The directors present the strategic report for the year ended 31 March 2024.
The principal risks facing Goosepool continues to be those associated with the underlying recovery of the aviation market which impact its trading subsidiary, TIAL.
Passenger numbers can be affected by external factors that TIAL has limited control over. For example, severe weather or the increased price of variable costs e.g. fuel and air passenger duty, as this can drive up flight prices. The invasion of Ukraine by Russia is affecting worldwide markets and is having a significant effect on the price of energy, including aviation fuel. Passengers are also facing significant cost of living increases, which may increasingly impact their spending choices.
Competition from other airports both within the UK and across the world for passengers remains a risk; many passengers make marginal choices about which route to fly. Our focus remains to offer a safe, efficient and enjoyable passenger experience in order to continue to compete in the market.
While aviation continues to recover, the airport is well positioned to capitalise on new opportunities in the aviation market.
Business development
In terms of route development:
The deal with KLM Royal Dutch Airlines is continuing, with 3x daily flights to Amsterdam Schiphol providing worldwide connectivity from Teesside.
A deal was secured with TUI to reintroduce its flights to Dalaman for 2024, following the 2023 success of its Antalya route, which it ran alongside flights to Palma de Mallorca, capitalising on the Mediterranean Cruise Market.
Ryanair continued its year-round flights to Alicante, with additional summer flights to Palma de Mallorca, Faro and Corfu. Dialogue continues with the company to add other potential routes in future.
Loganair provided daily flights to Aberdeen throughout the 2023-24 reporting period, however pulled out of the airport after a strategic review of its country-wide airport operations – with Aberdeen to Newcastle and Glasgow to Southampton also scrapped. Eastern Airways has since returned to the airport to continue the route – the only airport in Yorkshire and the North East to operate flights to Aberdeen.
TIAL has also worked with a range of other companies to offer specific seasonal destinations, including Balkan Holidays (Bourgas), Transun (Lapland), Newmarket Holidays (Italian breaks), and Jersey with a range of operators (inc Fairs-Lloyds Travel and Premier Holidays).
The airport continues discussions with airlines with a view to delivering more airline partnerships, routes and services, and continuing to grow passenger numbers.
TIAL is also looking to grow its income from its land and assets:
Business Park North - TIAL invested in a new 26,995sq ft hangar, the first of two hangars to be granted planning permission on the north side of the airport site. The hangar will house global aircraft painting company Airbourne Colours, which works with airlines such as EasyJet, Jet2, Loganair and TUI. Its £6.5million facility could create up to 40 new jobs.
Business Park South – Unit D, the first 25,000 sq ft facility of the £200million Business Park South has been built, alongside a 1-mile-long link road connecting the development to the A67. The southside development will create up to 4,400 jobs when fully operational. Colliers and Aviation Real Estate Advisers (AREA) have been appointed as commercial agents for the airport business parks.
After historically handling very little air freight business, TIAL has invested in a Regulated Agent Facility, with a purpose-built 21,000 sq ft hangar offering security screening, temporary storage and freight forwarding, which has also become a Border Control Point, allowing it to handle fruit, vegetables and flowers. August 2023 marked one year since the facility became operational.
FedEx, the world’s largest transportation company, has signed a five-year deal for an airfreight handling facility at Teesside Airport. This will bring in eight additional inbound and outbound flights per week – providing capacity for 196,000lbs of cargo to be transported through the airport per week.
Marketing has continued to highlight the advantages of being based within the business park estate, including the Tees Valley Freeport area, offering additional customs zone incentives for businesses to locate or do business here.
TIAL continues to develop other revenue sources to reduce reliance on the passenger-related elements of scheduled and charter flying. These include ground-handling and fuelling to commercial, general aviation and military customers.
Goosepool continues to assist TIAL in working towards achieving all of the objectives in the business plan over the coming months.
Areas of focus:
In 2024/25 increasing operations through our regulated agent
Further developments of the North and South Business Parks including new hangars and units
The Teesside Airport Foundation is now up and running. It is continuing to develop the Foundation’s long-term strategy and designing its case for support and its charitable fundraising activities. It will work to ensure people living in the region reach their potential and go on to find a successful and rewarding career in the Tees Valley.
