Wed, 15 Mar 2023 | ADMINISTRATION
Specialist modular contractor Eco Modular Buildings has filed notice of intention to appoint administrators at the High Court. The Hull-based firm specialises in the offsite construction of schools, working on a number of projects across England and Wales.
The company was founded in 2011 and had grown to become a high-profile operator, reporting in November 2022 that it had secured £14.2 million-worth of work with the Department for Education (DfE) and had further work worth £33.3 million that it expected to secure by the end of this year.
The business was hit by significant headwinds during the year to June 30 2020, with the early part of the year impacted by “contractual inertia on a number of schemes”. While this was followed by “a strong and sustained period of activity” for DfE and Tier 1 clients, the business was subsequently hit by the COVID-19 pandemic’s huge impact on the construction sector. This led to the company’s pre-tax losses widening from £581,393 in 2019 to £946,758.
The following year the company recovered significantly, with turnover increasing from £22.9 million in 2020 to £33.3 million and it returned to profitability, reporting a pre-tax profit of £244,314 and outlining its strong order book for the forthcoming year in accounts for the year ending December 31 2021.
Despite this, the company said it expected to post a loss for the 2022 financial year, citing the cost of building materials rising “at an unprecedented level”. The reports stated that fixed build rate contracts meant the firm had not always been able to pass rising prices on to customers, meaning the company had to absorb the cost, resulting in its gross margin being eroded.
However, the company forecast that its EBITDA would grow to £1.2 million during 2023 and £2.7 million during 2024 and said it was “well placed for the future”. Looking forward, the company was planning to significantly diversify its business during 2023 and 2024, with education schemes reducing to around 70 per cent of turnover and healthcare and M.O.D. work increasing to 17 and 12 per cent of turnover respectively.
Despite this optimism, the company’s notice of intention to appoint administrators indicates that it has succumbed to the numerous headwinds impacting the UK’s construction industry and which had been flagged up in its 2021 accounts.
No administrator has yet been named for the firm and it has yet to issue a comment on the process. In its 2021 accounts, the company’s fixed assets were valued at £682,106 and current assets at £7.3 million. The company’s net liabilities at the time amounted to £425,238.
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