Company Number: SC730130

Analysis Date: 2025-07-20 13:09 UTC

Financial Health Assessment of AMRR LTD

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1. Financial Health Score: C

Explanation:
AMRR LTD exhibits a moderate financial health score of "C". The company maintains positive net current assets and shareholders’ funds, indicating solvency and a buffer against immediate financial distress. However, a noticeable decline in net assets and current assets over the recent year signals emerging symptoms that warrant attention to prevent further financial weakening.

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2. Key Vital Signs

Metric	31-Mar-2024 (£)	31-Mar-2023 (£)	Interpretation
Fixed Assets	2,020	0	Introduction of fixed assets – investing in longer-term resources, generally positive.
Current Assets	13,772	18,864	Decreased by ~27%, potential sign of reduced liquidity or asset conversion challenges.
Current Liabilities	6,367	6,078	Slight increase, manageable but could pressure short-term liquidity if trend continues.
Net Current Assets	7,405	12,786	Decreased working capital indicates tighter short-term financial flexibility.
Total Assets Less CL	9,425	12,786	Decline signals net asset base erosion—may reflect operational losses or asset disposals.
Shareholders’ Funds (Equity)	9,425	19,722	Halved in a year, raising concerns about retained earnings and capital stability.
Share Capital	99	99	Nominal capital, typical for micro-entities, limited equity buffer from shareholders.
Employees (Average)	2	2	Stable workforce, small size consistent with micro company classification.

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3. Diagnosis: Financial Symptoms & Business Health

• Liquidity & Working Capital:
  The company maintains positive net current assets (£7,405), indicating that it can cover short-term liabilities with current assets—a healthy cash flow sign. However, the 42% reduction in net current assets year-on-year is a symptom of tightening liquidity, potentially caused by slower cash inflows or increased short-term obligations.

• Capital Erosion:
  A near 52% drop in shareholders’ funds from £19,722 to £9,425 is a notable symptom of financial distress. This suggests accumulated losses or distributions exceeding profits, weakening the company’s capital base and resilience against financial shocks.

• Asset Composition:
  The addition of fixed assets (£2,020) suggests investment in operational capacity or equipment. While this reflects growth aspirations, it also ties up cash in less liquid assets, which could stress liquidity if not managed carefully.

• Operational Scale & Risk:
  With just two employees and micro-sized classification, the company is small and likely sensitive to market fluctuations and operational disruptions. The SIC code "Other specialised construction activities" implies involvement in niche or bespoke construction services, which can be project-based and cash flow volatile.

• Governance & Control:
  The sole director, Mr. Richard Joe Peter Rae, holds full control of shares and voting rights, which centralizes decision-making. This can be efficient but also presents concentration risk if contingency plans are lacking.

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4. Recommendations: Prescriptions for Financial Wellness

• Improve Liquidity Management:
  Closely monitor cash flow forecasting and accelerate receivables collection to bolster current assets. Consider negotiating extended payment terms with suppliers to ease current liabilities pressure.

• Capital Restoration:
  Explore options to strengthen equity, such as additional shareholder funding or reinvestment of profits, to rebuild the capital base and improve financial stability.

• Cost Control & Profitability Focus:
  Analyze operational costs and project margins rigorously to identify areas for efficiency gains, reducing the risk of further losses eroding shareholders’ funds.

• Asset Utilization Review:
  Assess the return on new fixed asset investments to ensure they contribute positively to revenue and cash flow. Avoid over-investment in illiquid assets until liquidity improves.

• Risk Diversification:
  Consider expanding the client base or service offerings to reduce dependence on a small number of contracts, thus smoothing income streams.

• Governance and Contingency Planning:
  Implement formal financial controls and establish contingency plans to mitigate risks associated with centralized ownership and key person dependency.

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