Company Number: 13133345

Analysis Date: 2025-07-19 12:44 UTC

Risk Rating: HIGH

Justification: The company exhibits significant negative equity and materially negative net current assets, reflecting poor solvency and liquidity positions. The large current liabilities relative to current assets indicate potential difficulties meeting short-term obligations without external support.

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Key Concerns

1. Severe Negative Net Assets: As of 31 December 2023, net assets stand at approximately -£1.13 million, deteriorating sharply from -£391k the prior year. This signals persistent accumulated losses and erosion of shareholder funds, raising solvency risk.

2. Negative Working Capital: Net current assets are deeply negative at -£1.14 million, primarily due to current liabilities (£1.64 million) substantially exceeding current assets (£0.5 million). This suggests liquidity stress and possible cash flow challenges.

3. High Intercompany Debt: Over £1.3 million of current liabilities owed to group undertakings contrasts with only £67k due from group entities on the asset side. The imbalance and reliance on intra-group financing may mask underlying funding issues and operational cash shortages.

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Positive Indicators

• Timely Filing & Compliance: The company’s accounts and confirmation statements are up to date with no overdue filings, indicating regulatory compliance and good governance discipline.

• Going Concern Statement: Directors acknowledge negative reserves but affirm ongoing support to meet obligations, suggesting some level of backing from shareholders or parent entities.

• Modest Fixed Assets & Intangibles: Tangible and intangible assets are modest but increasing slightly, indicating some capital investment or asset development.

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Due Diligence Notes

• Examine Group Support: Investigate the nature, terms, and sustainability of intercompany financing arrangements to assess if the company’s liquidity depends on continued group support.

• Cash Flow Analysis: Obtain detailed cash flow statements to verify operating cash generation or consumption, given low cash balances (£10.5k) against large liabilities.

• Business Model Viability: Review the company’s underlying real estate letting operations, including revenue streams, occupancy rates, and market conditions, to evaluate operational sustainability.

• Directors’ Plans & Guarantees: Clarify the extent and form of directors’ or shareholders’ commitments to support the company going forward.

• Debtor Quality & Recoverability: Assess the collectability of trade and group debtors, especially the substantial reduction from prior year (£912k to £103k), to understand any impairments or bad debts.

• Stock Valuation: Confirm valuation approach and realizability of the £385k work in progress stock, as incorrect valuation could misstate current assets.

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