BMC LOFT CONVERSIONS LTD

Executive Summary

BMC Loft Conversions Ltd is an active micro company with sound compliance but shows weakening financial strength evidenced by a sharp decline in net assets and reduced working capital. While still able to meet short-term obligations, liquidity is constrained and provisions for liabilities create uncertainty. Conditional credit approval is recommended with vigilant monitoring of cash flow, profitability, and balance sheet health to mitigate risk.

BMC LOFT CONVERSIONS LTD - Analysis Report

Company Number: 13911240

Analysis Date: 2025-07-20 16:57 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   BMC Loft Conversions Ltd is a young micro-entity operating in domestic building construction. The company remains active with timely filings and no overdue returns or accounts, indicating good compliance discipline. However, its net assets have declined sharply from £24,927 in 2023 to a marginal £2,190 in 2024, reflecting a deterioration in financial strength. The company's current liabilities remain high relative to current assets, though positive net current assets persist. The presence of provisions for liabilities (£21,436) and a small long-term creditor balance introduce some concerns. Given this, credit approval should be conditional on continued monitoring of liquidity and profitability improvements, as the company’s capacity to meet debt obligations could be vulnerable if negative trends persist.

2. Financial Strength:
   The balance sheet shows a modest increase in fixed assets (£12,808 to £20,391), reflecting some investment in long-term resources. Current assets have decreased significantly (£178,662 to £105,858), while current liabilities remain substantial (£146,039 to £99,061). Net current assets have dropped from £33,555 to £6,797, indicating tightening working capital. Notably, net assets declined from £24,927 to £2,190 due primarily to the recognition of provisions for liabilities and some long-term creditors, which have not changed from the prior year but impact net asset value. Shareholders’ equity is nearly depleted, suggesting limited buffer for absorbing losses or unexpected cash flow demands.

3. Cash Flow Assessment:
   Current ratios are slightly above 1 (current assets to current liabilities), but the sharp reduction in current assets and net current assets signals pressure on liquidity. The working capital position remains positive but weakened. The company has a small workforce (average 3 employees) which limits fixed overheads but also constrains scale. The provisions for liabilities may require cash outflows, posing additional liquidity risk. Cash flow generation from operations is not detailed, but the shrinking net assets and current assets imply cash flow constraints. Close attention should be paid to cash conversion cycles and debtor management.

4. Monitoring Points:

• Monitor quarterly cash flow and working capital trends to ensure liquidity remains adequate.
• Review any changes in provisions for liabilities or creditor balances that could impair net asset value.
• Track revenue and profitability improvements to rebuild equity and reduce reliance on short-term borrowings.
• Observe any changes in director or ownership structure that might influence governance or financial stewardship.
• Confirm ongoing compliance with filing deadlines and absence of adverse director conduct.