ACORN BUILDING CONTRACTORS LTD

Executive Summary

Acorn Building Contractors Ltd operates with marginal liquidity and has experienced a decline in net assets, reflecting limited financial strength and working capital pressures. Credit can be conditionally approved given the company’s operational status and director support, but requires vigilant monitoring of cash flow, debtor collections, and short-term liabilities to mitigate risks. Overall, the company is a small, closely held entity with moderate credit risk typical of early-stage contractors.

ACORN BUILDING CONTRACTORS LTD - Analysis Report

Company Number: 13732681

Analysis Date: 2025-07-19 12:24 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Acorn Building Contractors Ltd is a recently incorporated building development company, currently active and privately held. The company shows a marginally negative net working capital position at year-end 2024 and has experienced a decline in net assets from £822 in 2023 to £232 in 2024. The director is also the sole shareholder with full control, which simplifies accountability but concentrates risk. The company demonstrates ongoing operations without overdue filings or liquidation concerns. However, the low equity base, negative working capital, and reliance on director loans indicate some liquidity and financial stability risks. Credit approval is recommended with conditions including close monitoring of cash flow, receivables collections, and reduction of short-term liabilities.

2. Financial Strength:

• Net assets decreased significantly from £822 to £232, indicating erosion of equity.
• Fixed assets are minimal (£602) and mainly plant & machinery; no motor vehicles held as of 2024.
• Negative net current assets of £256 (current assets £8,206 vs current liabilities £8,462) indicate working capital strain.
• Shareholders’ funds reduced from £822 to £132, highlighting limited buffer against losses.
• Director loans remain substantial but have reduced from £1,599 to £88, supplemented by new advances and repayments in the year.
  Overall, the balance sheet reflects a small-scale business with tight liquidity and limited financial resilience.

3. Cash Flow Assessment:

• Cash at bank increased from £184 to £631, which is positive but absolute cash levels remain low relative to liabilities.
• Debtors remain high at £7,575, with a notable portion classified as “other debtors” (£2,152) that may require scrutiny for collectability.
• Creditors slightly increased to £8,462, with significant taxation and social security liabilities (£2,860).
• Negative net working capital suggests potential pressure to meet short-term obligations without additional financing or improved collections.
• Director loans are interest free and repayable on demand, providing some liquidity support but also dependency on owner’s willingness to fund.

4. Monitoring Points:

• Track debtor aging and collection efficiency to ensure timely cash inflows.
• Monitor cash balances and short-term creditor payments closely to avoid liquidity shortfalls.
• Review any further changes in director loans and their repayment terms to assess ongoing funding reliance.
• Watch profitability trends through future accounts to confirm if equity erosion stabilizes or reverses.
• Evaluate impact of market conditions on building development sector and contract pipeline, as these affect revenue certainty.