BARR CONTRACTS LTD

Executive Summary

BARR CONTRACTS LTD shows strong financial growth, healthy liquidity, and a solid balance sheet with increasing net assets and working capital. The company appears well-positioned to meet debt obligations, though absence of detailed profitability data warrants continued oversight. Overall, credit approval is recommended with routine monitoring of trading performance and cash flow.

BARR CONTRACTS LTD - Analysis Report

Company Number: NI668791

Analysis Date: 2025-07-20 13:10 UTC

1. Credit Opinion: APPROVE with monitoring
   BARR CONTRACTS LTD demonstrates solid financial growth and a strong balance sheet for its size and industry. The company operates in renting and leasing construction machinery, a capital-intensive sector, but maintains a healthy asset base and net asset position. Directors hold significant control and appear stable with no adverse records. The company’s liquidity and working capital are strong, supporting its ability to meet short-term obligations. However, the lack of a profit & loss account filing limits insight into profitability trends, so ongoing monitoring of trading performance and cash flow is advised.

2. Financial Strength:
   The company’s net assets have grown substantially from £382k in 2023 to £617k in 2024, reflecting retained earnings of approximately £235k added during the year. Tangible fixed assets increased by about £59k net, after depreciation, indicating continued investment in machinery/equipment. The capital structure is sound with minimal share capital (£2) but substantial equity funding from accumulated profits. Long-term liabilities reduced from £137k to £100k, improving leverage and solvency. Overall, the balance sheet is robust with a strong equity buffer relative to liabilities.

3. Cash Flow Assessment:
   Current assets increased significantly to £640k, driven by a higher cash balance (£256k vs £72k) despite a slight reduction in debtors (£384k from £412k). Current liabilities rose modestly to £219k, but net current assets improved markedly from £282k to £421k, indicating strong working capital management. The company’s liquidity position appears healthy with cash representing about 40% of current assets. This suggests good short-term liquidity and an ability to comfortably cover near-term liabilities.

4. Monitoring Points:

• Profitability metrics: Lack of profit & loss filing requires monitoring of underlying earnings and margins through management accounts or interim reports.
• Debtor days: Slight reduction in debtors noted but continued focus on receivables collection is important.
• Capital expenditure and depreciation: Continued heavy investment in fixed assets should be matched with adequate returns.
• Debt servicing: Monitor long-term creditor balances and interest coverage to ensure obligations remain manageable.
• Market conditions: Construction equipment rental sector can be cyclical; watch for economic downturn impacts.