Company Number: 13917027

Analysis Date: 2025-07-29 20:18 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   AKF Contractors Limited is a recently incorporated SME (2022) operating in building completion and electrical installation. The company shows a modest net asset base (£37,463) with positive working capital but a notable decline in current assets and cash balances in the latest year. While the directors appear competent and the company is up to date with filings, the financial profile reveals tight liquidity and a reduction in debtor balances, which suggests potential pressure on cash flow. Approval is recommended with conditions including close monitoring of liquidity, cash flow forecasts, and timely servicing of short-term liabilities.

2. Financial Strength:
   The balance sheet shows net assets of approximately £37.5k and shareholders’ funds of the same amount, indicating no long-term debt leverage. Tangible fixed assets increased due to investment in motor vehicles (£26k net book value), supporting operational capacity. However, current assets have fallen from £57.2k in 2023 to £33k in 2024, mainly driven by a reduction in cash (£40.3k to £19.7k) and trade debtors (£13k to £6.3k). Current liabilities decreased from £28.5k to £18.3k, improving net current assets to £14.7k, but the overall asset base remains small. The company maintains a small provisions balance (£3.4k). Overall, the financial strength is limited but stable for a small contractor.

3. Cash Flow Assessment:
   The sharp decrease in cash and trade debtors is a concern, indicating tighter working capital and possibly delayed collections or lower sales volume. Net current assets remain positive but have halved year-on-year, reducing liquidity buffer. The company employs two staff, consistent with its size. Creditors decreased significantly, easing short-term pressure, but tax and social security creditors dropped from £18.1k to £962, possibly reflecting timing differences or payment cycles. Cash flow management is critical, and reliance on prompt debtor collections is high. The company appears dependent on operational cash generation without external financing.

4. Monitoring Points:

• Liquidity trends: monitor quarterly cash flow statements and bank balances to ensure sufficient liquidity.
• Debtor days and collection effectiveness to avoid cash flow strain.
• Timely payment of tax and social security liabilities to avoid penalties.
• Profitability trends (not disclosed here) to assess sustainability of operations.
• Capital expenditure plans given recent investment in vehicles.
• Any changes in director or ownership structure that could affect governance.