CROYDON IN CRISIS: The council’s bungling house-builders sneaked out their latest accounts on Christmas Eve, which show they expect the council to pay them £72m for the Fairfield Halls fiasco. By STEVEN DOWNES
As Colm Lacey got up from his desk in Brick by Brick’s £1million offices in George Street for a final time, the over-promoted ex-council exec left behind another steaming turd – a £25.26million loss in the company’s latest annual accounts.
The Brick by Brick accounts to March 2021 were released by Companies House this morning, in the latest crass attempt by the council-owned house-builders to sweep the bad news under a Christmas carpet. Which can be marked down as another Brick by Brick failure, because here are the bullet points…
Even since the council’s financial collapse in November 2020 and the admission that Brick by Brick is a busted flush, there has been some shuffling of the deck as far as the company’s loans after its latest audit six months ago, with a new facility arranged, repayable by 2025.
But now, borrowings payable within one year amount to £229million.
As the directors’ report states, “This facility consolidates numerous historic loan agreements and informal lines of funding. The facility agreement provides the company with the security of funding, based on its cashflow projections, to continue to build out and sell its developments in an orderly manner to maximise potential returns to the lender.”
And this is a nice bit, “Sufficient flexibility has been included within the agreement to allow for variations that may arise.” Which is handy.
According to the report, as at March 31 this year (the company’s financial year-end), it was working on 14 construction sites, 12 of which are supposed to be completed by the end of March 2022. Brick by Brick sold £20million-worth of flats in 2020-2021, while also writing off “approximately” £20million “of costs incurred that relate to projects that are no longer going to be acquired for development”.
In 2020-2021, after being in existence for nearly six years, Brick by Brick completed 187 homes across seven sites. “The company is on target to complete a further 291 homes across 12 sites in the year to March 31, 2022.” Most of its projects are at least one year behind schedule, some as much as three years late.
Under “current assets”, the accounts list “inventories and work in progress” worth £145.9million. This, though, is £51million less than was on the books in 2019-2020, the year before.
The accounts show income from “Property sales and refurbishment” to March 2021 of £92,788,823, up from £23,031,968 in 2020.
The accounts again disguise the salaries and pension contributions paid to Brick by Brick’s top earners, thought to be Lacey and his deputy CEO, Chloe Phelps, both of whom announced their intention to leave the company.
Yet while 500 staff at the council were receiving their P45s since 2020, Lacey’s empire-building at Brick by Brick continued, with the company’s staff numbers going up from 27 in 2019, to 38 in 2020, to 43 by March this year.
Staff costs – salaries, NI and pensions – rose from £2.2million (for 38 staff) in 2020 to £2.6million by March 2021.
The annual report also suggests that the costs of the bungled and over-budget Fairfield Halls fiasco has now reached £72million, as Brick by Brick awaits payments “arising from the refurbishment… and associated works”.
This money is to come from, yes, you’ve guessed it, the tax-payers of Croydon.
The directors – Ian O’Donnell and Duncan Whitfield, appointed 12 months ago when Lacey, the company’s CEO, was kicked off the board – say that the £25.26million net loss for the year, is “in large part due to the decision by the shareholder…” (that is, the council) “…to cease all new construction activities.”
It day-to-day language, that’s called cutting your losses.
The company under Lacey, despite being handed dozens of council-owned sites on the cheap – some for as little as £1 a time – has failed to make a penny profit since it was formed in 2015.
When O’Donnell first delved into Brick by Brick’s paperwork in early 2020, he discovered that Lacey had been running the operation without proper records or a finance director for around two years. Today’s report states, “The board monitor the profit and loss by means of detailed monthly management accounts and forecasts.” Which is nice.
It was Brick by Brick’s failure to repay a single penny of the original £200million-worth of loans from the council that led to Croydon becoming only the second local authority for 20 years to be forced to issue a Section 114 notice, effectively admission that they had gone broke.
But the warning signs had been there long before.
Even in July 2018, a council meeting was told, by the then cabinet member for finance, Simon Hall, that Brick by Brick’s “slippage” amounted to £63million, money that should have been in the council’s coffers, but wasn’t. This was largely because of the failures of Brick by Brick to build houses on time and to budget.
Tony Newman, the then leader of the council who was chairing the meeting, blocked any further questions. Which suggests that even then, Newman and his numpties knew how bad things were, but they just didn’t want anyone to find out.
To generate profits, Brick by Brick needs to sell homes. No dividend can be paid to the council without profits. But according to the 2018-2019 accounts, Brick by Brick had yet to sell a single property.
Back in 2018, Inside Croydon reported, “The harsh reality is that Brick by Brick’s failure to deliver even a single new home in the three years since the company was established could mean that Croydon’s Labour-run council will be forced to make more, and deeper, cuts in other council services.”
You sort of can see why Newman’s Croydon Labour has tried its utmost to ban this website from reporting on their serial incompetence.
Read more: BxB’s collapse was predictable. Why did no one else notice?
Read more: Brick by Brick CEO says company has sold 6 houses. Or is it 5?
Read more: Brick by Brick faces ‘disaster’ as it misses sales targets by 83%
Read more: Building towards the council’s financial ruin, Brick by Brick
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at firstname.lastname@example.org
- Inside Croydon is a member of the Independent Community News Network
- Inside Croydon works together with the Bureau of Investigative Journalism, as well as BBC London News and ITV London
- ROTTEN BOROUGH AWARDS: Croydon was named the country’s rottenest borough in 2020 in the annual round-up of civic cock-ups in Private Eye magazine – the fourth successive year that Inside Croydon has been the source for such award-winning nominations
- Inside Croydon: 3million page views in 2020. Seen by 1.4million unique visitors