R & R CONTRACTS (DUNDEE) LTD

Executive Summary

R & R CONTRACTS (DUNDEE) LTD is recovering from early liquidity challenges and has strengthened its balance sheet significantly in the latest financial year. Although working capital remains slightly negative, improvements in short-term liabilities and net assets indicate a stabilizing financial condition. Continued focus on cash flow management and prudent growth will support sustained financial wellness.

R & R CONTRACTS (DUNDEE) LTD - Analysis Report

Company Number: SC728180

Analysis Date: 2025-07-29 19:13 UTC

Financial Health Assessment: R & R CONTRACTS (DUNDEE) LTD

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1. Financial Health Score: C

Explanation:
The company shows signs of modest recovery and stabilization after initial cash flow and liquidity stress. However, its working capital remains negative, indicating ongoing liquidity challenges. Net assets have improved significantly from a very low base but remain modest in absolute terms. The company is in a fragile but improving financial state, warranting close monitoring and active management to ensure sustained health.

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2. Key Vital Signs

Metric	2024 (£)	2023 (£)	Interpretation
Fixed Assets	12,931	17,241	Slight decrease—may indicate asset disposals or depreciation; fixed assets are very modest.
Current Assets	14,219	15,287	Small decrease; cash and short-term receivables appear limited, indicating tight liquidity.
Current Liabilities	15,249	32,131	Significant reduction—improved management of short-term debts reduces liquidity stress.
Net Current Assets	-1,030	-15,922	Negative but much improved; working capital "symptom" moving toward healthier territory.
Total Assets less CL	11,901	1,319	Improved substantially, showing better balance sheet resilience.
Net Assets / Equity	10,616	694	Significant growth in shareholder funds; capital base strengthening.
Average Employees	2	2	Small workforce indicative of a micro-entity; likely tight cost control on staffing.

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3. Diagnosis

• Liquidity Symptoms: The company has historically suffered from "symptoms of liquidity distress," reflected by large negative net current assets in FY2023. However, by FY2024, this symptom shows marked improvement, with current liabilities reduced by more than half and net current liabilities nearly eliminated. This suggests effective short-term debt management and possibly improved cash flow.

• Solvency Condition: The increase in net assets from £694 to £10,616 over one year indicates a strengthening capital base and better solvency. This is a positive sign suggesting the company is less vulnerable to insolvency risks.

• Asset Base: The company's fixed assets are minimal and have slightly decreased, which is typical for a micro construction business focusing on specialized services rather than heavy capital investment.

• Operational Scale: With just two employees (including directors), the company is operating at a micro scale, which may limit risk but also constrains growth potential.

• Control and Governance: The company is closely held by two directors sharing equal control rights, which can allow for agile decision-making but may also concentrate risk if not balanced with strong governance.

• Industry Context: Operating in "Other specialised construction activities," a sector often subject to fluctuating project-based cash flows and payment cycles, the company's liquidity improvement is encouraging.

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4. Recommendations

• Improve Working Capital Management:
  Continue efforts to convert receivables faster and negotiate longer payment terms with suppliers to maintain positive working capital. Maintaining a healthy "cash flow pulse" is vital to avoid recurrence of liquidity distress symptoms.

• Build Cash Reserves:
  Aim to build a cash safety buffer to withstand short-term shocks, especially given the cyclical nature of construction activities. A healthy cash reserve is akin to a strong immune system for financial shocks.

• Monitor Creditors and Accruals:
  Keep accruals and deferred income under control to avoid sudden liabilities that could strain liquidity. Regular "financial health check-ups" on creditor terms will help maintain balance.

• Plan for Growth Prudently:
  Given the modest asset base and small team, any expansion should be carefully planned to avoid overextension. Consider gradual scaling with clear financial forecasts to avoid stress symptoms.

• Strengthen Governance:
  Although the company is closely held, consider formalizing financial oversight and risk management practices to ensure early detection of any financial distress signs.

• Regular Financial Reviews:
  Adopt frequent internal financial reviews (monthly or quarterly) to monitor key vital signs like liquidity ratios and net asset trends. Early diagnosis of adverse trends allows proactive treatment.

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Summary

R & R CONTRACTS (DUNDEE) LTD has shown a significant turnaround in its financial health within two years of incorporation, improving liquidity and strengthening its net asset base. While the company remains small and operates with tight working capital, the current trajectory suggests a recovering financial "patient" gaining strength. Continued focus on cash flow management, prudent growth, and governance will be essential to ensure a stable and healthy future.