THE MAINTENANCE BRANCH LIMITED

Executive Summary

The Maintenance Branch Limited has demonstrated growth in net assets and fixed assets since incorporation but currently faces working capital challenges with a negative net current asset position. Liquidity appears strained due to high short-term liabilities including tax and hire purchase obligations. Credit approval is recommended with conditions requiring close monitoring of cash flow and working capital to ensure the company can meet its immediate financial commitments.

THE MAINTENANCE BRANCH LIMITED - Analysis Report

Company Number: SC742738

Analysis Date: 2025-07-29 18:01 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   The Maintenance Branch Limited is a young private limited company incorporated in 2022, operating in professional/technical and domestic construction sectors. The company shows improving net asset position over the last two years from £585 to £11,909, which is positive. However, the latest year shows a negative net current asset position (£-5,310), indicating a working capital deficiency. The company has significant hire purchase liabilities and tax/social security creditors, which may pressure liquidity. Approval is recommended subject to monitoring cash flow closely and obtaining updated management forecasts to ensure timely servicing of short-term obligations.

2. Financial Strength:

• Net assets increased materially to £11,909 in FY 2024 from £585 in FY 2023, reflecting retained earnings growth and asset acquisition.
• Tangible fixed assets increased notably to £30,165, funded partly through hire purchase contracts.
• Current liabilities have increased to £25,095, exceeding current assets of £19,785, resulting in a negative net working capital of £5,310, which is a concern.
• Long-term liabilities (hire purchase) remain significant at £8,780 but have reduced from prior year (£12,995), showing some deleveraging.
• Shareholders’ funds remain modest, reflecting the company’s early stage.

3. Cash Flow Assessment:

• Cash on hand improved to £18,585 from £7,623 in the prior year, indicating some liquidity buffer.
• Absence of debtors in the latest year raises questions on receivables collection or sales recognition timing, requiring further clarification.
• Taxation and social security creditors increased substantially to £15,518, suggesting potential cash flow constraints or timing differences in payments.
• Reliance on hire purchase financing indicates limited free cash flow; repayment obligations will need close management.
• Overall, current cash and asset base may be insufficient to cover short-term liabilities without additional cash inflows.

4. Monitoring Points:

• Monitor working capital trends closely, especially current assets relative to current liabilities.
• Review management’s cash flow forecasts and payment schedules for hire purchase contracts and tax liabilities.
• Regularly assess debtor collection practices and turnover to ensure cash inflows meet operational needs.
• Watch for any late filings or deviations from planned financial controls given the company’s early development stage.
• Evaluate the impact of fixed asset acquisitions on operational efficiency and profitability.