Company Number: 13259021

Analysis Date: 2025-07-20 16:56 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Orka Building Services Ltd shows a strong financial recovery in the latest year (2024-2025) after negative net assets in the prior two years. The company has moved from a net liability position (£-120k in 2024) to a positive net asset position (£204k in 2025), supported by a significant increase in current assets and net working capital. The substantial growth in trade debtors and cash balances supports improved liquidity. However, trade creditors and current liabilities have also increased substantially, which may indicate extended payment terms or working capital pressure. The directors include experienced engineers which suggests sound management for their sector, but given the company’s young age and prior losses, credit exposure should be managed with monitoring and possibly credit limits or covenants.

2. Financial Strength:

• Fixed assets have increased moderately from £35.5k to £47.3k, showing ongoing investment in plant, machinery, and equipment.
• Current assets surged to £2.28M, mainly due to trade debtors (£1.8M) and cash (£480k).
• Current liabilities increased significantly to £2.11M, but net current assets remain positive at £172k (vs. negative £132k prior year).
• Total net assets improved to £204k from a negative £121k, indicating an improved balance sheet and equity base.
• The company’s gearing appears low with no long-term loans aside from finance leases totaling £17.8k.
  Overall, the balance sheet is strengthening with positive equity and improved working capital management.

3. Cash Flow Assessment:

• The cash balance increased substantially to £480k, improving liquidity.
• Trade debtors have increased markedly, which could increase cash flow risk if collections are delayed.
• Current liabilities grew proportionally, including trade creditors (£1.82M), corporation tax, and directors' loans, suggesting reliance on supplier credit and internal funding.
• Positive net current assets indicate short-term obligations are covered, but the high level of creditors demands attention to payment cycles.
• The company has finance lease obligations but they are relatively small and manageable.
  Liquidity is adequate but dependent on efficient debtor collections and creditor management.

4. Monitoring Points:

• Monitor debtor ageing and collection effectiveness to avoid cash flow squeeze.
• Watch trends in creditor days and supplier terms to ensure no overstretching occurs.
• Review profitability and cash flow from operations once profit and loss data are available to confirm sustainable earnings.
• Track any changes in directors or management that could affect company stability.
• Keep an eye on tax liabilities and related party balances due to directors.
• Regularly update credit limits in line with turnover and working capital changes.