Work is continuing on implementing the Net Zero strategy for the TIAL business, alongside collaborative engagement to reduce emissions from aircraft, with a view to make the airport operationally Net Zero by 2030 and offer Net Zero flights from 2035. In terms of estate developments, the airport is also developing a major solar array to provide electricity for the business and its tenants, and for supply to the national grid.
During the period, it was announced the airport would become home to a new permanent hydrogen refuelling station following the success of the Tees Valley Hydrogen Transport Hub trial in 2021. Element 2, which previously established a temporary refuelling facility, will set up the permanent station to provide fuel for hydrogen vehicles currently operating at the airport, plus those being trialled by local commercial fliers and authorities.
The subsidiary company's key financial and other performance related indicators during the full 12-month period were as follows:
2024 2023 %
Passenger numbers 230,258 191,963 20%
Revenue £14.9m £15.6m (4%)
Goosepool's subsidiary company TIA is subject to economic regulation by the Civil Aviation Authority ('CAA'), which is the independent aviation regulator in the UK, responsible for economic regulation, airspace policy, safety and consumer protection.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 March 2024.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group finances its activities with a combination of group borrowings and cash and short term deposits. Other financial assets and liabilities, such as trade debtors and trade creditors, arise directly from the group's operating activities.
Cashflow and liquidity risk is the risk that a group's available cash will not be sufficient to meet its financial obligations. The group actively manages its cash flow position including collection of debts and timely payment of creditors. This, coupled with funding provided by the ultimate parent, Tees Valley Combined Authority, is deemed sufficient to minimise the group's exposure to cash flow and liquidity risk.
Price risk is the risk that changes in raw material prices have the potential to impact on the profitability of the group. The group does not consider that it is materially exposed to price risk.
Foreign exchange risk refers to the potential for loss from exposure to foreign exchange rate fluctuations. Group policies are aimed at minimising this risk. The group does not consider that it is materially exposed to foreign exchange risk.
Credit risk is the risk that one party of a financial instrument will cause a financial loss for the other party by failing to discharge its obligation. Group policies are aimed at minimising such losses and require customers to satisfy credit worthiness procedures prior to acceptance of contracts. The company does not consider that it is materially exposed to credit risk.
See disclosures in the Strategic Report relating to future developments.
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the group will be put at a General Meeting.
The financial statements have been prepared on a going concern basis.
As at 31 March 2024 the company and group has net current liabilities of £55,832,965 and £151,598,033 respectively (2023: £51,333,914 and £122,084,610 ) and net liabilities of £22,216,860 and £67,790,273 (2023 - £17,717,809 and £54,367,217). The group meets its day to day working capital requirements through cash generated from operations and utilisation of a loan facility ultimately provided by the Tees Valley Combined Authority. The loan facility is approved for an amount of up to £64.4m which can be drawn down as required over the period to 31 March 2029. A facility for an amount of £23.6m which is to be used to fund the Southside development is in place. The total amount drawn down at the year end under both facilities was £88.7m and further draw downs are forecast to be made over the next 2-3 years in line with the company's development and expansion plans. The facility is repayable on demand and the directors have received a letter from Tees Valley Combined Authority confirming their continued support for a period of not less than 12 months from the date of signing these financial statements.
The directors have prepared both short term and long term forecasts which indicate that, taking into account reasonably possible downsides, the group and company will have sufficient funds, through funding from its ultimate parent, Tees Valley Combined Authority, to meet its liabilities as they fall due for that period. The directors are confident that the forecasts will be met based on the success of securing new long term arrangements with airlines as discussed in the Strategic Report.
Based on the factors set out above, the directors believe that there is no material uncertainty in relation to going concern and that the company has adequate financial resources to continue in operational existence for at least twelve months from the date of signing of the financial statements and therefore the directors believe It remains appropriate to prepare the financial statements on a going concern basis.
We have audited the financial statements of Goosepool 2019 Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2024 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the field in which the client operates, we identified the following areas as those most likely to have a material impact on the financial statements: Health and Safety; employment law (including the Working Time Directive); anti-bribery and corruption; and compliance with the UK Companies Act.
Owing to the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The group has no recognised gains or losses for the year other than the results above.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £4,499,051 (2023 - £4,174,080 loss).
Goosepool 2019 Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Teesside Airport Business Suite, Teesside International Aiport, Darlington, Co Durham, DL2 1NJ.
