CLOFIELD LIMITED - Credit Assessment

1. Credit Opinion: CONDITIONAL

Reasoning: While the company demonstrates solvency with positive net assets of £162,335 and minimal liabilities, there is a persistent and concerning decline in net assets over the past six years (from £295,261 in 2019 to £162,335 in 2025 – a 45% erosion). The micro-entity filing status severely limits visibility into profitability, cash position, and turnover. Without understanding whether this decline stems from trading losses or shareholder distributions, the credit risk cannot be fully quantified. Any facility should be conditional upon receipt of full management accounts and confirmation of the drivers behind the declining balance sheet.

2. Financial Strength

Balance Sheet Trend – Declining

• Net asset position remains positive at £162,335, indicating the company is solvent
• Liabilities are remarkably low at only £6,743 (current year), representing just 4% of total assets – effectively debt-free on the balance sheet
• Fixed assets are minimal at £1,616, suggesting the business operates with little tangible asset backing; the asset base is predominantly current assets (£166,769)
• Share capital of £10,000 with accumulated reserves of £152,335 indicates historical profit retention, though this reserve is being depleted

Concern: The consistent year-on-year erosion of net assets without visibility on the cause (trading losses vs. dividends) is a significant red flag. If driven by losses, the company may be trading at an unsustainable level.

3. Cash Flow Assessment

Liquidity appears adequate but deteriorating:

• Current ratio (YE 2025): Current Assets £166,769 / Current Liabilities £6,743 = 24.7x – exceptionally strong on paper
• Net current assets of £160,719 provide substantial working capital headroom
• However, no cash position is disclosed for 2022-2025. In 2020, cash stood at £135,248 against total current assets of £253,495 (53% cash). If the composition has shifted away from cash, liquidity may be overstated by the current ratio
• Minimal liabilities suggest the company is not leveraging trade credit or external funding, which could indicate either conservative financial management or an inability to secure credit terms

Working Capital Observation: The low creditor position may mean the company pays suppliers promptly (positive for reputation, negative for cash efficiency), or that trade creditors are minimal due to low trading volume.

Critical Data Gap: Without P&L information, it is impossible to assess operating cash generation. The micro-entity regime allows filleted accounts without profit disclosure, which significantly hampers credit analysis.

4. Monitoring Points

Key Actions Required: 1. Obtain full management accounts including P&L, cash flow statement, and aged debtor/creditor reports before advancing any facility 2. Clarify the cause of net asset decline – request dividend history and trading profit/loss for the last 3 years 3. Confirm cash position – bank statements for the last 6 months 4. Monitor for further balance sheet deterioration – the trend must stabilise or reverse 5. Assess debtor quality – current assets of £166k may include significant trade debtors; ageing and recoverability must be confirmed

Positive Indicators to Monitor: - Long-established entity (34 years of trading) - No history of insolvency proceedings - Filing record is compliant - Two PSCs with equal ownership suggests stable family-business governance