Why did a profitable contractor see operations burn GBP 83.3k of cash?

Harris & Harris Construction Limited, a UK building contractor, turned a net loss of GBP 645k in FY2024 into a net profit of GBP 785k in FY2025. Operating profit reached GBP 1.0m on revenue of GBP 9.8m, so the operating margin moved to 10.4% from -6.3%. Revenue itself fell 11.5%. The cash line tells a different story: operating cash flow was GBP -83.3k, and cash at year end stood at GBP 59, down from GBP 143. A profitable year that did not bring money in from operations.

In contracting, profit and cash often part ways. Revenue can be booked on work done before the client has paid, and money then sits in receivables or retentions held by customers. Profit can also include items that bring in no cash. The accounts do not say which applies here. Equity rose to GBP 1.4m, and the equity ratio to 35.8%, but equity is not cash. I would watch the cash line next year: a margin of 10.4% is pleasant, though it cannot pay wages.