The group consists of Goosepool 2019 Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Goosepool 2019 Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 March 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group statement of financial position at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
The financial statements have been prepared on a going concern basis.
As at 31 March 2024 the company and group has net current liabilities of £55,832,965 and £151,598,033 respectively (2023: £51,333,914 and £122,084,610 ) and net liabilities of £22,216,860 and £67,790,273 (2023 - £17,717,809 and £54,367,217). The group meets its day to day working capital requirements through cash generated from operations and utilisation of a loan facility ultimately provided by the Tees Valley Combined Authority. The loan facility is approved for an amount of up to £64.4m which can be drawn down as required over the period to 31 March 2029. A facility for an amount of £23.6m which is to be used to fund the Southside development is in place. The total amount drawn down at the year end under both facilities was £88.7m and further draw downs are forecast to be made over the next 2-3 years in line with the company's development and expansion plans. The facility is repayable on demand and the directors have received a letter from Tees Valley Combined Authority confirming their continued support for a period of not less than 12 months from the date of signing these financial statements.
The directors have prepared both short term and long term forecasts which indicate that, taking into account reasonably possible downsides, the group and company will have sufficient funds, through funding from its ultimate parent, Tees Valley Combined Authority, to meet its liabilities as they fall due for that period. The directors are confident that the forecasts will be met based on the success of securing new long term arrangements with airlines as discussed in the Strategic Report.
Based on the factors set out above, the directors believe that there is no material uncertainty in relation to going concern and that the company has adequate financial resources to continue in operational existence for at least twelve months from the date of signing of the financial statements and therefore the directors believe It remains appropriate to prepare the financial statements on a going concern basis.
Turnover comprising airport charges, rental and other income represents amounts achievable by the group in respect of facilities and service provided during the year and is recognised as the services are provided. Turnover is shown net of value added tax.
Freehold land and assets in the course of construction are not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution plans are recognised as a prepayment.
Defined benefit pension obligation
Teesside International Airport Limited made enhanced defined benefit obligations to 4 retiring employees whilst it was a contributing employer to the local authority pension scheme. The obligation is an unfunded liability and the annual contributions payable by the group are calculated by the scheme actuary. The group contributions should be sufficient to cover the future obligation. Any movements in excess of the contributions will be accounted in line with FRS 102.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The group has recognised goodwill on the acquisition of 89% of Durham Tees Valley Airport Limited. The fair values of the net assets acquired were estimated by the directors on acquisition and the resulting goodwill has been estimated by the directors to be amortised over a period of 10 years. The directors consider that the goodwill is supported by the future cash flows to be generated by the acquired company.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Investment properties are carried at fair value based on valuations performed by independent qualified professional valuers and application of their methodologies which have been adopted by the directors. The values are based on a combination of the rental yields on the properties and the estimated resale value of land for commercial development purposes. The assumptions applied are inherently subjective and so are subject to a degree of uncertainty. The carrying amount is £49,472,000 (2023 - £34,954,000).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
Impairments
Goodwill
Goosepool 2019 Limited acquired 89% of the issued share capital of Teesside International Airport Limited ("TIA") in 2019 for £40,200,000. Initial goodwill of £24,767,562 arose on this transaction however following a review in 2020 of the fair value of the assets and liabilities acquired the initial goodwill was revised to £25,435,718. At the current period end the directors performed an impairment review on the carrying value of goodwill in light of the performance of TIA. The directors considered the future cash flows to be generated by TIA under a number of circumstances and concluded that the value in use as a continuing operational airport with commercial land development opportunities was the most appropriate basis to consider the cash flows.
The directors have prepared long term cash flow forecasts for TIA. These forecasts include the airport securing a number of low cost carrier airlines and are based on known secured contracts or those which are currently being negotiated. The securing of these contracts is in line with, and in some cases, ahead of the long term business plan set out when TIA was acquired. A discount rate of 3.5% was applied to the forecasts, being the local government agreed investment appraisal discount rate.
The key elements to the forecasts are based on TIA securing contracts and routes with low cost carrier airlines. As noted above the directors have clear visibility of such contracts and have included only those contacts secured or in advanced negotiations in their forecasts. The directors considered flexing of the discount rate as well as a number of downward sensitivities on the forecasts. These included reductions in ticket revenues, cargo income, income from car park revenue and commercial profit per departing passenger. The forecasts show that it would take significant reductions, without applying any corrective measures, of which the directors consider there are many, to result in an impairment. In addition the airport has the capacity for a number of other routes to be established with low cost carriers in future years - none of which have been factored into the forecast by the directors on the grounds of prudence.
