PRIVATE EDUCARE LIMITED
Company number 04406764 · Monitor this company
This analysis was written by an AI from the company's public filings. It may contain errors or omissions and is not financial or professional advice.
Commercial Credit Assessment: PRIVATE EDUCARE LIMITED
1. Credit Opinion: CONDITIONAL
Reasoning: While the company demonstrates longevity (22+ years operating) and a substantial asset base dominated by freehold property, several material concerns warrant a conditional approach. The most pressing issues are:
- Severe liquidity constraints with cash dropping 79% from £50,251 to £10,589
- Net current liabilities persist at (£20,360), meaning short-term obligations exceed liquid assets
- Overdue accounts filing signals compliance risk
- Long-term debt increased by £100,902 (from £302,990 to £403,892) without corresponding asset growth
- Concentrated ownership (Mrs Parker >75%) creates key-person dependency
Credit facilities should only be considered with appropriate security (likely the freehold property) and covenants addressing liquidity and filing compliance.
2. Financial Strength
Balance Sheet Summary (August 2024):
| Metric | 2024 | 2023 | Movement |
|---|---|---|---|
| Total Assets | £1,244,691 | £1,177,879 | +£66,812 |
| Net Assets | £341,127 | £342,242 | -£1,115 |
| Shareholders' Funds | £341,127 | £342,242 | -£1,115 |
| Gearing (Liabilities/Equity) | 1.44x | 1.54x | Improving |
Positive Indicators: - Net assets have grown substantially over the longer term: £202,585 (2015) → £341,127 (2024), representing 68% growth over 9 years - Freehold property of £760,884 provides tangible asset backing and potential security - Share capital maintained at £215,100 — no evidence of capital erosion - Gearing ratio improving (1.54x → 1.44x)
Concerning Indicators: - Net assets plateaued and now declining slightly from the 2022 peak of £347,008 - Goodwill fully amortized — no intangible asset value remaining - Retained earnings declined from £109,943 to £108,828, indicating a loss or dividend extraction in the period - Revaluation reserve static at £17,199 — no recent property revaluation to reflect current market values
Asset Composition Concern: The balance sheet is heavily illiquid. Fixed assets represent 62% of total assets, with the freehold property comprising the vast majority. While this provides security, it creates significant liquidity risk if the business encounters trading difficulties.
3. Cash Flow Assessment
Working Capital Position:
| Metric | 2024 | 2023 | Movement |
|---|---|---|---|
| Current Assets | £471,773 | £391,795 | +£79,978 |
| Current Liabilities | £492,133 | £528,328 | -£36,195 |
| Net Current Assets/(Liabilities) | (£20,360) | (£136,533) | +£116,173 |
| Current Ratio | 0.96:1 | 0.74:1 | Improving |
Cash Flow Red Flags:
-
Cash declined 79% — from £50,251 to £10,589. This is critically low for a business with 52 employees and likely monthly payroll obligations
-
Debtors surged 34% — from £334,044 to £448,684. While this may reflect revenue growth (employee count rose from 42 to 52), it may also indicate: - Slower collections - Extended credit terms to customers - Potential bad debt risk
Without P&L data (filleted accounts), it's impossible to determine if this debtor growth is proportionate to revenue growth
-
Long-term creditors increased by £100,902 — This significant increase in borrowing requires investigation. Is this a new term loan? Refinancing of short-term debt? Or director lending?
-
Provisions for liabilities increased from £4,319 to £7,539 — modest but directionally negative
Liquidity Stress Indicators: - Cash covers approximately 2.6% of current liabilities — dangerously thin - The working capital deficit, while improved, still means the company cannot cover all short-term obligations from current assets - Employee growth of 24% (42→52) without corresponding cash improvement suggests potential cash burn from expanded operations
4. Monitoring Points
Critical (Immediate Attention Required)
| Metric | Current | Target/Concern Level |
|---|---|---|
| Accounts Filing Status | OVERDUE | Must be filed immediately |
| Cash Position | £10,589 | Monitor for further decline |
| Current Ratio | 0.96:1 | Target >1.2:1 |
| Debtor Days | Unknown — 34% increase YoY | Request Aged Debtors report |
Important (Ongoing Monitoring)
| Metric | Current | Watch Point |
|---|---|---|
| Long-term Debt | £403,892 (+33% YoY) | Understand purpose and repayment terms |
| Employee Count | 52 (was 42) | Revenue must grow proportionately |
| Net Assets Trend | Declining since 2022 | Must stabilize |
| Retained Earnings | £108,828 (was £109,943) | Determine if loss or dividend |
Recommended Covenants/Conditions
- Security: First legal charge over freehold property (£760,884 book value)
- Financial Covenants: Minimum current ratio of 1.0:1; maximum gearing of 1.5:1
- Information Requirements: Quarterly management accounts; monthly cash flow forecasts
- Filing Compliance: All Companies House filings maintained on time
- Debtor Monitoring: Aged debtors report quarterly; debtor days not to exceed 60 days
Key Questions for Management
- Why did cash decline so significantly while debtors increased?
- What is the nature and purpose of the £100k increase in long-term debt?
- Is the debtor increase proportionate to revenue growth or indicative of collection issues?
- What are the terms of the long-term creditor obligations?
- Why are accounts overdue, and when will they be filed?