The modular homes arm of asset management and investing giant Legal & General saw operating losses of more than £119m last year.
New accounts for the winding down business show the extent of losses as it parent company ploughed £51.6m into the off-site construction concept as a decision was taken to shut its Yorkshire factory in May this year. Bosses previously said the start-up business had failed to secure the necessary pipeline to make the Sherburn-in-Elmet facility viable – blaming long planning delays and the impact of the pandemic.
The 550,000 sqft factory had employed almost 550 people, most of whom were made redundant earlier this year. A small number were kept on to service existing contracts at three sites across the country, as part of a winding down process that is expected to be completed by June 2025.
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Having launched the business in 2016, Legal & General said it had set out to tackle the housing crisis by producing “impactful” housing volumes. It wanted to build around 3,000 homes per year and had capabilities to create two, three and four-bedroom houses out of cross laminated timber, as well as five storey apartment blocks made from concrete and steel. The modules were delivered to site with just external cladding to be added in situ.
Now, accounts 2022, the year before the closure of Legal & General Homes Modular Limited’s factory show revenue of £39.9m, up from £12.1m. But operating losses widened from £35.7m to £119m and overall losses widened from £29m to £93.8m. The documents show the firm also had liabilities of £54m.
The firm had set out to target developers as well as housing associations and local authorities as part of its strategy. But by the end of September this year it had handed over just 75 homes across three sites in Bristol, Broadstairs and Selby.
Writing in a report accompanying the accounts, director Gareth Mee, said: “On May 4, 2023 the company announced a proposal to cease production at the Modular Sherburn and to reduce businss operations. Following this announcement The company entered collective consultation process which concluded on June 26, 2023 with the decision to move forward closure of the factory and reduction of business operations on a phased basis expected to be completed by June 2025.
“Losses have increased in the period to £93.9m, this is largely the result of increased costs to deliver at each of the existing sites, additional overhead costs incurred in support of business growth objectives and balance sheet impairment impacts following the decision to close the factory and reduce business operations.”
The shutdown of Legal & General’s modular venture is among a string of difficulties faced by the nascent industry. Just this week, Hull-based M-Ar called in administrators having previously promised growth.
Last year a modular joint venture between regeneration firm Urban Splash and Japanese firm Sekisui House and Homes England collapsed into administration, and Caledonian Modular also went into administration last March before being acquired by JRL Group.
Original artice – https://business-live.co.uk/all-about/yorkshire-humber
