Jobs saved as rival buys Eco Modular Buildings
Industry ‘disruptor’ Spatial Initiative has bought troubled rival Eco Modular Buildings in a deal that saves more than 50 jobs.
The Manchester firm, part of ESS Group, acquired the Hull-based offsite-construction specialist from administration.
Eco Modular Buildings previously warned that it expected to make a loss in the current financial year and last month revealed a plan to appoint administrators.
Jane Steer, Tim Higgins and Peter Dickens of PwC were subsequently handed control of the education-sector construction specialist (one of its projects is pictured above) and its parent company Rawson Brook Group Holdings – and sold the business and assets of the combined group to Spatial Initiative.
The administrators said the deal “represents the best option available to the creditors as a whole under severely limited timescales”. They added that the “vast majority” of the group’s 65 employees had transferred to Spatial, which has offices in Manchester, London and Dublin.
While a “small number” of employees resigned and thus did not transfer, Steer said, “Particularly during the current testing economic climate, the completion of this transaction provides much-needed certainty to over 50 members of staff after a period of understandable concern.”
Eco Modular Buildings was established by Simon Rawson in 2011, and its website said it had invested in “highly skilled people and manufacturing infrastructure”.
Latest accounts filed with Companies House show the company had a turnover of £33.5m in the 18 months to 31 December 2021. It employed an average of 77 people during this period and made a £245,000 pre-tax profit.
However, when these results were published in November 2022, a directors’ report warned that Eco faced “significant challenges, both internal and external”.
It had “not always been possible” to pass on to customers “unprecedented” material cost rises, the report explained, adding: “It is anticipated that the company will report a loss in the current financial year as a result.”
Meanwhile, in the same accounts, the company’s auditor, Dutton Moore, flagged a “material uncertainty” in the builder’s ability to keep trading. The auditor added that finance-availability risks “cast significant doubt on the company’s ability to continue as a going concern”.
PwC said the group had experienced “a series of challenges that meant it required additional funding to continue trading”.
“However, throughout 2022, the group continued to experience significant delays on projects, resulting in operating losses, eroding the working capital available [to it],” PwC added.
PwC was engaged last summer to review the group’s cashflow and carry out an independent business review, after which managers decided to pursue a sale. The professional services giant was retained to manage this process and completed the Spatial deal on 24 March.
Spatial Initiative made a pre-tax profit of £669,000 in the 2021 calendar year and posted revenue of £18.1m, its latest filed accounts show.
The firm has worked on a number of projects in the education and health sectors. Its parent company, ESS Group, specialises in modern methods of construction and describes itself as an “innovative disruptor in the construction industry”.