CLEAN WATER SYSTEMS (N.I.) LTD

Executive Summary

Clean Water Systems (N.I.) Ltd is financially stable with a positive equity increase and manageable liabilities, reflecting a healthy operational foundation for its size. While liquidity is tight, the company’s growing asset base and controlled director advances suggest capacity for sustainable growth with prudent financial management. Strengthening working capital and managing debts will be key to maintaining long-term financial wellness.

CLEAN WATER SYSTEMS (N.I.) LTD - Analysis Report

Company Number: NI677779

Analysis Date: 2025-07-29 14:45 UTC

Financial Health Assessment for Clean Water Systems (N.I.) Ltd as of 29 February 2024

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1. Financial Health Score: B

Explanation:
The company demonstrates solid financial footing for a micro-entity with improving net assets and working capital. While current liabilities remain significant, the positive trend in net assets and controlled director advances indicate manageable financial health. The "B" grade reflects a generally healthy condition with some areas requiring monitoring to ensure continued stability.

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2. Key Vital Signs

Metric	Value (2024)	Interpretation
Fixed Assets	£57,645	Indicates investment in long-term assets; nearly doubled from previous year, showing growth.
Current Assets	£51,960	Reasonable amount of liquid and short-term assets to meet immediate obligations.
Current Liabilities	£57,509	Slightly higher than current assets but net current assets positive (£1,643), indicating solvency.
Net Current Assets	£1,643	Small positive working capital ("healthy cash flow buffer"), though tight for immediate liquidity.
Total Assets Less Current Liabilities	£59,288	Shows the company can cover current liabilities with assets, a good sign of short-term health.
Long-term Liabilities	£29,006	Moderate long-term debt, manageable given equity base but worth monitoring.
Net Assets / Shareholders Funds	£26,664	Equity has increased significantly from £17,211 in 2023, indicating retained earnings or capital injection.
Director Advances	-£1,838	Director owes company funds, implying some internal financing but currently manageable.
Employee Count	2	Small staffing consistent with micro-entity status, limiting operational complexity.

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3. Diagnosis

The financial "vitals" of Clean Water Systems (N.I.) Ltd reflect a company in relatively good health for a young micro-entity operating in a niche service sector (SIC 96090 - Other service activities). The significant increase in fixed assets suggests capital investment, potentially in equipment or facilities, which is positive for operational capacity. The company maintains a narrow but positive net current asset position, resembling a "healthy pulse" with adequate liquidity to cover short-term debts.

However, the working capital is tight, which could be a "symptom of distress" if unexpected costs arise or cash inflows slow down. The increase in long-term liabilities should be carefully managed to avoid future strain on cash flow. The director's advances show ongoing internal financing, a typical pattern in small companies but one that should be monitored to avoid over-reliance on personal funds.

Overall, the company appears financially stable, with a solid equity foundation and growth in net assets signaling retained profits or fresh equity contributions. The absence of overdue filings and audit exemptions under the micro-entity regime reduce regulatory burdens, allowing focus on business development.

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4. Recommendations

• Strengthen Working Capital: Aim to increase current assets relative to current liabilities to build a more comfortable liquidity buffer. This might include faster debtor collections or controlling short-term payables.

• Manage Long-term Debt: Review repayment schedules for the £29,006 long-term liabilities to ensure they align with cash flow forecasts and avoid liquidity crunches.

• Formalize Director Advances: Consider formal agreements for director loans/advances to clarify terms and reduce risk of personal financial exposure.

• Asset Utilization Review: Ensure fixed assets are being effectively deployed to generate revenue and profits, avoiding idle investments that could strain resources.

• Monitor Cash Flow Closely: Given the micro-entity status and small employee base, maintain tight cash flow controls to anticipate and react quickly to any financial stresses.

• Explore Growth Opportunities: With improving net assets and equity, consider strategic investments or partnerships to expand market reach or service offerings.

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