Company Registration No. 09578014 (England and Wales)
BRICK BY BRICK CROYDON LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
BRICK BY BRICK CROYDON LIMITED
COMPANY INFORMATION
Directors
I O'Donnell
(Appointed 30 November 2020)
D Whitfield
(Appointed 30 November 2020)
Company number
09578014
Registered office
62 George Street
Croydon
CR0 1PD
Auditor
Ensors Accountants LLP
Cardinal House
46 St Nicholas Street
Ipswich
Suffolk
IP1 1TT
BRICK BY BRICK CROYDON LIMITED
CONTENTS
Page
Directors' report
1
Directors' responsibilities statement
2
Independent auditor's report
3 - 6
Income statement
7
Statement of financial position
8
Notes to the financial statements
9 - 19
BRICK BY BRICK CROYDON LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2020
- 1 -
The directors present their annual report and financial statements for the year ended 31 March 2020.
Principal activities
The Company is a development company established by the London Borough of Croydon to deliver housing led development across the borough.
The year was one of significant change. The company has started completing projects and making sales of units. During the year and post year end the company has faced further challenges including COVID 19, delays in achieving planning consents, changes in its Board and funding arrangements. In light of risks they have identified and also uncertainties flagged by the auditor, the directors are in the process of reviewing a number of the company’s projects and have made provisions against the carrying value of them, leading to a loss during the year. Following reviews carried out by external parties and comments from the auditors, the company has made changes to its project and financial reporting systems and capabilities.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
M Evans
(Resigned 25 November 2020)
C Lacey
(Resigned 25 November 2020)
M Norrell
(Resigned 13 November 2019)
J Pitt
(Appointed 1 May 2020 and resigned 6 October 2020)
I O'Donnell
(Appointed 30 November 2020)
D Whitfield
(Appointed 30 November 2020)
Auditor
In accordance with the company's articles, a resolution proposing that Ensors Accountants LLP be reappointed as auditor of the company will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
On behalf of the board
I O'Donnell
Director
31 March 2021
BRICK BY BRICK CROYDON LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2020
- 2 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
BRICK BY BRICK CROYDON LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BRICK BY BRICK CROYDON LIMITED
- 3 -
Disclaimer of opinion on financial statements
We were engaged to audit the financial statements of Brick by Brick Croydon Limited (the 'company') for the year ended 31 March 2020 which comprise the income statement, the statement of financial position and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
We do not express an opinion on the accompanying financial statements of the company.
Because of the significance of the matters described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate evidence to provide a basis for an audit opinion on these financial statements.
BRICK BY BRICK CROYDON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BRICK BY BRICK CROYDON LIMITED
- 4 -
Basis for disclaimer of opinion
In carrying out our work issues were identified, a number of which have been enhanced by the current status of the parent undertaking, which when taken in aggregate and considering the nature of the challenges facing the parent undertaking, have led us to consider that the possible effects on the financial statements could be both material and pervasive as follows:
-
With respect to funds provided to the company by its parent undertaking included in the balance sheet at both 1 April 2019 and 31 March 2020 the evidence available to us was limited on the basis that these funds have been advanced to the company in a manner which is not supported by the terms of loan agreements. As a result, the value and nature of the funds advanced by the parent undertaking and the related interest charges and repayment terms are unclear and it is possible that a significant amount of loans owed by the company shown as non-current liabilities should be shown as current liabilities. Owing to the nature of the company’s records, we were unable to obtain sufficient audit evidence regarding the status of the funds advanced to the company by its parent undertaking, the accuracy of the relevant interest charges or the repayment terms relating to these advances. The parent undertaking has confirmed to the company its intention that it will not request payment for the project loans until each project is completed and they do not intend to seek to accelerate payment due to the loan breaches and therefore at 31 March 2020 the directors believe that all loans were due in more than one year. However these intentions have not yet been expressed in a legally binding agreement and as a result we have been unable to obtain sufficient appropriate audit evidence that this was the contractual position at the balance sheet date.
