The extent of losses racked up by modular builder TopHat have been laid bare, after the firm confirmed it ceased trading before Christmas.
The Derby-based company published two sets of accounts last Thursday (16 January), showing that it plunged £53.8m into the red in the year to 31 October 2023.
TopHat Corporate posted a £7.5m pre-tax loss during the period, up from a £5.1m deficit in the year before.
The firm reported no income at all for the year to October 2023, with all of its costs stated as administrative expenses and interest.
Meanwhile, TopHat Industries plummeted to a £46.3m loss before tax in the latest period after being £20.4m in the red during the previous spell.
This business turned over £10.9m in the year to October 2023.
Its administrative expenses totalled more than £38m. These included £18.3m of ‘exceptional’ expenditure due to TopHat’s decision to abort plans for a 60,000 square metre manufacturing plant in Corby.
Another subsidiary, TopHat Communities Ltd, is due to release its accounts on the Companies House website by next Monday (27 January).
In both of the latest reports, company directors confirmed that the TopHat group ceased trading at the end of November 2024.
However, Companies House shows that the holding company, TopHat UK Holdings Limited, and all subsidiaries remain officially active.
“Throughout the year, TopHat traded at low levels,” the latest TopHat Corporate and TopHat Industries accounts said. “This was a result of several factors including a sluggish market for modular housing, the continuing energy crisis, heightened interest rates, rising raw material costs and limited consumer demand.
“Market conditions worsened as the year progressed, with a number of businesses in the modular housing sector ceasing to trade and entering into insolvency owing to similar pressures.”
Directors said in the TopHat Industries report that they had “encountered difficulties in securing additional funding to support the company’s operations and expansion plans”.
“Owing to the significant trading difficulties within the group, and the uncertainty this has caused for employees, there has been a significant level of staff attrition,” they added.
This led to a formal redundancy process in September and October 2024, according to the statement, and “the vast majority of staff across the group being made redundant” at the end of that period.
The report confirmed that TopHat completed an auction process to dispose of factory equipment. Construction News reported in November that machinery and equipment owned by a “major modular building manufacturer” had been offered by asset-disposal specialist BPI.
TopHat Industries’ average headcount grew from 212 in the year to October 2022 to 236 in the latest period. Its annual wage costs soared from £6.9m to £7.8m.
However, employee numbers fell from 24 to 15 over the same timeframe at TopHat Corporate, with the firm’s annual wage bill dropping from £2.6m to £2.2m.
In February 2024, TopHat launched a consultation over 70 potential job cuts, then the following month the company revealed it had paused plans for a South Midlands factory, citing “market conditions”.
Auditor BDO stated no opinion on the financial statements in the latest accounts published by both TopHat Industries and TopHat Corporate. “We have not been able to obtain sufficient appropriate evidence to provide a basis for an audit opinion,” it said.
TopHat said auditors had requested information that would delay publication of the accounts by up to four months.
“Having taken professional advice, the directors have concluded that it is in the best interests of stakeholders in the company, especially the company’s creditors, that the approval of the financial statements and filing of the accounts is not delayed,” said the TopHat Corporate and TopHat Industries accounts.
In October, TopHat announced it was going to lay off staff and wind down its operations, amid a torrid time for many modular specialists.
ModPods International appointed administrators last summer, for instance, after spiralling relocation costs hit its bottom line.
Investor L&G also wound down its offsite business in 2023 after years of heavy losses.
Modular specialist Urban Splash House entered administration in May 2022, blaming operating issues at its factory in Alfreton.
Other specialists including Ilke Homes, Mid Group, Eco Modular Buildings and Caledonian Modular have also failed in recent years.
In addition, Scottish affordable housing specialist Connect Modular appointed administrators this month.
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Greg Pitcher