FOSSEWAY THERMAL GROUP LIMITED

Executive Summary

Fosseway Thermal Group Limited is a young company showing initial growth and positive working capital but has minimal net equity and relies heavily on unsecured director and related party loans. Liquidity is adequate but vulnerable to debtor collection risks and insider funding withdrawal. Conditional credit approval is recommended with ongoing monitoring of cash flow, loan repayment, and profitability to mitigate risk.

FOSSEWAY THERMAL GROUP LIMITED - Analysis Report

Company Number: 14035692

Analysis Date: 2025-07-20 13:03 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Fosseway Thermal Group Limited is a newly incorporated private limited company (since April 2022) operating in plumbing, heating, and air-conditioning installation. The company shows initial growth in working capital and asset base, but net assets remain very low (£3,170) with significant liabilities falling due after one year (£136,304) that are unsecured and interest-free, owed to a close family member of a director. The presence of director loans and related party balances indicates reliance on insider funding rather than external creditworthiness. Approval is conditional on continued monitoring of cash flows and timely repayment of related party balances to ensure liquidity and reduce risk of default.

2. Financial Strength:

• The balance sheet at 31 March 2024 shows fixed assets of £29,010 and current assets of £373,610, with current liabilities at £257,634, resulting in positive net current assets of £115,976.
• However, after accounting for non-current liabilities (£136,304) and provisions (£5,512), net assets are marginal at £3,170, indicating very thin equity buffer.
• The company’s capital structure depends heavily on director loans and related party funds, which are unsecured and interest free, exposing the company to capital risk if these loans are withdrawn or not converted to equity.
• Retained earnings are minimal (£3,070), reflecting early stage operations with limited profit accumulation.

3. Cash Flow Assessment:

• Cash at bank is £46,207, a significant improvement from £100 the prior year, suggesting better liquidity management but still modest for a company with current liabilities of £257,634.
• Debtors are high (£307,403), which could impact liquidity if collection periods are long; this requires review of debtor aging and credit control processes.
• Net current assets indicate positive short-term liquidity but the company should be cautious about cash conversion cycles to avoid liquidity strain.
• The increase in employees from 2 to 13 during the year suggests expanding operations, which could pressure working capital if not matched by revenue growth.

4. Monitoring Points:

• Closely monitor cash flow forecasts and debtor collections to ensure working capital remains sufficient to meet short-term obligations.
• Watch the repayment or conversion of director and related party loans to avoid overreliance on insider financing.
• Review profitability trends once full profit and loss accounts are available to assess sustainable earnings capacity.
• Track any changes in company credit terms and payment behavior with suppliers and customers to detect early signs of financial stress.
• Monitor compliance with filing deadlines and management integrity, noting that directors have no disqualifications and filings are up to date.