ASSOCIATED COMPUTER SERVICES LTD

Executive Summary

Associated Computer Services Ltd shows positive equity growth and investment in fixed assets but currently suffers from negative working capital and liquidity pressures. Credit approval is recommended on a conditional basis, with close monitoring of cash flow, debtor collections, and creditor management to mitigate short-term repayment risk. The company’s ownership by a controlling group and recent management changes suggest improving governance but warrant ongoing vigilance.

ASSOCIATED COMPUTER SERVICES LTD - Analysis Report

Company Number: 13575538

Analysis Date: 2025-07-29 12:28 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Associated Computer Services Ltd is a relatively young private limited company incorporated in 2021, operating in the IT consultancy sector (SIC 62020). The company demonstrates growth in net assets from £8,224 in 2023 to £24,741 in 2024. However, the current year shows a negative net current asset position of £-7,063, indicating potential short-term liquidity pressures. The presence of significant trade and other creditors (£32,063) exceeding current assets (£25,000) warrants cautious credit consideration. The company appears to be investing in fixed assets, notably motor vehicles (£36,905 net book value), which may impact cash flow. Directors have recently changed, with a strong controlling shareholder Apted Group Ltd holding 75-100% ownership, which may enhance governance and stability. Given these factors, credit approval should be conditional on monitoring cash flows and current liabilities closely, with possible limits on short-term exposure.

2. Financial Strength:
   The balance sheet reveals a small but improving equity base, with shareholders’ funds increasing from £8,224 to £24,741 over one year, reflecting retained earnings growth. Tangible fixed assets grew significantly to £39,264, mostly due to new motor vehicle acquisitions. However, current liabilities have more than doubled from £13,937 to £32,063, causing a working capital deficit. Deferred tax provision increased to £7,460, which is a non-cash liability but reduces net asset quality. Overall, the company’s financial strength is moderate; equity growth is positive but constrained by rising short-term obligations and negative working capital.

3. Cash Flow Assessment:
   Cash at bank has decreased from £6,590 to £4,406 despite increased debtors (£20,594), suggesting slower cash conversion or increased credit terms to customers. The negative net current assets point to potential liquidity strains in meeting immediate obligations. The increase in other creditors (£26,838) may reflect deferred payments or accruals, which temporarily supports cash but could crystallize as outflows soon. The company’s ability to service debt and operational expenses depends on timely collection of receivables and control of payables. No audit was required, and the accounts are unaudited, which introduces some risk in cash flow reliability.

4. Monitoring Points:

• Working capital and liquidity ratios, particularly current ratio and quick ratio, to track improvements or deterioration.
• Debtor days and credit control effectiveness to ensure cash inflows.
• Creditor ageing and payment terms to avoid supplier disputes or financial stress.
• Profitability trends when full P&L details become available, focusing on operating margins in IT consultancy.
• Impact of fixed asset acquisitions on cash flow and asset utilization.
• Changes in shareholder structure or director appointments for governance stability.