CCNH LIMITED

Executive Summary

CCNH Limited demonstrates steady revenue growth and strong liquidity but faces challenges from a marginal operating loss and negative net assets due to significant long-term liabilities. The company’s cash position and positive net current assets mitigate short-term risks, supporting a conditional credit approval. Close monitoring of profitability, debt management, and compliance is essential to safeguard credit exposure.

CCNH LIMITED - Analysis Report

Company Number: 13515782

Analysis Date: 2025-07-20 16:08 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   CCNH Limited operates in the residential nursing care sector with a turnover growth from £3.06M (2023) to £3.68M (2024). However, the company reported a small loss (£48,962) in the latest year and its net assets turned negative (-£1,749). Despite this, the company shows strong cash reserves (£1.25M) and positive net current assets (£1.03M), indicating short-term liquidity. The company’s long-term liabilities exceed total assets, creating a shareholders’ deficit. The directors have prepared forecasts supporting going concern, and the auditor raised no going concern warnings. Credit approval is recommended with conditions: close monitoring of profitability and balance sheet recovery, and covenant controls on additional borrowing given the negative equity position.

2. Financial Strength:
   The balance sheet reveals significant fixed assets (£6.15M) primarily comprising intangible and tangible assets. These provide collateral value but are largely offset by substantial long-term creditors (£7.09M) and provisions (£92.7k), leading to negative net assets. Shareholders’ funds swung from positive £47k in 2023 to a slight deficit in 2024, driven by the net loss. The company’s equity base is weak, and the negative net asset position signals limited financial buffer against adverse events. However, the business is still operationally stable with growing turnover and maintained asset base.

3. Cash Flow Assessment:
   Current assets at £1.40M exceed current liabilities (£369k), resulting in strong net current assets and indicating good short-term liquidity. Cash balances more than doubled from £581k to £1.25M, which should support working capital needs and debt servicing in the near term. Debtors are relatively low (£145k) compared to turnover, suggesting efficient collections. The company’s operating profit remains positive (£170k), but interest expense (£173k) nearly offsets operating profit, causing a marginal pre-tax loss. Close cash flow monitoring is essential to ensure timely interest and principal repayments.

4. Monitoring Points:

• Profitability trends: watch for return to consistent net profit to rebuild equity.
• Balance sheet structure: monitor long-term debt levels and potential refinancing risks given negative net assets.
• Cash flow and liquidity: maintain healthy cash reserves and working capital to avoid liquidity strain.
• Compliance and regulatory risks: nursing care sector is highly regulated; adherence to CQC standards and legislative changes must be ensured.
• Directors’ forecasts and actual performance alignment: validate ongoing viability through updated management accounts and forecasts.