PLOUGHFIELDS (PRESTON ON WYE) LTD

Executive Summary

Ploughfields (Preston on Wye) Ltd is showing financial recovery from prior net liabilities to a marginal net asset position, supported mainly by high stock levels. However, liquidity is tight with minimal cash and large current liabilities, including bank loans and related party debts. Credit approval is conditional on strict monitoring of cash flows, stock liquidity, and debt repayment performance to mitigate elevated risk.

PLOUGHFIELDS (PRESTON ON WYE) LTD - Analysis Report

Company Number: 12953143

Analysis Date: 2025-07-20 15:59 UTC

1. Credit Opinion: CONDITIONAL APPROVAL

Ploughfields (Preston on Wye) Ltd shows a fragile but improving financial position. The company has moved from a net liability position in prior years to a modest net asset position of £2,182 as of 31 March 2024, indicating a turnaround. However, the current liabilities remain very high (£3.78M) relative to current assets (£3.79M), resulting in a very tight net current asset position (£2,182). The company’s ability to service its short-term debts depends on converting stock and debtors to cash efficiently. The presence of a significant bank loan (£2.2M) adds financial pressure. Directors have not drawn salaries and no employees are recorded, suggesting low operating overhead but also limited scale. Related party debt remains substantial, reflecting dependence on connected entities. Credit approval is recommended only with conditions: require regular cash flow monitoring, clear repayment plans for bank loans and related party balances, and ongoing review of stock liquidity.

2. Financial Strength:

The balance sheet shows total current assets of £3.79M, primarily stock (£3.78M), and minimal cash (£4,093) and debtors (£5,035). Current liabilities are almost equal at £3.78M, including £2.2M bank loans and £1.56M owed to group companies. The company has transitioned from net liabilities of £1.9M last year to net assets of £2,182, reflecting either stock revaluation or improved operational results. Shareholders’ funds remain minimal (£2,182) with only £1 share capital. The company’s balance sheet is highly leveraged with low equity and substantial short-term debt. The stock value is significant but its liquidity and realizability are untested in the data. The company’s financial strength is weak but shows signs of improvement.

3. Cash Flow Assessment:

Cash on hand is very low (£4,093) compared to liabilities due within a year, indicating tight liquidity. Debtors are also minimal (£5,035), so working capital is highly dependent on stock conversion. The company’s bank loan facility (£2.2M) suggests reliance on external financing to meet obligations. Given the large stock holding and substantial creditor balances, timely collection and payment management are critical. No employees and absence of payroll expense reduce cash burn, but also limit operating activity scale. Overall, liquidity risk is elevated and the company requires robust cash flow forecasting and controls to avoid default risk.

4. Monitoring Points:

• Stock turnover and realizability: Monitor ability to convert stock into cash or receivables.
• Bank loan and related party debt repayment schedules: Ensure adherence to repayment terms.
• Cash flow forecasts: Regular updates to identify potential liquidity shortages.
• Profitability trends: Lack of reported turnover or profit data warrants close watch on income generation.
• Directors’ conduct and related party transactions: Transparency and arm’s length terms are essential.
• Filing compliance: Maintain timely accounts and confirmation statement filings (currently up to date).