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Wed September 22 2021

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TopHat losses reveal entry costs for system builders

9 Aug For every £1 generated by start-up modular housing manufacturer TopHat last year, it lost £3.

Housing secretary Robert Jenrick visited the TopHat factory in Foston last month
Housing secretary Robert Jenrick visited the TopHat factory in Foston last month

TopHat Industries made a pre-tax loss of £21.3m in the year to 31st October 2020 on turnover of £6.3m. Operating loss was £17.4m.

That’s just the manufacturing operations. It also has a real estate business called TopHat Communities, which made a pre-tax loss of £4.9m on £10.3m turnover.

Previous accounts show that TopHat Industries lost £11.7m before tax in the period between 1st November 2019 to 31st October 2019 on turnover of £2.2m. TopHat Communities lost £22.1m before tax in the same period, with just £1.4m turnover.

However, TopHat is a young company with heavy start up costs and very deep pockets. 

It began production in early 2018 at its factory near Derby. In 2019 merchant bank Goldman Sachs took over majority ownership and committed £75m investment to it. The owners are already planning to set up a second factory.

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TopHat completed its first third-party project just after the end of the financial year in Chatham. In total, TopHat is delivering 302 homes at the 4.8-acre Kitchener Barracks site.

It also signed its first order with Urban & Civic and its first framework agreement call-off with BoKlok, the Ikea/Skanska venture. Production of the first BoKlok and Urban & Civic homes began in November, with deployment from January 2021.

In the strategic report in the latest set of accounts, TopHat chief executive Jordan Rosenhaus writes: “The company has invested heavily in a catalogue of house types and is also well-progressed on a range of apartments that will be deployed from summer 2021 at Kitchener Barracks in Chatham. This will open a significant new revenue stream for the company as it is believed that the production methodology will enable t to undercut the price and deliver more quickly that traditional building, with enhanced quality and far better environmental performance.”

“Elsewhere the pipeline is building strongly, giving the board the confidence to progress planning for a second factory, which will have a capacity of over 3,000 homes,” the directors said.

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