MP BUILDING SERVICES (OAKLEY) LTD

Executive Summary

MP Building Services (Oakley) Ltd is currently facing financial distress evidenced by its negative net asset position and very low cash reserves, although it maintains positive working capital. Immediate actions to improve cash flow, manage debt, and strengthen profitability are essential to avoid worsening financial health. With focused management and possible capital support, the company can stabilise and improve its financial condition.

MP BUILDING SERVICES (OAKLEY) LTD - Analysis Report

Company Number: 12450010

Analysis Date: 2025-07-20 17:18 UTC

Financial Health Assessment for MP Building Services (Oakley) Ltd

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1. Financial Health Score: C

Explanation:
The company shows mixed financial signals. While it maintains positive short-term liquidity (working capital), it suffers from a persistent negative net asset position as of the latest year end, reflecting accumulated losses or net liabilities. The company’s current assets cover current liabilities comfortably, but long-term obligations and equity deficits indicate financial stress requiring close management attention.

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2. Key Vital Signs

Metric	Latest (2024) Value	Interpretation
Current Assets	£14,308	Adequate short-term assets including debtors; very low cash on hand (£16) indicates limited liquid cash reserves.
Current Liabilities	£11,266	Debts due within one year are covered by current assets, indicating a stable short-term liquidity position.
Net Current Assets (Working Capital)	£3,042	Positive working capital, but significantly reduced from £9,980 in prior year, signaling reduced short-term financial buffer.
Net Assets (Equity)	-£7,445	Negative net assets show liabilities exceed assets; this is a symptom of financial distress or accumulated losses.
Long-term Liabilities	£12,805	Significant bank loans due after one year; combined with negative equity, this increases financial risk.
Cash at Bank	£16	"Healthy cash flow" absent; extremely low cash suggests potential cash flow constraints.
Share Capital	£1	Minimal capital base, typical for small private companies.

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3. Diagnosis

MP Building Services (Oakley) Ltd shows symptoms of financial distress, primarily due to its negative net asset position of approximately £7,445, indicating that total liabilities exceed total assets. This can erode stakeholder confidence and restrict the company’s ability to secure further financing or investment.

On a positive note, the company maintains positive working capital with current assets exceeding current liabilities, suggesting it can meet short-term obligations. However, a concerning sign is the sharp decline in working capital from nearly £10,000 in 2023 to just over £3,000 in 2024 and a drastic reduction in cash reserves to almost zero. This may indicate cash flow challenges or slower collection of receivables.

The company carries a significant long-term loan (£12,805), which, combined with negative equity, adds to financial strain. The balance sheet suggests that the company is relying heavily on debt financing, which may pose risks if earnings do not improve.

Overall, the financial “vital signs” suggest the business is surviving but vulnerable. Without corrective action, the negative equity and low liquidity could worsen, potentially leading to solvency issues.

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4. Recommendations

Immediate Actions:

• Improve Cash Reserves: Prioritize accelerating debtor collections and managing payables to shore up cash balances. Consider negotiating extended payment terms with suppliers to ease cash flow pressures.
• Review Debt Structure: Engage with lenders to explore refinancing options, possibly restructuring long-term debts to reduce short-term pressures.
• Cost Control & Profitability: Conduct a detailed profitability review to identify and cut non-essential expenses. Focus on projects or services with better margins.
• Capital Injection: Consider bringing in new equity or director loans to improve the balance sheet and reduce net liabilities.

Medium-Term Strategies:

• Financial Monitoring: Implement tighter cash flow forecasting and regular financial health checks to catch symptoms early.
• Diversify Revenue Streams: Explore opportunities in related construction segments or maintenance services to improve income stability.
• Strengthen Working Capital Management: Optimize inventory and receivables management to maintain a healthier liquidity buffer.

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Executive Summary