OPEN CONSTRUCTION LTD

Executive Summary

OPEN CONSTRUCTION LTD is currently in a fragile financial state marked by negative working capital and severely diminished equity, signaling liquidity and solvency issues. Prompt measures to improve cash flow, reduce costs, and manage liabilities are essential to stabilise the business and secure its financial future.

OPEN CONSTRUCTION LTD - Analysis Report

Company Number: 12417912

Analysis Date: 2025-07-20 18:25 UTC

Financial Health Assessment for OPEN CONSTRUCTION LTD (Year Ending 31 December 2024)

---

1. Financial Health Score: D

Explanation:
The company shows symptoms of financial distress, with key indicators such as net current assets turning negative and a sharp decline in net assets. While still operating, the financial “vital signs” suggest a weakening position that requires urgent attention to avoid further deterioration.

---

2. Key Vital Signs:

Metric	2024 Value (£)	Interpretation
Fixed Assets	11,346	Steady decline, indicating possible asset sales or depreciation.
Current Assets	17,803	Slight decrease, but with a warning sign in liquidity.
Current Liabilities	19,338	Increased liabilities due within 1 year, pressuring cash flow.
Net Current Assets	-1,535	Negative working capital; "symptom of liquidity stress".
Total Assets less Current Liabilities	9,811	Declining, indicating reduced buffer to cover debts.
Creditors due after 1 year	9,450	Non-current liabilities remain significant relative to assets.
Net Assets (Equity)	361	Drastic reduction from £4,629 in 2023; very thin equity cushion.
Share Capital	2.00	Nominal capital, typical for micro-entities, not a concern.
Average Employees	4	Small workforce, stable but limited scale.

Interpretation:

• The negative net current assets is a critical “red flag” indicating the company may not have enough short-term assets to cover its immediate liabilities, potentially leading to cash flow problems.
• The sharp fall in net assets from £4,629 to £361 shows erosion of the company’s financial foundation—akin to a patient losing vital strength.
• Decline in fixed assets might mean asset sales or write-downs to raise cash or reflect reduced operational capacity.
• Overall, the balance sheet has weakened considerably over the last year.

---

3. Diagnosis:

OPEN CONSTRUCTION LTD is currently experiencing financial strain with symptoms of liquidity distress and weakened solvency. The negative working capital indicates difficulty meeting short-term obligations, which can manifest as payment delays, strained supplier relationships, or reliance on external financing. The dramatic fall in net assets suggests accumulated losses or write-downs that have eroded shareholder equity, compromising the company’s financial resilience.

This pattern is concerning for a micro-entity in the construction sector, where timely cash flow is vital to sustain operations and fund projects. Although not yet insolvent, the company is in a fragile state and requires immediate intervention to stabilize its finances.

---

4. Recommendations:

• Improve Cash Flow Management:
  Prioritize collection of receivables and negotiate extended payment terms with suppliers to improve liquidity.

• Cost Control and Expense Reduction:
  Review overheads and operational expenses to preserve cash and halt equity erosion.

• Review Debt Structure:
  Engage with creditors about restructuring or refinancing short-term liabilities to reduce pressure on working capital.

• Asset Utilization:
  Assess fixed assets for potential sale or more productive use to generate cash without impairing operations.

• Financial Planning and Forecasting:
  Implement rigorous budgeting with cash flow forecasting to anticipate future liquidity needs and avoid surprises.

• Seek Professional Advice:
  Consider consulting insolvency or turnaround specialists promptly if liquidity issues deepen, to explore formal restructuring options if necessary.

---

Executive Summary

OPEN CONSTRUCTION LTD shows clear signs of financial distress, notably negative working capital and a steep decline in net assets, indicating liquidity and solvency challenges. Immediate focus on cash flow improvement, cost control, and debt restructuring is critical to prevent further deterioration and restore financial health. Without swift action, the company risks escalating financial instability.