Company Number: 14718919

Analysis Date: 2025-07-29 18:01 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Hex Contractors Limited is an active private limited company incorporated recently in 2023. The company operates in landscape services and specialized construction activities. While it shows profitable trading with a significant increase in retained earnings (£46k profit in year ending March 2025), current liabilities substantially exceed current assets, resulting in a negative working capital position (-£67.7k). This suggests potential short-term liquidity pressure. The company also has considerable provisions and long-term creditors, which further strain net asset levels (only £161 equity). Credit approval is possible on condition of close monitoring of cash flow and debtor collections to ensure the company can meet short-term obligations. Directors’ personal advances indicate some reliance on director funding which should be reviewed.

2. Financial Strength:
   The balance sheet shows modest fixed assets (£105k), predominantly plant, machinery, and motor vehicles, indicating tangible operational capacity. However, net current liabilities of -£67,730 reflect a liquidity mismatch; current liabilities (£95k) exceed current assets (£27.5k), driven largely by other creditors (£70k) and bank loans (£13.4k). Total net assets are minimal at £161, with shareholders’ funds comprising mainly retained earnings after dividends. The increase in provisions (£19.9k) and long-term creditors (£17.2k) adds to leverage concerns. Overall, the capital structure is weak with limited equity buffer.

3. Cash Flow Assessment:
   Cash at bank is low (£6,400) relative to short-term liabilities, suggesting tight liquidity. Debtor balances have increased to £21k but include other debtors rather than trade debtors, which were £0, raising questions on the nature and collectability of these amounts. The company paid substantial dividends (£46k) despite liquidity constraints, indicating possible distribution of profits without retaining cash reserves. Director advances of over £68k imply reliance on internal funding to support operations. Working capital management and cash flow forecasting are critical to avoid default risks.

4. Monitoring Points:

• Monitor monthly cash flow and liquidity to ensure timely settlement of creditors and bank facilities.
• Review debtor aging and collection efficiency, especially the composition of "other debtors."
• Keep watch on provisions and creditor balances to detect any contingent liabilities or overdue payments.
• Track profitability trends and dividend policy to ensure retained earnings support operational growth.
• Director funding levels and repayment plans should be reviewed to assess dependence on related party financing.
• Ensure timely filing of accounts and confirmation statements continue to maintain transparency and compliance.