-
We draw attention to note 1.2 in the financial statements, which indicates that there is a material uncertainty in respect of going concern and, consequently, the net realisable value of work in progress. This uncertainty is derived from two sources. Firstly, the company is reliant on the principal shareholder for continued financial support in respect of not calling for the repayment of loans previously advanced and for the prompt and timely provision of additional funding to allow the completion of building projects that were in progress at the year end. It is further noted that following the year end the company was in breach of a loan covenant associated with these loans. Whilst the Directors are confident that funding will not be withdrawn and that the necessary financial support will continue to be forthcoming, there can be no certainty in these matters. The parent company has indicated that it will not call for repayment until projects are completed and will also permit sales proceeds from projects to be used to finance the development of other projects. The directors of the company are of the opinion that this will provide sufficient funding to allow developments currently underway to be completed. However as the intentions expressed by the parent undertaking have not yet been converted into a legal agreement we have been unable to gain sufficient reliable audit evidence in order to remove the fundamental uncertainty which exists and therefore to be able to form an opinion on this matter
Should the necessary support not be forthcoming from the shareholder or should there be significant delays in the provision of such funding then there would be a fundamental uncertainty in respect of the net realisable value of partly completed construction projects which could have a material impact upon the financial position and performance of the company.
Secondly, the company is engaged in the speculative construction of residential properties for resale. As a result, the realisable value of work in progress further depends upon both future sales proceeds and costs to complete of projects that are partially complete at the year end. Both the future sales proceeds and the costs to complete projects are inherently uncertain, a situation which has been enhanced by the current COVID pandemic.
-
Material errors were identified in respect of the timing of the recognition of construction costs in the financial statements and by extension the accuracy of both the recorded value of creditors and work in progress. In addition, whilst these errors were adjusted for in the preparation of these financial statements, control weaknesses around the reconciliation of project costing records and the financial accounting records have limited the audit evidence that is available to support a conclusion as to whether ongoing construction sites are likely to be profitably concluded.
BRICK BY BRICK CROYDON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BRICK BY BRICK CROYDON LIMITED
- 5 -
Opinions on other matters prescribed by the Companies Act 2006
Notwithstanding our disclaimer of an opinion on the financial statements, in our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the directors' r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the directors' report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed, subject to the pervasive limitations described above, we have not identified material misstatements in the directors report.
Arising from the limitations of our work referred to above:
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and take advantage of the small companies exemption from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
BRICK BY BRICK CROYDON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BRICK BY BRICK CROYDON LIMITED
- 6 -
Auditor's responsibilities for the audit of the financial statements
Our responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report.
However, because of the matters described in the basis for disclaimer of opinion section of our report we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.
We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Barry Gostling (Senior Statutory Auditor)
for and on behalf of Ensors Accountants LLP
31 March 2021
Chartered Accountants
Statutory Auditor
Cardinal House
46 St Nicholas Street
Ipswich
Suffolk
IP1 1TT
BRICK BY BRICK CROYDON LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2020
- 7 -
2020
2019
(15 months)
£
£
Revenue
23,031,968
13,751
Cost of sales
(22,932,302)
(200,507)
Gross profit/(loss)
99,666
(186,756)
Administrative expenses
(848,140)
(409,119)
Other operating income
28,000
-
Operating loss
(720,474)
(595,875)
Finance costs
4
(82,977)
(61,736)
Loss before taxation
(803,451)
(657,611)
Tax on loss
-
-
Loss for the financial year
(803,451)
(657,611)
BRICK BY BRICK CROYDON LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 MARCH 2020
31 March 2020
- 8 -
2020
2019
as restated
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
5
582,299
618,303
Current assets
Inventories and work in progress
196,565,939
112,259,816
Trade and other receivables
6
9,745,355
1,463,531
Cash and cash equivalents
22,620,112
2,428,483
228,931,406
116,151,830
Current liabilities
7
(13,296,004)
(14,321,397)
Net current assets
215,635,402
101,830,433
Total assets less current liabilities
216,217,701
102,448,736
Non-current liabilities
8
(218,157,626)
(103,585,210)
Net liabilities
(1,939,925)
(1,136,474)
Equity
Called up share capital
9
100
100
Retained earnings
(1,940,025)
(1,136,574)
Total equity
(1,939,925)
(1,136,474)
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 31 March 2021 and are signed on its behalf by:
D Whitfield
Director
Company Registration No. 09578014
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
- 9 -
1
Accounting policies
Company information
Brick by Brick Croydon Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
62 George Street, Croydon, CR0 1PD.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements. However, the directors have considered the factors that impact the company’s future development, performance, cash flows and financial position along with the company’s current liquidity in forming their conclusion on the applicability of the going concern basis.
