ASKERN UK LIMITED
Company number 00564890 · 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 Assessment: ASKERN UK LIMITED
1. Credit Opinion: APPROVE
Reasoning: Askern UK Limited presents a compelling credit profile. The company demonstrates exceptional financial strength with net assets of £5.78M, a dramatically improved cash position, and consistent profitability. The balance sheet has strengthened considerably over recent years, with liabilities reduced from £3.22M (2019) to £1.34M (2025). While turnover declined 12.2% year-on-year, this was managed with an improved gross margin (31.77% vs 30.14%), indicating sound pricing discipline and cost management. The company operates well within its banking facilities and carries minimal long-term debt (£29,917). A well-established business since 1956 with a specialist market position, this entity poses low credit risk.
2. Financial Strength
Balance Sheet Summary (FY2025):
| Metric | FY2025 | FY2024 | Movement |
|---|---|---|---|
| Net Assets | £5,784,924 | £5,089,293 | +13.7% |
| Net Current Assets | £4,643,389 | £4,024,324 | +15.4% |
| Cash | £1,904,121 | £1,215,905 | +56.6% |
| Total Liabilities | £1,342,045 | £1,753,160 | -23.4% |
Key Ratios:
| Ratio | Value | Assessment |
|---|---|---|
| Current Ratio | 4.46x | Excellent (>2x considered strong) |
| Gearing (Long-term debt/Equity) | 0.5% | Negligible leverage |
| Net Asset Value per £1 Share Capital | £651.46 | Substantial retained earnings |
Analysis: The balance sheet tells a story of progressive strengthening. Over five years, net assets have grown from £1.88M to £5.78M – a threefold increase. The company has systematically de-leveraged, reducing total liabilities by 58% since 2019 while growing the asset base. Tangible fixed assets of £1.34M support manufacturing operations. Shareholders' funds are dominated by retained profits (£5.77M of £5.78M total equity), demonstrating long-term value creation rather than reliance on injected capital.
The company is wholly owned by Askern Holdings Limited, which should be noted for group structure considerations, though no negative implications are apparent.
3. Cash Flow Assessment
Profitability:
| Metric | FY2025 | FY2024 | Change |
|---|---|---|---|
| Turnover | £8,990,620 | £10,233,403 | -12.2% |
| Gross Profit | £2,856,442 | £3,083,930 | -7.4% |
| PBT | £1,057,040 | £1,138,316 | -7.1% |
| Net Profit | £795,631 | £854,382 | -6.9% |
| Gross Margin | 31.77% | 30.14% | +163bps |
Working Capital Analysis:
| Component | FY2025 | FY2024 |
|---|---|---|
| Debtors | £3,103,259 | £3,563,557 |
| Stocks | £978,054 | £998,022 |
| Current Liabilities | £1,342,045 | £1,753,160 |
| Debtor Days (est.) | ~126 days | ~127 days |
Analysis: The company converted turnover decline into a margin improvement story – gross margin expanded by 163 basis points despite a 12% revenue contraction. This suggests disciplined cost management and pricing power in a specialist market.
Cash generation has been exceptional, with the cash balance growing from £17,603 in 2019 to £1.9M in 2025. The dividend of £100,000 represents a conservative 12.6% payout ratio, retaining significant earnings for reinvestment and buffer.
Debtor levels remain high relative to turnover (approximately 126 days outstanding), which warrants monitoring. However, this has improved slightly year-on-year. The directors confirm they operate within invoice financing arrangements, which mitigates debtor risk.
Interest payable is negligible at £3,540, confirming minimal debt service obligations. The company's ability to service additional debt facilities is clearly strong.
4. Monitoring Points
| Risk Area | Metric to Monitor | Current Position | Threshold for Concern |
|---|---|---|---|
| Revenue Trajectory | Turnover YoY change | -12.2% | Further decline exceeding 20% |
| Debtor Collection | Debtor days | ~126 days | Exceeding 140 days |
| Raw Material Costs | Gross margin | 31.77% | Falling below 28% |
| Leverage | Total liabilities/Net assets | 23.2% | Exceeding 50% |
| Cash Buffer | Cash/Current liabilities | 1.42x | Below 0.5x |
| Dividend Policy | Payout ratio | 12.6% | Exceeding 50% of net profit |
Sector-Specific Considerations: - Timber/raw material supply chain disruption (directors note successful substitution away from Russian/Belarusian sources) - US tariff exposure and UK economic uncertainty flagged by management - Manufacturing sector cyclicality – cable industry demand correlation with infrastructure spend
Positive Indicators to Track: - Post year-end management accounts show continued profitable trading - Continued debt reduction trajectory - Maintenance of gross margin above 30%