NOTES TO THE FINANCIAL STATEMENTS

At 31 December 2022

1. ACCOUNTING POLICIES

Statement Of Compliance

Port of Tyne Authority is a Trust Port, established by an Act of Parliament. The registered Office is Maritime House, Tyne Dock, South Shields, NE34 9PT. The Group’s financial statements have been prepared in compliance with FRS102 as it applies to the financial statements of the Group for the year ended 31 December 2022.

Basis Of Preparation And Going Concern

The financial statements of Port of Tyne Authority were approved for issue by the Board of Directors on 15th June 2023. The financial statements have been prepared in accordance with applicable accounting standards. The financial statements are prepared in sterling which is the functional currency of the Group and rounded to the nearest £’000.

After making due enquiries, including consideration of recent and forecast trading performance, cash flow forecasts and banking facilities, the Directors have reasonable expectation that the Port of Tyne Authority has adequate resources to continue in operational existence for the foreseeable future.

For these reasons, the Directors continue to adopt the going concern basis in preparing the financial statements.

Basis Of Consolidation

The Group financial statements consolidate the financial statements of the Authority and its subsidiary undertakings made up to 31 December 2022. No income statement is presented for Port of Tyne Authority as permitted by section 408 of the Companies Act 2006.

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities.

Entities in which the Group holds an interest and which are jointly controlled by the Group and one or more other ventures under a contractual arrangement are treated as joint ventures. In the Group financial statements, joint ventures are accounted for using the equity method. In the parent authority financial statements investments in subsidiaries and joint ventures are accounted for at cost less impairment.

Judgements And Key Sources Of Estimation Uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However the nature of estimation means that actual outcomes could differ from those estimates.

The following judgements and estimates have had the most significant effect on amounts recognised in the financial statements:

• Revaluation of investment properties

The Group carries its investment property at fair value, with changes in fair value being recognised in the income statement. The Group engaged CBRE to determine fair value as at 31 December 2022. The determined value is most sensitive to estimated yield and void periods. The key assumptions used to determine the fair value are further explained in note 10. The valuation prepared by CBRE is subject to internal review by suitably qualified individuals, and is adjusted when considered to be materially different to management’s expectation of property value.

Following this internal review of the valuation as at 31 December 2022, the CBRE figures have been used for all assets with the exception of the Nissan car terminal. An element of the value for this site is derived from a per unit charge, the value of which is dependant upon assumed volumes. The volume assumptions within the CBRE valuation are based upon the past five years, which in our view have been suppressed by Covid and automotive supply chain issues. Management have therefore adjusted the CBRE valuation to be based on their current best estimate of annual throughput for the site based on more recent trends and forecast activity. This has had the impact of increasing the valuation of the car terminal by £2.7m

Under the “removal of undue cost or effort exemptions” of FRS102 – we have elected in the Authority not to revalue investment properties rented to another group entity, instead they are held at deemed cost at the date of transition. This election has no impact at a Group level, where these properties were already held as Operational Properties.

• Categorisation of properties

A property will be classified as investment property if the intention is to let it to one or more third parties throughout the medium term or beyond. Investment properties are held at fair value, with changes in value being recognised in the income statement. Operational properties are carried at depreciated historic cost. The categorisation of properties into these two categories therefore represents an area of judgement which may lead to material change in the value of the asset held on the balance sheet and the amounts recognised through the income statement.

• Pension benefits

The costs of defined benefit pension plans are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and the long term nature of these plans, such estimates are subject to significant uncertainty. Further details are given in note 22.

• Operating lease commitments:

The Group has entered into property, vehicle and trailer operating leases and, as a lessee, it obtains use of property, plant and equipment. The classification of such leases as operating or finance lease requires the Group to determine, based on an evaluation of the terms and conditions of the arrangements, whether it retains or acquires the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the statement of financial position.

1. ACCOUNTING POLICIES (CONTINUED)

JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY - CONTINUED

• Taxation

Management estimation is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies.

Significant Accounting Policies

a. Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Such cost includes costs directly attributable to making the asset capable of operating as intended.

Depreciation is provided on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual value, of each asset on a systematic basis over its expected useful life as follows:

Infrastructure (including roads, piers and swing bridge) – 15 to 100 years

Operational buildings (including quays) – 25 to 50 years

Dredging of a capital nature – 25 to 100 years

Plant & Machinery – 3 to 45 years

No depreciation is provided on freehold land. The carrying value of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable

b. Investment Properties

Certain of the Group’s properties are held for long term investment. Investment properties are accounted for as follows:

• Investment properties are initially recognised at cost which includes purchase cost and any directly attributable expenditure

• Investment properties whose fair value can be measured reliably are measured at fair value. The surplus or deficit on revaluation is recognised in the income statement and accumulated in the profit and loss reserve unless a deficit below original cost or its reversal on an individual property is expected to be permanent, in which case it is recognised in the income statement for the year. Further details are given within the Judgements and key sources of estimation uncertainty section on page 48.

c. Revenue Recognition

Revenue is recognised to the extent that the Group obtains the right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duty.

Revenue is recognised when services are physically provided to the customer and represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the value of consideration due.

Amounts receivable under annual bulk handling contracts including Take or Pay guaranteed annual tonnage clauses are recognised as physically handled. Any contractual amounts due as a result of a shortfall against the guaranteed tonnage due under these contracts in a given contractual period are recognised only when there is a contractual right to receive the amount due.