At the Compulsory Acquisition Hearing of the Development Consent Order (DCO) application held on 28th November 2023, the Inspectors asked to see the Luton Rising accounts for 2022-23. Luton Rising (LR) said they would provide them as soon as possible. That turned out to be the very last day for submissions 8th February 2024.
These accounts can also be found on the Companies House website when they are actually filed: https://find-and-update.company-information.service.gov.uk/company/02020381
These accounts are even more shocking than 2021-22, and this will give you a flavour of the financial quagmire they contain.
1. A Qualified Auditors’ opinion for the third year in a row
This is because the Auditors can’t support the Director’s valuation of the airport at £1.16bn, even though it is £320m down from the £1.5bn valuation in March 2021. The Auditors would support a further write down of £150m bringing the valuation down to c£1bn. Remember this is a new Auditor to LR, so this means neither they and nor their predecessors can support the inflated values applied to the airport by LR.
2. The “game changing” DART is excluded from this valuation as it is treated as plant and machinery and carried in the accounts at its recoverable cost.
In the Financial Year 2020-21, LR announced impairment on the DART of £184.7 million. Impairment is a permanent reduction in the value of an asset. It means the return over the lifetime of a project will not meet construction / operating costs. In the 2022-23 accounts there has been a further impairment of £75.6 million, giving a total figure of £260.3 million.
The total DART costs are shown to have risen to £361m, so only £100.7 million will be recovered OVER THE 40 YEAR LIFE SPAN OF DART!!!!!
Of course, the loans for that £260.3 million will have to be paid from held back Concession Fee income, money that if it hadn’t been wasted in such a profligate manner, could have done so much good in Luton. We have informed you previously of our efforts to get public access to the business plan for DART, and how that ended up with the Information Commissioner’s Office forcing LR to provide it, but it was so redacted as to be useless.
We believe that a full Public Inquiry needs to be instigated by the political opposition within Luton Borough Council, or by Central Government itself, to make those responsible for this huge waste of potential public funds to be held to account.
3. DCO expenditure to obtain planning permission totalled £71m at 31 Mar 2023 and has been treated as an asset, which will have to be written off if not obtained.
The original budget for the DCO was £50 million. There is no detail explaining whether or not the costs of the DCO Examination are included. With the size of the legal team of LR, the raft of experts fielded, and the administration costs of supplying all the additional responses, it is reasonable to estimate that if these costs are not included, the bill is now a minimum of £100 million, plus interest.
4. Loans provided by LBC
At 31 March 2023 these total £487m an increase of £78m during the year. This leaves LR £20m short of the £507m facility advanced to LR by Luton Borough Council (LBC). LBC and LR have confirmed that there will be no more significant funding from LBC via the Public Works Loans Board, as their criteria have been tightened. It would appear that the airport operator, LLAOL, is the only investor currently considering financing DCO Stage 1. What stipulations that would entail are of course commercially sensitive, and therefore not in the public domain.
5. Profit and Loss.
- For 2022/23 there was a loss of £207.8 million
- For 2021/22 there was a loss of £232.1 million
- For 2020/21 there was a loss of £109.7 million
So over three years LR has cumulative losses of £549.6 million.
In real world terms, a company with losses like these would be insolvent/declared bankrupt. LR are fortunate that as LBC are their major creditor as well as sole shareholder, they will never be put in in that real world scenario. It is clear that the winner of all this is the Spanish controlled operator who are returning significant profits to their shareholders and have been protected against the impact of COVID on air travel and have avoided providing any more than a minimal sum towards the capital projects at the airport.
They must be delighted with the way the concession has worked out for them and how this has been achieved with unwitting support from an incompetent LBC/LR, which bears all the risks.