ABSOLUTE CARE AND SUPPORT (UK) LIMITED
Company number 08326687 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Analysis Report: Absolute Care and Support (UK) Limited
1. Credit Opinion: APPROVE
Reasoning: This company presents a strong credit profile characterized by consistent organic growth, robust liquidity, and an apparently debt-free balance sheet. Net assets have grown from £2 (2016) to £225,426 (2024), demonstrating sustained profitability and retained earnings accumulation. The cash position of £187,241 exceeds total liabilities of £89,405 by more than 2:1, providing exceptional debt service capacity. The care sector offers defensive revenue characteristics through local authority contracts, and the business has expanded its workforce from 41 to 47 employees, indicating genuine operational growth. No adverse conduct records exist for directors.
Caveat: The husband-and-wife ownership structure creates key-person dependency, and unaudited abridged accounts limit visibility into profitability metrics and debtor quality.
2. Financial Strength
Balance Sheet Summary (2024): - Total Assets: £312,388 - Total Liabilities: £89,405 - Net Assets: £225,426 - Share Capital: £2 (nominal only) - Retained Earnings: £225,424
Gearing & Leverage: The balance sheet shows no long-term debt facilities. All liabilities (£89,405) are classified as current, likely comprising trade creditors, accruals, and the modest deferred tax provision (£192). This represents an extremely conservative capital structure with effective gearing of nil.
Asset Quality: - Tangible Fixed Assets: £2,251 (asset-light service business model) - Debtors: £125,147 - Cash: £187,241
The debtor book represents 40% of total assets. Given the SIC code (88100 - social work without accommodation), these debtors likely comprise local authority payments which typically carry low credit risk but can experience bureaucratic payment delays. Debtor days analysis would be beneficial but unavailable from abridged accounts.
Capital Resilience: Shareholders' funds have grown year-on-year without external equity injection (share capital remains at £2), confirming all growth has been funded through retained profits. This trajectory demonstrates genuine trading profitability rather than financial engineering.
| Year | Net Assets | YoY Growth |
|---|---|---|
| 2019 | £32,460 | - |
| 2020 | £67,591 | +108% |
| 2021 | £131,100 | +94% |
| 2022 | £124,503 | -5% |
| 2023 | £167,942 | +35% |
| 2024 | £225,426 | +34% |
The slight dip in 2022 warrants attention but was fully recovered, and growth has resumed strongly.
3. Cash Flow Assessment
Liquidity Position: - Current Assets: £312,388 - Current Liabilities: £89,405 - Current Ratio: 3.5x - Quick Ratio (excl. inventory): 3.5x (service business, no inventory)
Both ratios significantly exceed the 1.5x benchmark for healthy liquidity. The company can comfortably meet all near-term obligations.
Cash Trajectory:
| Year | Cash | Cash as % of Total Assets |
|---|---|---|
| 2019 | £10,768 | 10% |
| 2020 | £76,316 | 55% |
| 2021 | £171,123 | 77% |
| 2022 | £130,676 | 72% |
| 2023 | £89,833 | 39% |
| 2024 | £187,241 | 60% |
Cash has more than doubled from 2023 to 2024. The fluctuations in 2021-2022 likely reflect COVID-related impacts (possibly advance payments or delayed expenditure). The 2024 cash position of £187,241 provides a substantial buffer—equivalent to approximately 2.1x total liabilities.
Working Capital Analysis: Net Current Assets (Working Capital): £222,983
This is a strongly positive working capital position. The business is self-funding its growth without requiring working capital facilities.
Undrawn Commitments: Operating lease commitments of £22,718 (2024, down from £37,691 in 2023) represent the only identified financial commitment. This is modest and declining.
Estimated Profit Retention: P&L reserve increased by £57,484 (from £167,940 to £225,424) in 2024, indicating strong post-tax profitability. After accounting for the deferred tax adjustment of £67, this suggests retained profits after any dividends of approximately £57,417.
4. Monitoring Points
| Metric | Current Position | Watch Threshold | Rationale |
|---|---|---|---|
| Current Ratio | 3.5x | Below 2.0x | Early warning of liquidity strain |
| Debtor Days | Unknown (abridged) | Exceeding 90 days | Local authority payment delays; sector risk |
| Cash Balance | £187,241 | Below £50,000 | Minimum liquidity buffer |
| Employee Count | 47 | Significant decline | Revenue capacity indicator |
| Net Asset Growth | +34% YoY | Negative growth | Profitability sustainability |
| CQC Registration Status | Active | Any regulatory action | Operating licence prerequisite |
| Director Changes | Stable (2 directors) | Resignation of either | Key-person risk materialization |
| Filing Compliance | Current | Overdue filings | Governance indicator |
Sector-Specific Considerations: - Local Authority Funding Pressure: Ongoing real-terms reductions in social care budgets may impact contract values and payment terms - Regulatory Risk: CQC compliance is essential for continued operations; any enforcement action would materially affect revenue - Workforce Risk: 47 employees in care services represents significant payroll obligation; sector faces recruitment and retention challenges - National Living Wage Impact: Rising wage costs in care sector may compress margins
Recommended Facility Structuring: Given the strong cash position and nil existing debt, any credit facility should be structured conservatively: - Overdraft: Unlikely required given cash reserves - Term Loan: Could be considered for expansion capital; suggest maximum 3x annual retained profit (~£170k) with 3-5 year term - Asset Finance: Appropriate for vehicle/equipment replacement if required - Personal Guarantees: Should be requested given husband/wife ownership structure and nominal share capital of £2