Financial Health Assessment: 05018021 LIMITED (formerly SUNSQUARE LIMITED)

1. Financial Health Score: F (Critical/Terminal)

This company is in Liquidation status. This is the corporate equivalent of a patient being pronounced deceased – the business has entered a formal closure process and is no longer operating as a going concern. The name change from SUNSQUARE LIMITED to 05018021 LIMITED on 20 June 2023 is a classic indicator that the original trading name and goodwill may have been sold or transferred, with the shell company left to be wound up.

2. Key Vital Signs

Historical Trajectory (Net Assets over 6 years):

• 2017: £423,755 → 2018: £457,650 → 2019: £615,627 → 2020: £193,429 → 2021: £552,067 → 2022: £472,820

The 2020 figure represents a near-fatal event (68.6% drop in net assets), from which the company appeared to recover in 2021, only to decline again in 2022.

3. Diagnosis

Terminal Condition: Corporate Liquidation

The patient has succumbed. The company status of "Liquidation" confirms that a licensed insolvency practitioner has been appointed to realise assets and distribute proceeds to creditors. This is the corporate equivalent of a post-mortem.

Symptoms of the Final Illness:

a) Severe Cash Drain Cash plummeted from £714,339 to £228,287 – a loss of nearly £486,000 in one year. This represents a cash haemorrhage that the business could not sustain. Healthy businesses maintain stable or growing cash reserves; losing two-thirds of your cash in a single year is a critical vital sign.

b) Exploding Trade Debtors Trade debtors surged by 84.5% from £328,752 to £606,759. This suggests the company was struggling to collect payment from customers – like a circulatory system where blood is pumped out but doesn't return. This is particularly concerning because: - Revenue is not converting to cash - Bad debt risk was increasing significantly - Working capital was becoming trapped in unpaid invoices

c) Volatile Financial History The wild swings in net assets (from £615,627 down to £193,429, up to £552,067, then down to £472,820) indicate a business with chronic instability – like a patient with wildly fluctuating blood pressure. The 2020 collapse likely involved significant losses or write-offs, and the 2021 "recovery" may have been partly illusory (inflated by debtors that would later prove difficult to collect).

d) Director Loan Repayments Directors repaid £157,930 of their loans during the year (reducing from £165,361 to £7,431). While this improves the balance sheet cosmetically, the timing is noteworthy – directors were extracting cash before the company's collapse.

e) Share Buyback The company bought back 40 Ordinary D Shares during the year, further reducing equity.

f) Overdue Filings Both annual accounts and the confirmation statement are overdue, consistent with a company in liquidation where normal administrative processes have broken down.

Underlying Causes:

The business operated in specialised construction (SIC 43999) – a sector vulnerable to economic cycles, project delays, and payment disputes. As a skylight manufacturer selling to architects, homeowners and builders, the company was exposed to: - Construction sector downturns - Late payment culture in the industry - Potential bad debts from contractor/customers - Rising input costs and supply chain pressures

4. Recommendations

Given the company is in liquidation, recommendations are directed at different stakeholders:

For Creditors:

• Register your claim with the appointed liquidator immediately
• Review retention of title claims if goods were supplied but not paid for
• Assess personal guarantees – if you provided guarantees to the company, understand your exposure

For Directors:

• Cooperate fully with the liquidator – failure to do so can lead to disqualification proceedings
• Preserve all company records – books, records, and documents must be maintained
• Seek independent legal advice regarding potential personal liability, particularly around:
• Preferential payments (the director loan repayments may be scrutinised)
• Wrongful trading if they continued trading while insolvent
• Any personal guarantees given on company borrowing

For Potential Purchasers of the Business/Assets:

• The SUNSQUARE brand and website (sunsquare.co.uk) appear to have been separated from the liquidating entity
• Conduct thorough due diligence – understand exactly what assets, IP, and liabilities you are acquiring
• Ensure you are not assuming any undisclosed liabilities

For Employees:

• Check eligibility for redundancy payments and outstanding wages via the National Insurance Fund
• The company employed 39 staff – these individuals may have claims

Prognosis

Fatal. The company is in liquidation and will be dissolved. The prognosis is not about recovery but about orderly closure. The question now is whether creditors will receive any meaningful distribution, which depends on: - Realisable value of remaining assets (tangible assets of £124,622 plus debtors and stock) - Extent of preferential and secured creditors - Liquidation costs which will consume a portion of any recoveries

The historical volatility, the dramatic cash decline, and the surge in uncollected trade debtors all point to a business that ultimately could not sustain itself in a challenging construction market.