Profits at the controversial 2,600-acre Teesworks regeneration site covering the former Redcar Steelworks tripled last year, according to the latest accounts.

Progress at the site has been pivotal to the region, providing vast plots of remediated land with Freeport status which have already attracted major investors like bp and SeAH.

But the transfer of the company into majority-private ownership is subject to a government inquiry, with an overdue report looking at whether the whole project was set up to give the best value for money due out in the next few weeks.

The investigation, requested by the Tees Valley Mayor Ben Houchen, was launched in June after allegations of cronyism. 

One of the key issues it will look at is how the Teesworks blueprint was developed on a 50-50 split with companies run by developers Chris Musgrave and Martin Corney.

The latest results say the company achieved a turnover of £142,889,169.

The report says that land disposal ‘marks the beginning of the main, core activity of the Company, to secure new business into the Teesworks site, thus securing new jobs and investment into the region. At this time, the Teesworks site is now undergoing a transition away from public investment used to kick start the repurposing of the site, into a private sector led remediation and redevelopment phase.’

The key figures from the report are:

  • Turnover for the year ended March 31 2023 was £142,889,169 (compared to £53,975,871 in 2022)
  • Gross profit £68,302,943 compared to £33,339,726
  • Net profit after tax £54,269,850 compared to £15,075,814
  • EBITDA £66,982,023 compared to £18,989,150.

Around 1,500 acres of the 2,600 are described as ‘developable.’ The total area of land leased or disposed of to third parties at the year-end was 105 acres, with lease terms ‘significantly progressed’ across a further 407 acres where contracts are anticipated to be concluded within the following 12 months.

The report, prepared by Chartered accountants and statutory auditors Chipchase Manners in Middlesbrough, adds: “While ground conditions and infrastructure conditions in a number of cases remain unknown and therefore carry risk of uncertainty and cost assessment, the Board are confident that progress will continue to be made and at an expedited pace.

The Northern Echo: Ben Houchen and Chris Musgrave at the Teesworks launch in 2020Ben Houchen and Chris Musgrave at the Teesworks launch in 2020 (Image: Newsquest)

“Indeed, the original Masterplan for the site forecast a 25-year delivery time horizon which, at the current rate of progress, will be reduced by at least a decade.”

Sale of scrap and aggregates fell from £53,975,871 to £49,503,387, possibly indicating how the remediation work, while clearly still a major part of the revenue from the site, may start to become less core to the operation.

Among other details, the report reveals a number of ‘related party transactions' which give a revealing insight into the huge amount of multi-million pound deals that have been put together to construct the financial infrastructure underpinning Teesworks.

Key points include:

At 31 March 2023 Teesworks Limited owed £1,403,803 to a company that holds a participating interest and has shared directors. At 31 March 2023 Teesworks Limited was due nil (2022: £959,520) from the same company.

During the year, Teesworks Limited received £500,000 from this company in connection with the assignment of a Put and Call Option (a put is the right to sell and a call is the right to buy) over a plot of land at the development site on which exists a 250-year headlease.

During the year Teesworks Limited was charged £22,298,016 (2022: £16,669,863) by the related party company for marketing and other consultancy services.

At 31 March 2023, Teesworks Limited owed £10,000,016 to an entity that holds a participating interest. During the year, Teesworks Limited made sales totalling £3,972,456 to this entity in relation to the sale of scrap and aggregates from the development site.

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During the year Teesworks Limited was charged £22,798,016 (2022: £16,669,863) by the related party entity in relation to services for demolition and extraction of scrap across the development site.

During the year Teesworks Limited agreed to pay £15,000,000 to this entity in relation to agreed upon terms in a commercial deed with regards to land. On 11 October 2022 Teesworks Limited entered into a 99-year lease with the related party for a 13-acre plot of land at the development site granted at a peppercorn rent.

On 11 October 2022 Teesworks Limited exercised an option with a related party company over a plot of land at the development site for a sum of £13. On 16 December 2022 Teesworks Limited exercised an option with the same related party company over a plot of land at the development site for a sum of £97. This related party company is controlled by a part-owner of Teesworks Limited.