Company Number: 15091535

Analysis Date: 2025-07-29 16:50 UTC

1. Risk Rating: MEDIUM

Justification: Trinity Surfacing Group Limited is a newly incorporated private limited group company formed in 2023 with its first financial year ending July 2024. The company has reported solid operational figures including turnover of £18.3m and gross profit margin of 18%, with net assets of £2.16m. However, there is a qualified audit opinion due to lack of sufficient audit evidence regarding the valuation of reserves and net assets of an acquired subsidiary (Trinity Surfacing Limited). This introduces uncertainty around the accuracy of reported goodwill and net asset values, which impacts reliability of the financial position. The company is not overdue on filings and is active with no insolvency status, but uncertainty at acquisition and short trading history warrant a medium risk rating.

2. Key Concerns:

• Qualified audit opinion stemming from insufficient audit evidence on acquisition accounting, which casts doubt on the reliability of reserves, goodwill, and net asset valuation.
• The company is newly formed and dependent on acquired subsidiaries for its trading operations, with only 11 months of trading data, limiting historical performance assessment.
• Relatively low cash balance (£318k) in context of substantial current liabilities (£4.63m), though net current assets remain positive, indicating potential liquidity pressures if working capital management weakens.

3. Positive Indicators:

• Strong turnover (£18.3m) and gross profit margin (18%) with positive EBITDA margin (~7%) in its first period of trading, indicating operational viability.
• Positive net current assets (£1.04m) and net assets (£2.16m) suggesting a solid working capital position and equity base.
• No overdue statutory filings or confirmation statements, indicating good regulatory compliance and governance.
• Diverse client base including commercial and local authority clients, potentially mitigating market risk.
• Directors report investment in plant and machinery, showing commitment to operational capability and sustainability.

4. Due Diligence Notes:

• Review detailed audit working papers and management accounts of Trinity Surfacing Limited and Trinity Highways Limited prior to acquisition to clarify the basis of valuation and goodwill recognition.
• Assess cash flow forecasts and working capital management closely given the relatively low cash holding versus current liabilities.
• Monitor subsequent trading performance beyond the initial 11 months to verify sustainability of margins and profitability.
• Confirm no regulatory, legal, or contractual issues affecting the subsidiaries acquired or corporate governance concerns with recent director changes.
• Investigate the rationale and impact of the director resignation (Ben William Bridges) shortly after year-end on 11 December 2024.