Company Number: 12621627

Analysis Date: 2025-07-29 16:40 UTC

1. Credit Opinion: CONDITIONAL APPROVAL. NFD LIMITED is an active private limited company in the building development sector with a short operating history (incorporated in 2020). The most recent accounts show a significant increase in long-term liabilities (loans of £389k due after more than one year), which now exceed net assets, reducing shareholders’ funds from £149k to £44k. While current assets exceed current liabilities, indicating reasonable short-term liquidity, the company’s reduced equity base and increased gearing warrant close monitoring. Credit facilities can be considered but should be limited and structured with appropriate covenants and regular financial reviews.

2. Financial Strength: The company’s financial position has weakened over the last year. Net assets declined from £148,954 in 2022 to £44,351 in 2023, primarily due to the recognition of a £389,424 loan payable in 2-5 years. Current assets (£446,752) still cover current liabilities (£14,097) comfortably, producing strong net working capital of £432,655. However, the sizeable long-term debt reduces the overall equity cushion. The company’s tangible fixed assets are minimal (£1,120), and the balance sheet is largely composed of debtors (£404,076) and cash (£42,676). The decline in retained earnings suggests profitability pressures or possible distributions.

3. Cash Flow Assessment: Liquidity appears adequate in the short term, with cash and equivalents of £42,676 and positive net current assets. Debtor levels are high but have decreased compared to the previous year, which could improve cash inflows. The company should maintain tight credit control to ensure timely collections. The increased long-term debt raises concerns about future cash outflows for debt servicing. No audit is reported, so cash flow statements are unavailable, limiting insight into operational cash generation. Close scrutiny of cash flow forecasts and debt repayment capacity is essential.

4. Monitoring Points:

• Track debtor days and cash conversion cycle to ensure ongoing liquidity.
• Monitor servicing of long-term debt and covenant compliance if credit is extended.
• Watch profitability trends and retained earnings movements in future accounts.
• Review any significant changes in related party transactions, as a large portion of debtors and creditors involves group or associated companies.
• Assess management’s ability to control costs and manage working capital efficiently.