The company is reliant upon the continued support of its parent undertaking to provide funding to enable the company to continue to trade.
Should continuing support not be forthcoming from the parent undertaking or should there be significant delays in the provision of such funding then there is a material uncertainty with regards to the applicability of the going concern basis. It is further noted that as highlighted in note
12
subsequent to the year end date the company is in breach of a loan covenant condition which requires audited accounts to be provided to the lender (the parent undertaking) within 90 days of the year end. This condition has not been met and as a result technically the whole of the loans provided by the parent undertaking have since the year end date become repayable on demand
. In addition, a number of loan repayment dates on certain loans have been missed. However
the directors are confident
, based on discussions with the parent undertaking lender,
that these loans will not be called for repayment until each development project has been completed.
The going concern basis has a particular impact in respect of the recoverability of work in progress in respect of partially complete construction projects and as a result in these circumstances the net realisable value of this work in progress may be materially less than the cost value included in the financial statements.
In addition, the nature of the company’s business is the speculative construction of residential properties for resale. As a result in the normal course of events the company is exposed to the movement in property market relating to sales values for completed properties as well as the uncertainties related to the estimates of the necessary costs still to be incurred in respect of bringing work in progress projects to a saleable condition. These uncertainties are further impacted upon by the effects of the current COVID pandemic.
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 10 -
1.2
Going Concern (continued)
Whilst the directors have made reasonable estimates in respect of the expected net development values of their ongoing projects and are therefore confident that work in progress is included in the financial statements at the lower of cost and net realisable value by its very nature this is uncertain. In addition, whilst the directors expect that the parent undertaking will continue to provide the necessary support to bring all current projects to an orderly conclusion this cannot be guaranteed. As a result, the company and its directors believe that it is appropriate to continue to prepare the financial statements on a going concern basis but noting that the factors highlighted above represent a fundamental uncertainty over the company’s ability to continue as a going concern and, accordingly, the recoverability of work in progress.
1.3
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Revenue from the sale
of property
is recognised when the significant risks and rewards of ownership of the
property
have passed to the buyer
(usually the completion date)
,
1.4
Property, plant and equipment
The company holds a mix of land, building, equipment and leasehold fixed assets. These are classed as Property, Plant and Equipment which are recognised under FRS 102 as assets which:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period.
Property, plant and equipment
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
10 Years
Fixtures and fittings
10 Years
Computers
5 Years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of non-current assets
Assets are assessed for impairment at the balance sheet date, to
assess whether there is any indication that
an
asset may be impaired. Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall.
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 11 -
1.6
Inventories and work in progress
Work in progress comprises direct materials, labour costs, site overheads, associated professional charges, loan interest and other attributable overheads. It is held at the historical cost of bringing the buildings to their present location and condition.
Upon the completion of a building, it is transferred from work in progress to inventory. At this point it is valued and then held at the lower of cost and net realisable value. Net realisable value represents the estimated selling price less all estimated costs of completion and overheads.
