RECOM FARMHOUSE LTD

Executive Summary

Recom Farmhouse Ltd, a newly formed photographic services company, demonstrates a positive net asset base and strong cash position in its first accounts. Despite limited trading history and reliance on intercompany liabilities, the company shows prudent working capital management. Conditional credit approval is recommended, subject to monitoring future profitability, cash flows, and intercompany debt servicing.

RECOM FARMHOUSE LTD - Analysis Report

Company Number: 14498652

Analysis Date: 2025-07-20 16:37 UTC

1. Credit Opinion: CONDITIONAL APPROVAL. Recom Farmhouse Ltd is a recently incorporated private limited company (since November 2022) operating in the photographic services sector. The company has filed its first set of accounts showing a positive net asset position and working capital. However, the company’s financial history is limited, and the absence of an income statement limits assessment of profitability and debt servicing capacity. The company relies heavily on amounts owed to group undertakings (£294,821) within current liabilities, indicating possible intercompany funding or related party loans which require monitoring. Credit approval should be conditional on reviewing future trading performance and confirmation of cash flow stability.

2. Financial Strength: The balance sheet as at 30 April 2024 shows net assets of £86,919, with fixed tangible assets of £8,338 and strong current assets of £541,239 dominated by cash (£535,124). Current liabilities total £460,990, including bank loans (£4,523), trade creditors (£40,968), tax liabilities, social security, and a significant amount owed to group undertakings (£294,821). Net current assets stand at £80,249, indicating positive working capital. The capital structure is equity-based with nominal called up share capital (£100) and retained earnings of £86,819. Deferred tax provision (£1,668) is small and unlikely to impact liquidity materially. Overall, the company presents a sound but early-stage financial position supported by cash reserves.

3. Cash Flow Assessment: Cash holdings of £535,124 are substantial relative to current liabilities, providing a strong liquidity buffer. The net current asset position of £80,249 suggests the company can meet its short-term obligations without difficulty. However, the high level of amounts owed to group undertakings within current liabilities requires clarity on repayment terms, as these can affect liquidity if called upon suddenly. Trade creditors and accrued expenses are within reasonable levels relative to cash. Given the company’s short trading history and lack of profitability data, ongoing monitoring of cash flow from operations and intercompany balances is recommended.

4. Monitoring Points:

• Future filing of income statements and cash flow statements to assess profitability and operational cash generation.
• Continued monitoring of intercompany liabilities (£294,821) for repayment risk or refinancing needs.
• Tracking debtor days and creditor days to assess working capital efficiency.
• Confirmation of director’s and group company’s financial support if needed.
• Any changes in capital structure or shareholder funding.
• Company’s ability to maintain or grow cash reserves against liabilities.