MMC business set up by insurance giant recorded no revenue in 2019
The modular housing business of insurance giant L&G has reported another huge loss in 2019 accounts – taking the firm’s total pre-tax losses since inception to over £100m.
L&G Modular, set up by the firm in 2016 to produce 3,500 factory-built homes a year, fell to a pre-tax loss of £30.6m for the 2019 calendar year, without reporting any revenue.
The only income the firm received was from the sale of some fixed assets, interest payments, and huge tax credit, which reduced its full final loss to £24.4m. A spokesperson for the business said the losses were to be expected given the investment in innovation necessary to “transform the way homes are built.”
The loss is the fourth consecutive loss reported by the firm, which originally said the first homes would be rolling off the production line in by June 2016, but, prior to 2020 had only delivered prototypes and one small development.
L&G had originally set up to produce all homes using Cross Laminated Timber technology, but has had to change its apartment product to timber and steel in order to meet the stipulations of the government’s post-Grenfell “combustibles ban”.
In total the firm has racked up pre-tax losses of £107m since being set up, albeit this falls to £86.6m after taking account of tax rebates. The accounts show that the L&G group ploughed £20m into the firm in 2019 in return for the issuing of more shares in the business.
This year’s loss included a £2.7m write-off for “finished module stock” which were produced for a housing development for which, at the time accounts were produced, “the project outcome was still uncertain”.
Despite the deepending losses, the accounts made clear the business was still to be considered a going concern because it had received assurances of continued financial support from the L&G group.
However, 2019 also saw L&G Modular buy its first development site, in Selby, which chief executive Rosie Toogood (pictured, right) said this September was now nearing completion. Toogood also recently said the firm was now “ready to start building at scale”.
As well as the 154-home Selby site (pictured, below), L&G Modular has also in 2020 been selected by Bristol council to build out a 190-unit scheme in the Lockleaze part of the city.
The accounts added that the firm had in 2020 only suffered a limited shut down of the facility due to the covid-19 outbreak.
A spokesperson from Legal & General said: “Like most start-ups, our business plan anticipated a number of years of upfront investment to develop the products and processes required for the business to deliver profitably at scale.
“At Legal & General, we have had many successful J-curve businesses – it is the consequence of innovation.
“We are pleased with the positive progress that we have made to ensure that the factory could operate safely, alongside getting planning approval for hundreds of new homes.”
L&G Modular is part of a large housing business run by the insurance giant, which delivered 2,800 homes in 2019. Earlier this month it launched a suburban build-to-rent arm, to sit alongside its housebuilder, build-to-rent, affordable housing, and later living businesses.