Overall the directors are satisfied that the forecasts are robust and reflect real contracts which are either secured or are in the process of being negotiated and are therefore comfortable that the forecasts will be achieved. Accordingly they do not believe that an impairment charge is required in 2024.
Impairment
The runway and terminal assets were fully impaired in previous years due to the company incurring large losses. Given the ongoing uncertain recovery from the Covid-19 pandemic and the Russia - Ukraine crisis there remains significant uncertainty over the impact on travel and airports, therefore the directors believe that it would be prudent to consider any reversal of impairments at this stage. Amounts capitalised in the current year relate to new assets and developments which the directors consider will create economic benefit going forward.
Investment properties have been valued at fair value based on valuations performed by independent qualified professional valuers and adoption of their methodologies by the directors. Changes in fair values are recognised in profit or loss.
In a prior year cash was paid into a designated bank account in order that the group could comply with its obligations under an agreement to develop land on the Southside of the airport. In the event certain conditions are not met this sum is payable to other parties to the agreement. The movement during the year of £117,692 (2023 - £43,480) relates to interest earned on the total sum. This interest is due to Tees Valley Combined Authority.
In February 2019 the company acquired 89% of Teesside International Airport Limited ("TIA") at a cost of £40,200,000. At each period end the directors consider the carrying value of the investment. No impairment was considered necessary in the current or prior period.
Details of the company's subsidiaries at 31 March 2024 are as follows:
Amounts owed to group undertakings consist of loans granted by the immediate parent, Tees Valley Combined Authority. Interest on this facility is charged at 5.09%. All amounts are repayable on demand. The loans are secured by a fixed and floating charge over land and buildings owed by Teesside International Airport Limited.
Other provisions relate to contractual obligations between Teesside International Airport Limited and Network Rail to maintain a rail halt. The estimated costs of repair are £1,000,000.
The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £210,714 (2023 - £188,933).
Contributions totalling £43,883 (2023 - £37,537) were payable to the scheme at the end of the year and are included in creditors.
Teesside International Airport Limited participated as an admitted body in a Local Government Pension Scheme, Teesside Pension Fund, which is administered by Middlesbrough Borough Council.
On 30th November 2017 the Company's participation in the Local Government Pension Scheme (LGPS) ceased and all past service liabilities of the Company's employees transferred back to the Local Authorities who were both original majority shareholders of the Company and also participants of the particular pension fund (the Teesside Pension Fund") within the LGPS.
The company made enhanced defined benefit obligations to 4 retiring employees whilst the company was a contributing employer to the local authority pension scheme. This obligation is a unfunded liability and the annual contributions payable by the company are calculated by the scheme actuary. The company contributions should be sufficient to cover the future obligation.
As at 31 March 2024 the actuarial valuation calculated the unfunded liability as £60,000 (2023 - £65,000). This has been included in other creditors at the year end.
The date of the most recent comprehensive actuarial valuation was 31 March 2022. The latest actuarial valuation of the scheme assets and the present value of the defined benefit obligation were carried out at 31 March 2024 was prepared by Hymans Robertson LLP for Middlesbrough Borough Council in accordance with IAS 19 and FRS 102.
Rights, preferences and restrictions
A Ordinary have the following rights, preferences and restrictions: The A Ordinary shares carry a right to one vote per share and a right to participate in a distribution, whether by way of income or capital distribution. The A Ordinary shares are not redeemable.
B Ordinary have the following rights, preferences and restrictions: The B Ordinary shares carry a right to one vote per share and a right to participate in a distribution, whether by way of income or capital distribution. The B Ordinary shares are not redeemable.
This reserve records retained earnings and accumulated profits or losses.
Group
The ultimate parent undertaking, Tees Valley Combined Authority, holds a fixed and floating charge over the over land and buildings belonging to Teesside International Airport Limited in relation to borrowings of Goosepool 2019 Limited.
Amounts contracted for but not provided in the financial statements:
The group has taken advantage of the exemptions contained in s33.11 of FRS 102 and has not disclosed details of transactions and balances with Tees Valley Combined Authority and other entities under its control.