Teesworks: Private partners make £93m from plot of land it bought from public sector for £100

Teesworks Ltd, the company responsible for redevelopment of the former Redcar steelworks site, has published its annual accounts and reported profits tripled compared to the previous year.

In the first full year of accounts since the previously 50-50 public-private partnership became 90% privately owned after a controversial share transfer, Teesworks Ltd reported net profits of £54m in the year to the end of March 2023. Net profits in the previous year were £15m.

Dividends of £3m were paid to shareholders compared to £21m in the previous year. South Tees Development Corporation (STDC), the public entity which retains 10 percent ownership of the company, has a different class of shares to the private owners and is not believed to have received any dividend payment in the most recent accounts.

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Despite the lower payments in dividends, there was an increase in payments to a related party that holds “a participating interest” in Teesworks for “marketing services”. In 2022/23 Teesworks paid the unnamed company £22,298,016 for these services, up from £16,669,863 the previous year.

Tees Valley Combined Authority stands to make £650k a year from the SeAH Wind site at Teesworks, while others will make millions.Tees Valley Combined Authority stands to make £650k a year from the SeAH Wind site at Teesworks, while others will make millions.
Tees Valley Combined Authority stands to make £650k a year from the SeAH Wind site at Teesworks, while others will make millions.

Documents from August 2021 obtained by Private Eye and seen by The Yorkshire Post show an agreement for marketing services between Teesworks Ltd and DCS Industrial Ltd - the company which holds the majority shareholding in Teesworks Ltd and is ultimately owned by Teesworks’ private partners who include Chris Musgrave and Martin Corney.

The enormous increase in annual turnover from £54m to £143m is because of the completion of a lease agreement for a controversial 90-acre parcel of land on-site which was sold to Teesworks by STDC for £97. A side-agreement for the land transfer was agreed for £15m, which The Yorkshire Post revealed is only due for full payment in December 2025.

However, Teesworks sold a 40-year lease on the land to Australian financial giant Macquarie for £93.3m. The published accounts publicly confirm this amount for the first time.

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Macquarie then sublets the plot to Tees Valley Combined Authority (TVCA) who pay £3.65m a year. The authority, led by Ben Houchen, subsequently leases its interest to the land user, SeAH Wind, for £4.3m a year.

As part of the chain of leasing, Teesworks has paid TVCA a reverse premium which totals £12,423,910 after costs are removed. The amount covers TVCA’s liabilities to Macquarie for the two-year period before SeAH begins paying for its lease.

More than £49m of the company’s turnover in the reporting period comes from the sale of scrap and aggregates. Clearing the site of the former steelworks buildings has proven lucrative, with £54m in sales of scrap made in 2021/22. Meanwhile site clearance and remediation, undertaken by STDC, means there’s a market for aggregate to re-fill polluted land that’s removed.

The transfer of shares from STDC to private interests in November 2021 led to accusations of corruption and a subsequent government inquiry into the project. Investigating since June, the panel is expected to deliver its report to Government imminently. However, publication would be at Secretary of State Michael Gove’s discretion.

Neither STDC nor Teesworks responded to requests for comment.

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