Persimmon has written off £25m invested and loaned to modular builder TopHat.
The housebuilding giant has invested £700,000 in Derby-based TopHat and holds a further £24.3m of long-term loan notes from the company.
However, in interim results published on Thursday (8 August), the group said it had “reviewed” the investment and loans and now believes they are worthless.
Persimmon said the revaluing of the loans and investment to nil was due to a “reassessment of risks within the modular build sector” but added it will continue to work with TopHat and believes its facade product presents “a clear opportunity for build efficiency”.
“We originally invested in the TopHat business because of its industry-leading facade product,” Persimmon said.
“While the broader market challenges for volumetric modular manufacture has led us to take the prudent decision to write down our original investment, we continue to work with TopHat as they reposition the business to focus on the facade product.”
The write-down is the latest sign of difficulties at the modular builder, which was served with a winding up petition by a Yorkshire-based developer on Wednesday (7 August) and made around 70 job cuts in February.
TopHat is one of the UK’s most high-profile modular builders, having attracted funding from Aviva and Goldman Sachs, as well as securing a £15m debt facility with Homes England in November 2023.
However, the group reported pre-tax losses of £5.1m, £19.4m and £21.3m in its past three financial accounts published on Companies House, which cover the years ending 31 October 2022, 2021 and 2020 respectively.
TopHat has previously announced plans for a new 60,000 square metre factory in Corby, Northamptonshire, adding to its existing facility in Derby. However, work on the project was paused earlier this year and it remains unclear whether the factory will be built.
Several other high-profile modular businesses have gone bust in recent years, including Ilke Homes, Mid Group, Eco Modular Buildings, Caledonian Modular and House by Urban Splash. Legal & General decided to wind-up its modular homes business last year and Laing O’Rourke cut 60 jobs in its modular factory in January.
Last year TopHat chairman Carl Leaver told an inquiry into modular housing construction that some of its rivals had had strategic and operational weaknesses, such as seeking to develop their own sites, which tied up capital and exposed them to risks with groundworks.
Elsewhere in its interim results, Persimmon hailed “improving macroeconomic conditions” as its revenue grew by £120m to £1.32bn in the first half of 2024. The housebuilder saw home completions increase by 5 per cent to 4,445, but said pre-tax profit dropped from £151m to £146.3m compared to a year earlier.
TopHat declined to comment.