Regular reviews are carried out to identify any impairment in the value of inventory and work in progress. Where an impairment is identified, it is charged as a finance expense in the Statement of Comprehensive Income in the year.
Regular reviews of schemes are carried out to ensure they are still active, and that activity will result in an asset. Where a scheme is no longer likely to proceed, costs are charged as a cost of sales in the Statement of Comprehensive Income in the relevant year.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
The nature of the company’s business is the construction of properties for sale on a speculative basis
.
A
s a result the are always inherent uncertainties around the net reali
s
able value of work in progress projects. In producing these financial statements, the directors have therefore had to ma
k
e certain estimations and assumptions concerning the future sales value of completed projects and the remaining costs necessary to be incurred in order to bring these projects to completion. These estimates and assumptions are by their nature subjective and uncertain. These uncertainties have been enhanced by the current COVID pandemic.
1.7
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
The company only has basic financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 12 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including trade and other payables, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade payables
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade payables are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Retirement benefits to certain employees of the company are provided through the Local Government Pension Scheme (‘LGPS’). This is a defined benefit scheme. The LGPS is a multi-employer scheme and there is insufficient information available to use defined benefit accounting. The LGPS is therefore treated as a defined contribution scheme for accounting purposes and the contributions recognised in the period to which they relate.
1.12
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 13 -
1.13
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
Where grants relate to specific developments schemes, grants will be recognised as income as property units are sold connected to those grants.
1.14
Finance costs are capitalised according to Section 25 of FRS 102 to reflect the fact that loans to Brick by Brick are aligned to specific development schemes. Interest is apportioned to individual schemes and then charged to WIP using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Interest incurred on borrowing to fund operating expenditure is also apportioned accordingly and charged to the Statement of Comprehensive Income.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Work in Progress
The company applies a valuation to its work in progress based on the
stage
of completion of the project and in accordance with the project development plan agreed at the outset of the project. All valuations are performed by employees of the company who are qualified surveyors who are best placed in judging the
stage
of completion for all individual projects. In estimating the carrying value of work in progress the directors also have to estimate whether each project will be profitable or not in order that the financial statements reflect the carrying value at the lower of cost and net realisable value
.
Depreciation
The company estimates the rates of depreciation used to write down the different classes of assets that the company owns. This is based on prior experience of asset lives while taking into account any additional circumstances. Once fully depreciated over its useful life the asset should be stated at its residual value or £nil if there is no residual value.
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 14 -
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Total
38
11
4
Finance costs
2020
2019
£
£
Finance costs includes the following:
Interest payable to group undertakings
82,977
61,736
In addition to the above interest payable to group undertakings of £9,219,615 (2019: £3,754,473) was capitalised as work in progress.
5
Property, plant and equipment
Land and buildings
Plant and machinery etc
Total
£
£
£
as restated
Cost
At 1 April 2019
515,234
190,278
705,512
Additions
43,995
13,072
57,067
At 31 March 2020
559,229
203,350
762,579
Depreciation and impairment
At 1 April 2019
51,523
35,686
87,209
Depreciation charged in the year
55,923
37,148
93,071
At 31 March 2020
107,446
72,834
180,280
Carrying amount
At 31 March 2020
451,783
130,516
582,299
At 31 March 2019
463,711
154,592
618,303
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 15 -
6
Trade and other receivables
2020
2019
Amounts falling due within one year:
£
£
Trade receivables
785,628
-
Amounts owed by group undertakings
3,750,000
-
Other receivables
5,140,296
1,323,531
Prepayments and accrued income
69,431
140,000
9,745,355
1,463,531
7
Current liabilities
2020
2019
£
£
Trade payables
1,925,095
10,557,030
Amounts owed to group undertakings
3,764,367
3,764,367
Accruals and deferred income
7,606,542
-
13,296,004
14,321,397
8
Non-current liabilities
2020
2019
Notes
£
£
Loans payable to group undertakings
207,907,626
103,585,210
Deferred income
10,250,000
-
218,157,626
103,585,210
The loans payable to group undertakings relate to secured loan facilities arranged with the London Borough of Croydon. These are secured on fixed and floating charges over the assets of the company.
