OWENS HOMES LIMITED

Executive Summary

Owens Homes Limited exhibits a fragile financial position with persistent negative equity and working capital deficits, sustained by director loans. Liquidity has deteriorated, limiting the company's ability to absorb shocks or service new credit. Given these factors, credit exposure should be declined unless significant financial restructuring or capital infusion occurs.

OWENS HOMES LIMITED - Analysis Report

Company Number: 12690746

Analysis Date: 2025-07-20 14:58 UTC

1. Credit Opinion: DECLINE. Owens Homes Limited demonstrates persistent net current liabilities and negative shareholders' funds over the past four years, indicating a weak financial position and insufficient equity buffer. The company relies heavily on director loans (£219,400), which are subordinated but represent a significant liability. Cash reserves have declined substantially from £202k in 2021 to £52k in 2024, suggesting liquidity stress. The company’s inability to generate positive working capital or build equity reflects limited capacity to service additional debt or sustain commercial credit exposure without increased risk.

2. Financial Strength: The balance sheet shows negative net current assets of £5,928 at 30 June 2024, worsening from the prior year. Shareholders’ funds are negative at £6,028, indicating accumulated losses. Current liabilities (£222,459) exceed current assets (£216,531) primarily due to director loan accounts. The company holds stocks valued at £74,573 and debtors of £90,000 (amounts owed by associates), but these do not offset short-term obligations. The absence of fixed assets and reliance on related party balances reduce financial robustness.

3. Cash Flow Assessment: Cash on hand has decreased significantly over recent years, dropping from £202,919 in 2021 to £51,958 in 2024. This decline signals potential cash flow difficulties. The company’s net current liability position implies working capital constraints, and dependence on director loans to finance operations. Without improvement in cash generation or external funding, liquidity risk remains elevated. The directors’ assurance that loans will not be repaid before other creditors provides some creditor protection but does not mitigate underlying cash flow weaknesses.

4. Monitoring Points:

• Track cash balances and movement in director loan accounts closely.
• Monitor trends in net current assets and shareholder equity for recovery or further deterioration.
• Watch for any overdue creditor payments or breaches of loan covenants.
• Assess debtor collectability, especially related party balances of £90,000.
• Review operational performance indicators and order book stability in the construction sector.
• Observe any changes in director conduct or governance as four directors from the same family control the company.