RICHMOND CONSTRUCTION (SOUTH WEST) LIMITED

Executive Summary

Richmond Construction (South West) Limited shows steady growth and improving financial strength since incorporation, with increased assets and equity. However, liquidity remains tight due to high current liabilities and elevated debtor balances, necessitating close monitoring of cash flow and debtor collections. Credit facilities may be extended on a conditional basis with regular review of financial performance and operational risks.

RICHMOND CONSTRUCTION (SOUTH WEST) LIMITED - Analysis Report

Company Number: 13916865

Analysis Date: 2025-07-29 20:41 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Richmond Construction (South West) Limited is a relatively new company incorporated in 2022, operating in the construction sector focused on domestic and commercial buildings. The company shows growth in net current assets and shareholders' funds over its two-year history, indicating improving financial health. However, the net current assets are modest (£10,987 at 2024 year-end) relative to current liabilities (£191,094), suggesting tight liquidity. The company’s debtors have increased substantially, which could signal good sales growth but also potential collection risk. The presence of a director with a construction background and previous directors with accounting expertise is positive, yet recent director resignations warrant monitoring. Given these factors, credit can be extended but with limits and conditions such as periodic monitoring of debtor collections and covenant compliance.

2. Financial Strength:
   The company’s balance sheet shows tangible fixed assets of £9,830 and current assets of £202,081 against current liabilities of £191,094, resulting in net current assets of £10,987. Shareholders’ funds improved from £7,842 in 2023 to £20,817 in 2024, reflecting retained earnings growth. The increase in debtors from £54,393 to £183,475 indicates expanding operations but raises concerns about cash conversion. No long-term liabilities reported, which reduces leverage risk. Overall, the balance sheet is moderately healthy for a micro/small entity but with limited buffer to absorb shocks.

3. Cash Flow Assessment:
   Cash at bank is relatively low at £18,606 compared to current liabilities of £191,094, indicating potential liquidity strain. The working capital position is positive but narrow. High debtor balances could indicate extended credit terms or slow collections, which may impact liquidity. The company should demonstrate effective debtor management to avoid cash flow issues. The absence of a profit and loss statement limits insight into operating cash generation; however, the retained earnings increase suggests profitability. Close scrutiny of cash flow cycles and payment behaviors is recommended.

4. Monitoring Points:

• Debtor aging and collection efficiency to ensure timely cash inflows
• Liquidity ratios and working capital trends in forthcoming accounts
• Changes in director appointments and any related governance issues
• Contract wins and revenue growth to confirm business trajectory
• Any increase in creditor days or reliance on trade credit as a funding source
• Compliance with any agreed loan covenants or facility terms