Company Number: 12662975

Analysis Date: 2025-07-20 16:09 UTC

1. Risk Rating: HIGH
   The company shows a persistently negative net asset position (shareholders' funds of -£85,437 as of June 2024) and significant long-term liabilities exceeding total assets, indicating solvency concerns. The presence of related party loans of material size adds complexity and potential risk. Despite asset revaluation gains, the negative equity and large creditor balances suggest financial stress.

2. Key Concerns:

• Negative Shareholders’ Funds and Net Assets: The company’s net liabilities position reflects that total liabilities exceed total assets, a red flag for solvency.
• High Long-Term Liabilities (£670k+) Relative to Assets: Creditors due after more than one year exceed the total fixed and current assets combined, raising concerns over the ability to meet long-term obligations.
• Substantial Related Party Loans: The company owes significant amounts to related parties (notably £345k to City Cleaning Service Ltd), which could indicate reliance on insider financing rather than external funding, possibly limiting financial flexibility.

3. Positive Indicators:

• Growth in Investment Property Value: The company's tangible fixed assets (investment property) were revalued upwards by nearly £79k in the latest year, reflecting potential capital appreciation.
• No Overdue Filings: Accounts and confirmation statements are filed on time, indicating compliance with regulatory filing requirements.
• Going Concern Statement by Director: The director affirms the company is a going concern, suggesting confidence in continuing operations.

4. Due Diligence Notes:

• Review Terms and Security of Related Party Loans: Clarify the nature, terms, and repayment plans of loans from related parties, and assess any risks related to these financial arrangements.
• Assess Cash Flow and Debt Servicing Capacity: Examine detailed cash flow statements and rental income streams to evaluate if operational cash flows can support debt obligations.
• Validate Investment Property Valuation: Confirm independence and reasonableness of the director’s valuation of investment properties to ensure asset values are not overstated.
• Investigate Provisions for Liabilities (£19,744): Understand the nature and likelihood of these provisions, as they may indicate contingent liabilities.
• Confirm Absence of Director or Governance Issues: No director disqualifications or overdue filings are noted, but further checks on governance and operational management should be done.

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