CROYDON IN CRISIS: Yet more bad news finally emerging into the public record. By BARRATT HOLMES, our house building correspondent
The wholly-owned housebuilder, which over five years from 2015 was loaned £200million by Croydon Council which led directly to the authority’s financial collapse in 2020, has just published its official annual accounts for the financial year to the end of March 2023 and they show it made another loss of £7.6million.
That’s a whole heap better than the £20million loss recorded in 2021-2022, but it comes after a year in which the failed company, which is oh, so slowly being wound-up, managed to sell £73million-worth of assets, all of which had been built using public money.
The accounts show “cost of sales” at £70.7million, which doesn’t leave much margin for profit, and after being hit by “finance costs” – loan interest mainly – of £8.4million, it means that Brick by Brick’s record of never actually managing to make any profit has been maintained yet again. Has anyone seen erstwhile “managing director” Colm Lacey?
Apart from the bald details recorded in the accounts in black and white (and, notionally, a great deal of red ink, too), the report to Companies House is unnecessarily coy about certain other key details about the company’s operations in the 12 months to last March.
Sold!: Flyover Towers was one of the major sales by BxB in 2022-2023, according to Companies House records
Duncan Whitfield, the official from Southwark Council who was among the directors appointed in 2021 with the task of extracting something, anything, from the wreckage left by Lacey and his fellow ego-trippers, attributes a loss of £8million “due to write downs in expected sales prices for undeveloped land and the level of interest payable to” Croydon Council.
The report also references how rising interest rates had made its sales operations more difficult, as potential home-buyers nervously contemplated their steepling mortgage payments.
Significant sales were made, although Whitfield and his fellow directors in their annual report avoid saying for how much, and to whom.
“During the year to 31 March 2023 individual apartments were sold to owner occupiers and bulk sales of entire blocks or entire developments were sold to investors, including the bulk sale of 128 units at Kindred House…”, they mean “homes” in Flyover Towers, “… to an investment group that will provide affordable housing and private housing.” The report neglects to state who that “investment group” might be.
The report states that other properties were also sold to… Croydon Council, “for use as affordable housing”. Which is nice.
It is impossible to know with certainty, but by process of elimination it seems that, as at 11 months ago, Red Clover Gardens, the long-ago-completed, long-empty flats on Lion Green Lane in Coulsdon is the last major BxB development to be sold – a deal that has still yet to be sealed.
In black and white and in the red: even with £72.9m-worth of sales, Brick by Brick has still be losing money
According to the most recent figures made available, Brick by Brick repaid loans to the council totalling £47million in 2022-2023 (and it did not borrow that amount from the council, as erroneously reported by Tony McArdle and the so-called improvement and assurance panel).
This followed £30.4million that was repaid in 2021-2022.
A report to a council cabinet meeting next week states that Brick by Brick’s outstanding loan balance at the end of March 2023 was £103.93million “and all accrued interest has now been paid back to the council”.
Bricking it: Colm Lacey, the MD at Brick by Brick who bankrupted a borough
The cabinet report suggests that Croydon expects to write-off up to £68million in loans to Brick by Brick – a good deal less than was originally feared in the immediate aftermath of the council’s financial nose-dive, but still enough to cause widespread cuts to council services for many years to come while Council Tax has been sent soaring.
The council report said: “The council has not received any dividend returns from the company, which was one of the intended aims. Instead, the council will have no choice but to write off a large loan balance and fund the write-off from its own budgets following the non-repayment of debt by Brick by Brick.”
Read more: Council risks being in the red over BxB’s Red Clover Gardens
Read more: Council set to lend more money to failing Brick by Brick
Read more: ‘An accountant could have foreseen this more than a year ago’
Read more: £36m Brick by Brick ‘risk’ helped to trigger Croydon’s S114
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