F&P UTILITIES LTD

Executive Summary

F&P Utilities Ltd shows solid financial growth with improving net assets and working capital, indicating a fundamentally healthy business. However, a negative cash balance and increased borrowings suggest some short-term cash flow challenges. With focused cash flow management and prudent debt control, the company is well positioned for continued growth and financial stability.

F&P UTILITIES LTD - Analysis Report

Company Number: 12739528

Analysis Date: 2025-07-20 18:37 UTC

Financial Health Assessment: F&P Utilities Ltd (as of 31 July 2023)

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1. Financial Health Score: B

Explanation:
F&P Utilities Ltd displays solid financial improvement and stability over recent years with increasing net assets and positive working capital. However, some caution is warranted due to the negative cash balance and increasing reliance on bank loans and hire purchase agreements. Overall, the company is financially healthy but shows symptoms of liquidity pressures that should be monitored.

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2. Key Vital Signs

Metric	2023 Value	Interpretation
Net Assets	£112,057	A healthy and growing equity base, nearly doubling since 2022, indicating retained profits and financial strength.
Net Current Assets (Working Capital)	£101,084	Positive working capital indicates the company can cover short-term liabilities comfortably, a good sign of liquidity.
Cash at Bank	-£9	Slightly negative cash position is a symptom of short-term cash flow stress or timing issues in cash management.
Debtors	£250,288	High debtors relative to cash suggest a significant amount of capital is tied up in receivables, potential collection risk.
Current Liabilities	£149,195	Current obligations are sizeable but covered by current assets; however, increasing year-on-year.
Long-term Liabilities	£50,949	Growing bank loans and hire purchase debt indicate increasing leverage, which needs careful management.
Fixed Assets	£61,922	Substantial investment in plant, machinery, and vehicles, which may support operational capacity and growth.
Share Capital	£2	Minimal capital injection from shareholders; growth is primarily from retained earnings.
Employee Count	11	Company has grown its workforce, indicative of expanding operations.

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3. Diagnosis

F&P Utilities Ltd is demonstrating the classic signs of a growing small-to-medium enterprise in the construction sector ("other specialised construction activities"). The company's balance sheet shows healthy growth in net assets and working capital, which are vital signs of improved financial health and business expansion.

However, the negative cash balance—although small—acts like a "mild fever", signaling some short-term liquidity stress. This is compounded by a large amount of trade debtors, suggesting that the company’s cash flow is constrained by the timing of collections. This "cash flow congestion" could potentially strain day-to-day operations if not managed carefully.

The increasing current and long-term liabilities, including bank loans and hire purchase agreements, reflect investment in fixed assets and possibly operational scaling. While leverage can be a useful stimulant for growth, it also introduces risk if earnings or cash flow falter.

The company’s equity base has nearly doubled in the last year, which is a good "immune response" showing the business is generating and retaining profits. However, the minimal share capital suggests that growth is internally funded and reliant on operational success rather than fresh equity injections.

Overall, the company’s financial health is stable with positive growth trends but with some symptoms of cash flow strain and increasing financial obligations that warrant close monitoring.

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4. Recommendations

1. Improve Cash Flow Management:

   • Tighten debtor credit control and collection processes to convert receivables into cash more quickly and reduce the risk of bad debts.
   • Consider invoice factoring or short-term financing solutions if cash flow gaps persist.

2. Monitor and Manage Debt Levels:

   • Review terms on bank loans and hire purchase agreements to ensure they remain affordable.
   • Avoid over-leveraging as increased debt servicing costs could worsen liquidity.

3. Maintain Healthy Working Capital:

   • Continue to monitor the ratio of current assets to current liabilities to ensure liquidity remains strong, especially as the company grows.

4. Plan for Cash Reserves:

   • Build a cash buffer to avoid negative cash balances, which can be a sign of operational stress and may affect supplier and creditor confidence.

5. Strategic Asset Investment:

   • Ensure that fixed asset purchases (plant, machinery, vehicles) are aligned with revenue-generating activities to maximize returns on investment.

6. Regular Financial Reviews:

   • Conduct frequent internal financial health checks to spot early symptoms of financial distress and adjust operations accordingly.

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