CONSTRUCTION SERVICES (MANSFIELD) LTD

Risk Rating: MEDIUM
The company demonstrates adequate solvency and liquidity at present, but a multi-year trend of declining net assets and a significant prior-year restatement introduce material uncertainty that prevents a lower rating.

Key Concerns

1. Declining Net Assets – Shareholders’ funds have fallen from £1.97m (2021) to £1.16m (2025), a 41% reduction. The sharpest drop occurred between 2023 and 2024, with net assets declining by £697k. Without access to profit-and-loss data, it is unclear whether this reflects trading losses or large dividend distributions, either of which would be a concern for long-term capital preservation.

2. Volatile Cash Position – Cash swung from just £24k in 2024 to £497k in 2025. While the 2025 level is reassuring, the near-depletion in 2024 suggests tight working capital management or a significant one-off outflow. Such volatility increases vulnerability to unexpected payment shocks, especially in a sector with project-based cash flows.

3. Prior-Year Restatement – The 2024 comparative figures are marked “as restated” in the 2025 accounts, indicating a correction or reclassification. The nature and materiality of the restatement are not disclosed in the filed notes; this lack of transparency is a red flag for governance and accounting quality.

Positive Indicators

• Solvent and Liquid – Net assets are positive (£1.16m) and net current assets stand at £868k, comfortably covering current liabilities of £1.43m. Long-term debt is modest (£30k), and the company is not in liquidation or administration.
• Improved Performance in 2025 – Retained earnings increased by £115k in the latest year, cash recovered strongly, and net assets rose by £115k, suggesting a return to profitability after the 2024 setback.
• Long-Standing Operations – Incorporated in 2000, the company has a 25-year track record in joinery installation, with a stable team of five directors and three balanced significant shareholders.

Due Diligence Notes

• Obtain Profit & Loss Accounts – Request full profit-and-loss statements for the last three years to distinguish between trading losses and dividend distributions. This is essential to assess earnings sustainability.
• Clarify the Prior-Year Restatement – Ask management to explain the nature, reason, and impact of the restated 2024 figures. Investigate whether any errors or changes in accounting policy were involved.
• Review Debtor and Creditor Ageing – With debtors at £1.79m (78% of current assets) and creditors at £1.43m, analyse ageing profiles to identify potential bad debts or payment pressures.
• Assess Revaluation Sensitivity – Land and buildings are carried at a 2022 valuation of £200k versus a historical cost of £177k. Confirm current market value and check whether any impairment indicators exist.