A few days before the deadline of 31st December 2024, Luton Rising (LR) filed their accounts for 2023/24 with Companies House.
https://find-and-update.company-information.service.gov.uk/company/02020381/filing-history
As we have previously stated when reviewing accounts, we do not have any financial backgrounds within our group, so we simply give our interpretation of what we find within said accounts.
Page 24 details the Profit and Loss Accounts, and shows that after four years of losses, LR returned to a post-tax profit for the year of £307.4 million. The losses for those previous for years totalled £553.1 million, so there is still a large shortfall to cover the losses of those previous years. This table appears to show that this profit is substantially based on a change in fair value of investment properties. This figure is arrived at by reassessing the value of assets at the time of the accounts, March 2024, against comparable airport assets.
The figure quoted for this change in value was £385.4 million, up from a £207.4 million LOSS in 2022/23.
Page 18 gives details of the Basis for Qualified Opinion from the Auditors. This still primarily revolves around airport valuation, which leads to the market valuation of the airport. Remember it was airport valuation that led to a previous Luton Borough Council (LBC) Auditor not signing off the accounts from 2018/19, or any subsequent years.
If we remove the £385.4 million from the profit declared of £307.4 million, we will still have a loss of £78 million.
As with any business, fair value of its assets is primarily just a snapshot in time as of March each financial year, and no company is going to paint itself in a bad light if it has the opportunity to do otherwise.
Passenger figures for the year are quoted as 16.4 million, which is up from 14.7 million in the previous financial year, and 800,000 short of the last pre-Covid year of 2019/20.
Those 16.4 million passengers generated an income from the Concession Fee of £61.9 million, which was an increase of £6.9 million on 2019/20, so that is one good piece of news. This increase in income, however, did not lead to an increase in either charitable donations or the dividend paid to LBC by LR from that income. Charity donations rose a fraction to £7.7 million, up from £7.4 in 2022/23, though still substantially down from the £16 million paid out in 2012/13, and that was only on a passenger throughput of 9.6 million passengers.
The Dividend was withheld for the fifth year running, and no indication is given as to when it will resume?
Bearing in mind these drops in income to charities and LBC, we looked at the administrative costs of LR, as we felt it would be safe to assume that staff costs would be curtailed to help stabilise the company through the post Covid years, but that is not what we found.
Administrative costs came in at £30.6 million, which is double what they were from the last full pre-Covid year, 2018/19, of £15.4 million. Employing more staff over the years when we would expect consolidations, to divert more cash to charities desperately in need, would appear not to have been the focus of LR!
Other snippets from the accounts detail how in May 2024, LR intended to draw down the final £8.2 million of its £507.5 million debenture loan agreement with LBC.
But the cupboard is now bare, as LBC can no longer gain access to loans from the Public Loans Works Board in Central Government. Any future loans will have to be via commercial routes, at substantially higher interest rates.
The DART Impairment previously accounted for was reviewed, and a reversal of the Impairment figure of £20.5 million was calculated. This means the project will now only lose £239.8 million over its operational lifetime.
The capitalised costs of the Development Consent Order (DCO) application, currently delayed again until April, reached £88 million. This is £18 million over the supposed unbreakable financial cap on the project of £70 million set by LBC, but we are not surprised – bearing in mind the substantial revaluations that have occurred, and no doubt we will find in the next accounts that figure has risen again.
In summary, the airport would appear to have recovered passenger numbers, but the financial benefits to the town of Luton of that revival, through increased Dividends and charity donations, have been consumed again by the debts, project and staff costs of LR.
Those debts comprise the £507.5 million debenture loans, the £199 million stabilisation loans given to LR by LBC in 2020/21 & 2021/22, and the £45 million force majeure payments to the airport operator.
What is not clear, however, is where those stabilisation/force majeure loans came from? DART and the DCO costs have gobbled up the majority of the debenture loans, so they could only have come from other commercial loans, from future monies due from the concession fee or from cash reserves redirected within LBC coffers?
We the public will never of course get answers to those questions, as LBC simply will not talk about LR/airport financing in the public arena, but £751.5 million debts held by LBC for LR, plus interest of course, is an awfully big hole to fill.
Should, as we of course hope, Central Government see sense and refuse the DCO, that financial crater would swallow not only the airport being in public ownership, but the services and town of Luton as well!