DEACON BROTHERS (PRINTERS) LIMITED
Company number SC029829 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Credit Analysis: Deacon Brothers (Printers) Limited
1. Credit Opinion: CONDITIONAL
This long-established printing business (incorporated 1954) presents a mixed credit profile. While the balance sheet shows positive net assets of £244,505 and a superficially strong current ratio of 4.1x, the underlying position is materially weaker than headline figures suggest. The critical concern is the severe deterioration in cash reserves—down 90% from £194,666 in 2021 to just £19,305 in 2025—coupled with £169,531 (70% of total debtors) owed by Deacon Brothers (Holdings) Limited on an unsecured, interest-free, repayable-on-demand basis. The retained earnings declined by £19,073 in the latest year, indicating the company is loss-making at the operational level. Any credit facility should be conditional upon satisfactory clarification of the inter-company position and evidence of sustainable cash generation from trading activities.
2. Financial Strength
Balance Sheet Composition (FY2025):
| Item | £ | % of Total |
|---|---|---|
| Fixed Assets (NBV) | 23,731 | 7.7% |
| Stocks | 47,358 | 15.3% |
| Trade & Other Debtors | 243,084 | 78.5% |
| Cash | 19,305 | 6.2% |
| Total Assets | 309,747 | 100% |
| Current Liabilities | 74,931 | |
| Long-term Creditors | 10,649 | |
| Provisions | 3,393 | |
| Net Assets | 244,505 |
Key Observations:
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Concentration Risk: Debtors represent 78.5% of total assets. Of the £243,084 debtor balance, £169,531 (69.7%) is owed by Deacon Brothers (Holdings) Limited and £1,188 by GCT Office Supplies Ltd—both related parties. Only approximately £72,365 represents third-party trade debtors. This concentration creates significant recovery risk.
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Asset Quality: Fixed assets carry a net book value of just £23,731 against an original cost of £215,052, indicating 89% depreciation. The asset base is heavily depleted, suggesting aging plant and equipment that may require capital expenditure in the near term.
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Equity Erosion: Shareholders' funds declined from £263,578 to £244,505 (a £19,073 reduction), consistent with operating losses. Over four years, net assets have fallen from £263,578 (FY2024) and appear to be on a declining trajectory after peaking around FY2022-2024.
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Gearing: The debt-to-equity ratio is modest at approximately 0.31x (total liabilities of £88,973 / shareholders' funds of £244,505), suggesting limited leverage but this is somewhat misleading given the inter-company debtor position.
3. Cash Flow Assessment
Cash Trajectory (5-Year Summary):
| Year | Cash | Net Current Assets | Net Assets |
|---|---|---|---|
| FY2021 | 194,666 | 268,213 | 245,971 |
| FY2022 | 83,334 | 285,260 | 261,449 |
| FY2023 | 53,406 | 278,544 | 261,678 |
| FY2024 | 52,562 | 259,218 | 263,578 |
| FY2025 | 19,305 | 234,816 | 244,505 |
Critical Findings:
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Cash Burn: Cash has declined by £175,361 (90%) over four years, from £194,666 to £19,305. This represents an average annual cash outflow of approximately £43,840. At the current cash level, the company has minimal liquidity buffer.
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Working Capital Quality: While net current assets of £234,816 appear healthy, £169,531 of this is the inter-company receivable from the holding company. Stripping this out, adjusted net current assets fall to approximately £65,285—a much tighter position.
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Current Ratio: Stated at 4.1x (£309,747 / £74,931), but adjusted for the related-party debtor, this falls to approximately 1.9x—a more realistic but still adequate measure.
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Operating Lease Commitments: The company has £26,802 in non-cancellable operating lease commitments (£6,700 within one year, £20,102 between one and five years), which will continue to drain cash.
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No Visible Funding Line: With only £19,305 in cash and no disclosed overdraft facilities, the company has limited headroom for working capital fluctuations or unexpected expenditures.
4. Monitoring Points
| Metric | Current Position | Risk Threshold | Commentary |
|---|---|---|---|
| Cash Position | £19,305 | Below £10,000 | Critically low; monitor monthly |
| Inter-company Balance | £169,531 | Any increase | Concentration risk; seek holding company financials |
| Retained Earnings Trend | Declining £19,073pa | Consecutive annual declines | Indicates sustained losses |
| Debtor Days | Requires turnover data | >90 days | Monitor collection efficiency |
| Employee Headcount | 12 (down from 13) | Further reductions | May indicate capacity constraints |
| Fixed Asset Replacement | NBV £23,731 vs Cost £215,052 | Capital expenditure plans | Aging assets may need replacement |
| Lease Commitments | £26,802 outstanding | Any new commitments | Ongoing cash drain |
Specific Conditions for Credit Approval:
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Inter-company Security: Obtain financial statements for Deacon Brothers (Holdings) Limited to assess recoverability of the £169,531 balance. Consider requesting a parent company guarantee.
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Cash Flow Forecasting: Request 12-month cash flow projections demonstrating the company's ability to service any new debt obligations from third-party trading income.
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Debtor Ageing: Obtain a detailed aged debtor report to assess the quality and collectability of third-party trade debtors.
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Capital Expenditure Plans: Confirm whether any material asset replacement is required in the near term, which could further strain cash resources.
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Industry Context: The paper stationery manufacturing sector (SIC 17230) faces structural decline due to digital substitution. Revenue trends should be monitored closely.