For loan drawdowns to 31st March 2017 an interest rate of 5% is applied. All subsequent loans accrue interest at a rate of 6.25%.
9
Called up share capital
2020
2019
£
£
Ordinary share capital
Issued and fully paid
100 Ordinary Shares of £1 each
100
100
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 16 -
10
Other financial commitments
Land overage calculated for development schemes where there were unit sales during the year was £6,185,987, of which £756,082 has been accrued within the accounts relating to those specific unit sales. This leaves £5,429,905, which will be accrued when the company makes further unit sales relating to these schemes. Any overage payments are payable to the company’s ultimate parent undertaking, the London Borough of Croydon, in accordance with the relevant property development agreements.
11
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2020
2019
£
£
157,500
202,500
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 17 -
12
Events after the reporting date
Subsequent to the year end date the company has become in breach of its loan agreements with its parent undertaking.
One of the condition of these loan agreements is that the
company will provide to the parent undertaking, as lender to the company, annual audited financial statements within 90 days of the year end date. The financial statements for the year ended 31 March 2020 were not available within this
period and, as a result, were not
made available to the parent undertaking.
As a result of the breach of this loan condition, the entire amount of the loans provided to the company by the parent undertaking may have become repayable on demand rather than over a period of greater than 1 year. The directors are confident that these loans will not be called for repayment until each development to which they relate has been completed and sold. Whilst the parent undertaking has been unable to issue a written waiver of this loan condition in respect of the 2019/20 financial statements, the directors have received a written assurance that even though several of the loans are outstanding and technically in default and the parent has the right to call in these loans, that with regard to the year 2020/21 that the Council will not be exercising those rights and that with regard to future years it is the parent’s intention to consolidate those loans into a single loan agreement that will include the ability to increase working capital to the company.
In addition on 11 November 2020 the parent undertaking issued a notice under Section 114 (3) of the Local Government Finance Act 1988 which requires all new non-essential spending to be stopped whilst an emergency budget is drawn up to find further savings in the current and coming years. This development represents an additional risk to the company and its ability to continue to trade and bring its development projects to an orderly conclusion.
Also at a Cabinet meeting on 18
th
February 2021, the London Borough of Croydon (the Company’s sole shareholder), decided to terminate a number of development projects that were underway or being prepared for development on Council owned sites.
On one project, significant works have been carried out on Council owned properties, with the expectation of another piece of land being transferred from the Council to the Company. This land, on which the Company had achieved a planning permission for development, will not now be transferred to the company. Within Work in Progress and Inventories, as at 31 March 2020 is an amount of £76.4m relating to this project. Funding for the works was advanced by the Council to the Company. The Company is in discussions with the Council as to the appropriate method of them recognising the work carried out for the Council, on Council owned property and the enhanced value created by the planning permission. The outcome of these discussions is uncertain.
On the other projects, the Company worked up development schemes and in a significant number of them submitted planning applications, which are awaiting determination. The properties were intended to be transferred to the Company by the Council. This will not now take place. Within Work in Progress and Inventories, as at 31 March 2020 is an amount of £12.4m relating to these projects. Funding for the works was advanced by the Council to the Company. The Company is in discussions with the Council as to the appropriate method of them recognising the work carried out, on Council owned property and the enhanced value created by the planning applications submitted. The outcome of these discussions is uncertain.
