SANDFORDS LIMITED

Executive Summary

Sandfords Limited is a recently established landscaping services company showing some improvement in total assets but still burdened with negative working capital and shareholders' funds. The company relies heavily on director loans and intercompany funding indicating financial vulnerability. Credit facilities may be conditionally approved with close monitoring of liquidity, working capital management, and ongoing operational performance.

SANDFORDS LIMITED - Analysis Report

Company Number: 13886150

Analysis Date: 2025-07-29 17:50 UTC

1. Credit Opinion: CONDITIONAL APPROVAL. Sandfords Limited shows improving total assets less current liabilities from a negative £11.6k (2023) to a positive £2.9k (2024), indicating some progress. However, net current liabilities remain negative at £39.5k, and net liabilities have increased to £17.5k negative equity. The company is relatively new (incorporated 2022) and operates in landscape services, a sector sensitive to economic cycles. Directors have significant control and appear actively involved. Lending could be considered with strong covenants, monitoring, and possibly a smaller facility given current weak equity and working capital deficits.

2. Financial Strength: The balance sheet shows tangible fixed assets of £42.4k, stable but depreciating, and current assets rising to £150.8k primarily due to a large increase in stocks (£128.6k from £2.3k) and moderate growth in debtors (£17.4k). Current liabilities have surged to £190.3k from £73.3k, driven by increases in directors’ loan accounts (£73.6k), intercompany balances (£80k), and bank loans/overdrafts (£7.3k). The company also has £20.4k in long-term bank loans. Negative net current assets (-£39.5k) and negative shareholders’ funds (-£17.5k) reflect ongoing losses or capital erosion. The capital structure relies heavily on director loans and intercompany funding, indicating reliance on related parties rather than external equity or bank financing.

3. Cash Flow Assessment: Cash on hand is low at £4.8k but improved from £0.7k. The large stock holding may indicate potential working capital tied up in inventory, which could strain liquidity if turnover slows. Trade debtors are reasonable but modest compared to liabilities. The sizeable creditors and loans due within one year pose a liquidity risk, as current liabilities exceed current assets by a substantial margin, reflecting working capital stress. Cash flow generation from operations is not provided, but the balance sheet suggests careful cash management is essential. The company’s ability to meet short-term obligations depends on converting stock and debtors to cash timely or securing additional funding.

4. Monitoring Points:

• Working capital trends, especially management of stock levels and debtor collections.
• Profitability and cash flow generation in trading activities to reduce reliance on director loans.
• Timely repayment of current and long-term loans; watch for any covenant breaches.
• Changes in net assets and shareholders’ funds to assess if losses continue or equity improves.
• Operational performance and sector conditions, as landscape services can be cyclical.
• Directors’ loan accounts and intercompany balances to ensure related-party funding is sustainable and not masking liquidity issues.