FORBES GROUP LIMITED
Company number 01591882 · 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 Report: Forbes Group Limited
1. Credit Opinion: CONDITIONAL
Reasoning: Forbes Group Limited demonstrates several positive credit characteristics including a 43-year trading history, consistent equity growth, and a healthy cash position. However, the significant increase in current liabilities (22.5% year-on-year) coupled with declining net current assets warrants a conditional approach. The company is investing in fixed assets (notably £126k in freehold property additions), which may explain the creditor movement, but the unaudited, abridged nature of the accounts limits full visibility. Approval recommended with standard covenants and monitoring of working capital metrics.
2. Financial Strength
Balance Sheet Summary (2024 vs 2023):
| Metric | 2024 | 2023 | Movement |
|---|---|---|---|
| Total Assets | £1,155,981 | £993,795 | +£162,186 |
| Total Liabilities | £572,936 | £467,760 | +£105,176 |
| Shareholders' Funds | £583,045 | £526,035 | +£57,010 |
| Net Current Assets | £230,883 | £311,400 | -£80,517 |
Key Observations:
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Equity Growth: Shareholders' funds have grown consistently from £411,989 (2021) to £583,045 (2024), representing a 41.5% increase over three years. This indicates sustained profitability and retained earnings accumulation.
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Capital Structure: The company has a modest share capital (£7,140) supplemented by a substantial share premium account (£244,201), suggesting historical capital injection by shareholders. The capital redemption reserve (£3,060) and retained earnings (£328,644) demonstrate prudent financial management.
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Asset Composition: Fixed assets increased dramatically from £214,433 to £351,960, driven by £164,703 in additions (primarily freehold property at £126,354 and motor vehicles at £38,349). This suggests investment in the business's operational capacity.
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Leverage: Total liabilities to equity ratio stands at approximately 98%, which appears elevated. However, this includes trade creditors and operational liabilities rather than solely debt obligations. The absence of long-term creditors on the balance sheet is notable and positive.
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Tangible Net Worth: At £583,045, the company has a solid asset base relative to its size, with significant freehold property holdings providing collateral value.
3. Cash Flow Assessment
Liquidity Position:
| Metric | 2024 | 2023 |
|---|---|---|
| Current Assets | £803,819 | £779,160 |
| Current Liabilities | £572,936 | £467,760 |
| Current Ratio | 1.40x | 1.67x |
| Quick Ratio (ex-stock) | 1.17x | 1.30x |
| Cash | £377,591 | £332,117 |
| Cash/Current Liabilities | 65.9% | 71.0% |
Working Capital Analysis:
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Cash Position: Cash at bank remains healthy at £377,591, representing 47% of current assets. The year-on-year increase of £45,474 demonstrates positive cash generation.
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Trade Debtors: Increased significantly from £153,593 to £220,369 (+43.6%). This warrants investigation—is this driven by sales growth, extended payment terms, or deteriorating collection? In the textile wholesale sector, debtor days stretching can signal market pressure.
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Stock: Declined from £181,698 to £133,022 (-26.7%), which could indicate improved stock management or, conversely, potential supply constraints.
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Current Liabilities Growth: The £105,176 increase in current liabilities (from £467,760 to £572,936) is the most concerning metric. Without a detailed P&L (not filed per small company exemptions), we cannot determine the composition, but this likely includes increased trade creditors potentially funding the fixed asset investment.
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Net Current Assets Compression: The decline from £311,400 to £230,883 (-25.9%) reduces the working capital buffer. While still positive, the trajectory needs monitoring.
4. Monitoring Points
| Metric | Target/Concern | Rationale |
|---|---|---|
| Current Ratio | Maintain above 1.25x | Currently at 1.40x but declining; breach would signal liquidity stress |
| Trade Debtor Days | Investigate increase | 43.6% increase in trade debtors needs explanation—sales growth vs. collection issues |
| Current Liabilities Composition | Obtain breakdown | Need visibility on trade creditors vs. other liabilities driving the £105k increase |
| Net Current Assets Trend | Watch for further decline | 25.9% reduction in one year; continued erosion would be concerning |
| Profitability Metrics | Request management accounts | P&L not filed; need turnover and profit margins to assess debt serviceability |
| Employee Numbers | Monitor | Slight decline from 21 to 20; further reductions may indicate contraction |
| Fixed Asset Investment | Clarify strategy | £164k in additions requires understanding of business rationale and funding source |
| Related Party Transactions | Full disclosure needed | PSC holds >75% shareholding; need visibility on any intercompany balances or director loans |
Additional Considerations:
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Industry Risk: Textile wholesale (SIC 46410) faces ongoing structural challenges including overseas competition, supply chain disruption, and margin pressure. The company's long establishment suggests resilience, but sector headwinds persist.
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Concentration Risk: With a single PSC holding >75% of shares and voting rights, key-person dependency is significant. Any personal financial difficulties of Mr Graville could impact the business.
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Accounts Quality: Unaudited abridged accounts under the small companies regime provide limited transparency. For any significant facility, full management accounts should be requested.