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 18 -
13
Parent company
Brick by Brick Croydon Limited is 100% owned by the London Borough of Croydon, which is the immediate and ultimate controlling party
.The controlling parties registered address is Bernard Weatherill House , Mint Walk , Croydon , CR0 1EA
14
Prior period adjustment
Reconciliation of changes in equity
1 January
31 March
2018
2019
£
£
Adjustments to prior year
Interest payable
26,580
118,184
Depreciation
6,629
32,366
Total adjustments
33,209
150,550
Equity as previously reported
(512,072)
(1,287,024)
Equity as adjusted
(478,863)
(1,136,474)
Reconciliation of changes in loss for the previous financial period
2019
£
Adjustments to prior year
Interest payable
91,604
Depreciation
25,737
Total adjustments
117,341
Loss as previously reported
(774,952)
Loss as adjusted
(657,611)
Notes to reconciliation
Interest payable
Interest on loans included in the income statement relating to then purchase of properties previously shown in fixed assets has now been included within work in progress, to match the change in treatment of the properties purchased (see below).
BRICK BY BRICK CROYDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
14
Prior period adjustment
(Continued)
- 19 -
Depreciation
Fixed assets costing £1,933,876 have now been included within work in progress as deemed to by part of the initial developments costs rather than a fixed assets. This is fundamental accounting error and comparatives have been restated. Accumulative depreciation previously charged on the fixed assets has been reversed.
2020-03-31
2019-04-01
false
CCH Software
CCH Accounts Production 2020.310
M Evans
C Lacey
S Mustafa
M Norrell
J Pitt
I O'Donnell
D Whitfield
09578014
2019-04-01
2020-03-31
09578014
bus:Director6
2019-04-01
2020-03-31
09578014
bus:Director7
2019-04-01
2020-03-31
09578014
bus:Director1
2019-04-01
2020-03-31
09578014
bus:Director2
2019-04-01
2020-03-31
09578014
bus:Director4
2019-04-01
2020-03-31
09578014
bus:Director5
2019-04-01
2020-03-31
09578014
bus:Director3
2019-04-01
2020-03-31
09578014
bus:RegisteredOffice
2019-04-01
2020-03-31
09578014
2020-03-31
09578014
2018-01-01
2019-03-31
09578014
2019-03-31
09578014
core:OtherPropertyPlantEquipment
2020-03-31
09578014
core:LandBuildings
2019-03-31
09578014
core:OtherPropertyPlantEquipment
2019-03-31
09578014
core:CurrentFinancialInstruments
core:WithinOneYear
2020-03-31
09578014
core:CurrentFinancialInstruments
core:WithinOneYear
2019-03-31
09578014
core:Non-currentFinancialInstruments
core:AfterOneYear
2020-03-31
09578014
core:Non-currentFinancialInstruments
core:AfterOneYear
2019-03-31
09578014
core:CurrentFinancialInstruments
2020-03-31
09578014
core:CurrentFinancialInstruments
2019-03-31
09578014
core:Non-currentFinancialInstruments
2020-03-31
09578014
core:Non-currentFinancialInstruments
2019-03-31
09578014
core:ShareCapital
2020-03-31
09578014
core:ShareCapital
2019-03-31
09578014
core:RetainedEarningsAccumulatedLosses
2020-03-31
09578014
core:RetainedEarningsAccumulatedLosses
2019-03-31
09578014
core:LeaseholdImprovements
2019-04-01
2020-03-31
09578014
core:FurnitureFittings
2019-04-01
2020-03-31
09578014
core:ComputerEquipment
2019-04-01
2020-03-31
09578014
core:LandBuildings
2019-03-31
09578014
core:OtherPropertyPlantEquipment
2019-03-31
09578014
2019-03-31
09578014
core:LandBuildings
2020-03-31
09578014
core:LandBuildings
2019-04-01
2020-03-31
09578014
core:OtherPropertyPlantEquipment
2019-04-01
2020-03-31
09578014
bus:PrivateLimitedCompanyLtd
2019-04-01
2020-03-31
09578014
bus:FRS102
2019-04-01
2020-03-31
09578014
bus:Audited
2019-04-01
2020-03-31
09578014
bus:FullAccounts
2019-04-01
2020-03-31
xbrli:pure
xbrli:shares
iso4217:GBP