Issue - meetings

Recommendations

1)    For the Executive to note the conclusions and recommendations of the independent external review that has been carried out.

2)    For Executive to approve additional loan facility headroom to Brierley Homes of £2m at the usual commercial rate of interest to be reviewed after 6 months to ensure Brierley Homes has appropriate cashflow over the short term. Approval of draw down on this additional loan facility to be delegated to the Corporate Director Resources in consultation with the Leader, Deputy Leader (Executive Member for Finance) and Chief Executive and is subject to evidence of need being demonstrated.

Considered – A report of the Corporate Director Resources setting out the outcomes of an independent review into Brierley Homes requested by the Council as Shareholder.  Approval was requested for additional loan facility headroom to Brierley Homes of £2m at the market rate of interest of 6% above base rate.  Any drawdown on the additional loan facility would be subject to evidence of need and approval of the Corporate Director of Resources in consultation with the Leader, Deputy Leader and Chief Executive.

The Corporate Director Environment, Karl Battersby, introduced the independent review making the following key points:

·       The review had been undertaken by Tony Dodds, an experienced real estate professional who has previously set up and led two local authority owned housing companies. 

·       The operating model of the company was considered alongside its structures, financial position and options going forward.

·       The review had concluded that Brierley Homes was based on a sound operating model with achievable aims of building new homes for profit.  The company had diversified and was building a high proportion of affordable homes and delivering construction in different ways.

·       The company had a positive impact on the County in addition to its core aim of generating Shareholder Value.  The company could continue to provide a valuable contribution to the economy and environment of the area.

·       The review made a number of recommendations and paragraph 4.7 set out the responses and actions of the Shareholder and company which were being progressed to ensure the company would continue to evolve and meet the council’s housing needs.

The Corporate Director Finance, Gary Fielding, then referred to the financial implications and reported that the company had reported a £3.2m loss for 2024/25 which was due to slower than expected house sales.  There was an existing loan facility of £25m at a commercial rate of interest, with an additional facility of £1.4m at base rate to enable the delivery of affordable homes above policy.  The proposed additional £2m facility would be at a commercial rate of 6% above base.  The company was currently well within its existing facility, however agreeing the facility now would avoid having to ask again should further funding be needed to support the supply chain, and a series of further approvals would be required.  The Corporate Director confirmed that the Shareholder was now receiving a weekly cashflow statement from the company.

Councillor Gareth Dadd reported that overall the Brierley Group of companies was successful with an overall profit of £3m.  It was confirmed that sensitivity analysis was undertaken for cash flow for the company and the principal sensitivity was housing sales.

Resolved (unanimously)

1)    That the conclusions and recommendations of the independent external review that has been carried out be noted.

2)    That approval be given to an additional loan facility headroom to Brierley Homes of £2m at the usual commercial rate of interest to be reviewed after 6 months to ensure Brierley Homes has appropriate cashflow over the short term. Approval of draw down on this additional  ...  view the full minutes text for item 745