The modular housebuilding arm of insurance giant L&G has fallen to a £37m pre-tax loss – its sixth consecutive loss – despite finally reporting sales revenue for the first time.
According to accounts filed at Companies House, L&G Modular recorded a pre-tax loss of £36.8m for the 2021 calendar year, an increase on the £30.2m loss reported in 2020, on turnover of £12.2m – its first recorded revenue.
After accounting for an income tax credit of £7.9m, the company, which was set up in 2016 to build hi-tech modular homes from a 550,000 sq ft factory outside Leeds, reported a final loss for the year of £29m.
The figures mean the firm has now racked up £174m of pre-tax losses since being created with an aim to disrupt the UK housebuilding industry by building 3,500 homes a year using modern methods of construction.
Despite the losses, the accounts show the firm improved its balance sheet in the year, growing its net assets from £35.1m to £40.9m, after parent company L&G injected £34.8m into the business in return for three new shares in the company.
The accounts statements said the accounts were prepared on a going concern basis after receiving confirmation of further ongoing support from L&G for at least the next 12 months.
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The figures come days after the firm revealed it had been selected by Wolverhampton council for the 400-home redevelopment of a canalside brownfield site on the edge of the city-centre, taking the firm’s pipeline to more the 1,000 homes.
The statement accompanying the accounts show the firm approved a five year plan and detailed budget in the financial year, and noted the “significant milestone” of reporting its first ever revenue from its developments in Broadstairs, Kent; Selby, North Yorkshire; and North Horsham, West Sussex. It said it had made “strong progress” by adding further projects to its sales pipeline and developing partnerships with suppliers.
However, it said that prices of timber and steel “jumped significantly” during the year in the of the Covid crisis “putting significant pressure on the cost of producing homes”.
The statement said cost reduction initiatives had helped reduce the impact of this, but did not put numbers on the effects. The firm said it signed contracts with housing associations to build 180 homes in the years and that “interest from existing and potential customers remains strong”.
Asked to explain the loss and say when the business would be profit-making, Rosie Toogood, chief executive of L&G Modular (pictured, left), said the firm “continues to make significant progress with projects and partners, delivering much needed affordable, energy efficient homes at the time of an acute energy crisis.”
She said the firm was on course to build 450 homes in 2022, and had already this year exceeded the revenue generated in 2021, “highlighting the progress of the business”. The firm’s first net zero carbon homes will go on sale at our site in Bristol next month, she added.
“We have been busy delivering homes on three major sites and are progressing planning applications on more as we grow our pipeline. We are already delivering some of the most energy efficient homes in the country. Our pipeline continues to grow following our selection as development partner for the regeneration of the Canalside South by the City of Wolverhampton Council where we will deliver 400 new homes.”
Toogood told Housing Today last year that L&G Modular is aiming to build 3,000 homes a year by 2024.