MODERN FORMWORK & GROUNDWORK LTD.

Executive Summary

MODERN FORMWORK & GROUNDWORK LTD demonstrates a healthy cash position but faces challenges including a sharp reduction in receivables, working capital, and equity. While current liquidity is sufficient, the company’s overall financial health has weakened, indicating vulnerability. Active management of receivables, costs, and equity is essential to stabilize and improve future financial wellness.

MODERN FORMWORK & GROUNDWORK LTD. - Analysis Report

Company Number: 12945697

Analysis Date: 2025-07-29 18:11 UTC

Financial Health Assessment of MODERN FORMWORK & GROUNDWORK LTD.

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1. Financial Health Score: C

Explanation:
The company shows a mixed financial picture with some positive signs such as a healthy cash balance but also significant warning signs, including a sharp decline in net current assets and net assets over the latest financial year. The drop in receivables and total assets suggests potential operational or market challenges. The overall financial condition is stable but fragile, requiring close monitoring and active management to avoid deterioration.

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2. Key Vital Signs

Metric	2024 Value (£)	2023 Value (£)	Interpretation
Cash at Bank	414,469	293,879	Strong cash position; good liquidity
Debtors (Trade & Other)	85,129	556,730	Significant drop; possible reduced sales or collection issues
Current Liabilities	321,803	430,743	Decrease in liabilities; positive
Net Current Assets (Working Capital)	177,795	419,866	Decline signals tighter short-term liquidity
Total Assets Less Current Liabilities	360,589	706,162	Nearly halved; indicates asset reduction or increased liabilities
Net Assets / Shareholders’ Funds	360,589	692,112	Decline suggests erosion of equity base
Fixed Assets (Net of Depreciation)	182,794	286,296	Significant reduction; asset disposals or impairments
Share Capital	100	100	Minimal capital; company relies on reserves

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3. Symptoms Analysis

• Healthy Cash Flow: The company has maintained and even increased its cash reserves, indicating good cash management or cash inflows from operations or financing. This is a vital sign of liquidity and operational cash health.

• Declining Debtors: The sharp fall in debtors (from £556k to £85k) could mean improved collections or a drop in sales volume. While improved collections are positive, the magnitude suggests potential loss of business or contracts.

• Reduced Working Capital: Net current assets dropped by more than half, signaling tighter liquidity and possibly increased short-term pressure to meet obligations despite cash reserves.

• Asset Impairment and Disposal: Fixed assets decreased significantly, which may reflect asset sales or write-downs. This may be a response to operational downsizing or a sign of distress.

• Declining Equity: The net assets and shareholders’ funds have decreased by nearly 50%, a symptom of accumulated losses or capital erosion. This weakens the financial buffer against future shocks.

• No Audit and Small Company Status: As a small company with exemption from audit, financial transparency is limited, and some risks might be hidden.

• Director Changes: One director resigned shortly before the accounts date, which can be a benign normal event or signal governance changes.

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4. Diagnosis

MODERN FORMWORK & GROUNDWORK LTD is currently in a stable but vulnerable financial state. The company benefits from a strong cash position which acts as a vital organ keeping liquidity healthy. However, the dramatic decline in debtors and net current assets is a symptom of operational contraction or potential market challenges. The reduction in fixed assets and net equity points to a weakening financial structure that could limit future investment and growth capacity.

There is no indication of insolvency or immediate distress, but the company’s declining equity and working capital suggest it is under financial strain and must manage its resources carefully to avoid further deterioration.

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5. Prognosis

If current trends continue—particularly the contraction in receivables and net assets—the company may face increasing liquidity pressures and limited financial flexibility in the medium term. However, the strong cash reserves provide a buffer to navigate short-term challenges if managed prudently.

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6. Recommendations

• Improve Receivables Management: Investigate the cause behind the drop in debtors. If sales have declined, develop strategies to boost revenue. If collections have improved, maintain this discipline.

• Cost Control and Efficiency: Review operational costs and asset utilization to prevent further erosion of fixed assets and equity.

• Strengthen Equity Base: Consider ways to bolster shareholders’ funds, whether through retained earnings or new capital injection.

• Cash Flow Monitoring: Maintain rigorous cash flow forecasting to ensure ongoing liquidity, especially with declining working capital.

• Governance Vigilance: Ensure stable leadership and clear succession planning given recent director changes.

• Strategic Review: Assess market conditions and business model to adapt to any structural changes causing financial strain.

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