FAIRGROVE ARCHITECTURAL AND CONSTRUCTION SERVICES LTD

Executive Summary

FAIRGROVE Architectural and Construction Services Ltd has shown a significant recovery in its net worth, moving from negative to positive shareholders' funds within a year. However, persistent negative working capital signals liquidity challenges that must be addressed to secure ongoing financial health. Focused efforts on improving short-term asset/liability balance and managing internal debt will support a stronger, sustainable financial future.

FAIRGROVE ARCHITECTURAL AND CONSTRUCTION SERVICES LTD - Analysis Report

Company Number: SC708399

Analysis Date: 2025-07-20 12:25 UTC

Financial Health Assessment of FAIRGROVE ARCHITECTURAL AND CONSTRUCTION SERVICES LTD

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1. Financial Health Score: C

Explanation:
The company shows a modest recovery from prior financial distress but still exhibits symptoms of financial strain. The positive turnaround in net assets and shareholders' funds is promising, yet persistent negative net current assets indicate ongoing liquidity challenges. This grade reflects a company in cautious recovery that needs to improve working capital management to achieve full financial wellness.

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2. Key Vital Signs

Metric	2024 Value	Interpretation
Net Assets	£30,516	Positive net worth shows overall value increase; healthy.
Shareholders' Funds	£30,516	Equity position now positive after previous losses.
Net Current Assets	-£12,121	Negative working capital; short-term liabilities exceed assets, indicating liquidity risk.
Cash Balance	£44,280	Strong cash on hand; a vital "heartbeat" for operational health.
Current Liabilities	£56,501	High short-term debts requiring careful management.
Fixed Assets	£42,637	Tangible assets mainly motor vehicles; useful but less liquid.
Trend in Net Assets	From -£37,283 (2023) to +£30,516 (2024)	Significant improvement, indicating recovery and better equity position.
Directors' Loan Accounts	£56,501	Major component of current liabilities; potential related-party financing.

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3. Diagnosis: What the Financial Data Reveals

The financial "vital signs" suggest FAIRGROVE Architectural and Construction Services Ltd has emerged from a period of financial distress, where its net assets and shareholders' funds were deeply negative in 2022 and 2023. The turnaround to positive net assets in 2024 is encouraging and indicates effective management actions or capital injections to restore the company's balance sheet health.

However, the company still shows a "symptom of distress" in the form of negative net current assets. This means the company's short-term obligations exceed its short-term resources, which can lead to cash flow problems if not managed carefully. The large current liabilities, primarily directors' loans, point to significant internal financing that might need restructuring or repayment plans.

The strong cash position is a reassuring "pulse," providing liquidity to meet near-term expenses and potentially invest in growth or debt reduction. Fixed assets are mostly motor vehicles, which are depreciating but provide operational capacity.

Overall, this suggests a company recovering from financial illness but still requiring careful liquidity management and possibly structural financial adjustments to ensure sustainable health.

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4. Recommendations: Path to Financial Wellness

• Improve Working Capital Management: Aim to reduce current liabilities or increase current assets (e.g., through quicker debtor collections or inventory reduction) to move net current assets into positive territory. This will ease liquidity pressures and reduce short-term financial risk.

• Manage Directors' Loan Accounts: Engage in discussions with directors to formalize repayment schedules or convert loans into equity if possible. This will improve the company's debt profile and reduce short-term liabilities.

• Maintain Healthy Cash Flow: Continue monitoring cash flow closely to ensure the "heartbeat" remains strong. Avoid overextending credit or incurring unnecessary short-term debts.

• Asset Utilization Review: Evaluate the fixed assets (motor vehicles) for their productivity and necessity, ensuring they contribute effectively to revenue generation.

• Explore Capital Injection or Financing: If working capital issues persist, consider additional equity investment or structured financing to strengthen liquidity.

• Regular Financial Monitoring: Establish monthly or quarterly financial reviews focusing on liquidity ratios and cash flow forecasts to detect early signs of stress.

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