Company Number: 06973781

Analysis Date: 2025-09-04 20:51 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Worthenshaws Ltd is an active private limited company operating within the food services sector. The company shows a positive trajectory in net asset growth from £829k in FY 2023 to £2.52M in FY 2024, underpinned by an increase in intangible and tangible fixed assets. There is a notable improvement in shareholders’ funds, driven by share premium injections or capital restructuring. However, the company carries a significant working capital deficit (negative net current assets of £799k in FY 2024), indicating liquidity stress and an overreliance on short-term creditors, which increases repayment risk. Debt maturity profile includes some longer-term liabilities but a large portion falls due within one year (£3.23M). Given these factors, credit is recommended with conditions focused on close monitoring of liquidity and working capital management.

2. Financial Strength:
   The balance sheet reflects substantial fixed assets (£3.62M), split between intangible assets (notably capitalised development costs of £1.99M) and tangible assets (£1.63M). The growth in fixed assets is a positive signal for long-term business capacity. Shareholders’ funds increased substantially to £2.52M, improving solvency metrics, and reducing leverage relative to previous years. However, current liabilities exceed current assets by a significant margin, indicating a strain on short-term reserves. The presence of bank loans (~£1.2M short and long term) and a fixed and floating charge held by Bibby Financial Services indicates secured borrowing. Director loans £15k are relatively immaterial.

3. Cash Flow Assessment:
   Cash reserves have improved substantially from £63.8k to £399.2k year-on-year, providing better immediate liquidity relief. Debtor balances remain high at approximately £1.45M, but there is no sign of material reduction, suggesting collection periods may be prolonged and require scrutiny. The working capital deficit implies reliance on creditor funding and timely refinancing to meet obligations. The increase in stock to £579k also ties up cash. Monitoring of cash conversion cycle efficiency and maintaining creditor relationships will be essential to safeguard ongoing liquidity.

4. Monitoring Points:

• Liquidity ratios and working capital trend quarterly to flag any deterioration.
• Debtor ageing and collection effectiveness to prevent cash flow squeeze.
• Continued capital injections or financing activities to support growth and working capital requirements.
• Impact of amortisation on profit and the sustainability of intangible assets valuation.
• Any changes in director or related party loans and borrowing covenants, especially under pressure conditions.
• Maintenance of payment discipline to avoid delinquency on bank loans and overdraft facilities.