyatt and seconded by Mr. Fowler that the update provided by the Managing Director be noted.

 

RESOLVED:

 

That the update provided by the Managing Director be noted.