Company Number: 13268906

Analysis Date: 2025-07-20 12:48 UTC

1. Credit Opinion: DECLINE. Ares Renewables Limited exhibits significant financial distress as evidenced by mounting net current liabilities and negative shareholders' funds. The dramatic deterioration from positive net assets of £282k in March 2023 to net liabilities of £438k in February 2024 signals worsening solvency. The company’s ability to meet short-term obligations is severely impaired, raising material doubts about its capacity to service debt. The absence of employees suggests limited operational scale and possible reliance on external contractors or consultants, which could impact cash flow stability. Given these indicators, the risk profile is elevated, and credit approval is not recommended without substantial improvement or additional security.

2. Financial Strength: The balance sheet shows a sharp increase in current assets from £137k to £3.37 million, largely driven by a surge in debtors from £130k to £3.21 million. However, current liabilities have also ballooned from £419k to £3.81 million, resulting in negative net current assets of £438k. This imbalance highlights a working capital deficit and potential liquidity crunch. Shareholders’ funds have turned negative (-£438k), reflecting accumulated losses and erosion of equity. The lack of fixed assets and minimal cash (£895) further weaken financial resilience. Overall, the company’s financial structure is fragile and reliant on debtor collections and creditor negotiations.

3. Cash Flow Assessment: Cash on hand is negligible at £895, insufficient to cover immediate liabilities. The large debtor balance indicates significant amounts owed to the company, but the collection risk is high. With trade creditors amounting to over £3.28 million and other creditors standing at £524k, short-term cash demands are substantial. The working capital deficit and negative net assets suggest ongoing cash flow pressure. Without conversion of debtors into cash or additional financing, the company may struggle to meet current liabilities on time.

4. Monitoring Points:

• Debtor aging and collectability: Monitor the quality and aging profile of trade debtors to assess realisable cash.
• Creditor payment terms and negotiation status: Watch for any delays or disputes that could escalate liquidity issues.
• Profitability trends and cash flow from operations: Review future filings for evidence of operational improvement or cash generation.
• Changes in equity and capital injections: Track any new equity or shareholder support to shore up balance sheet strength.
• Management actions on cost control and working capital management: Evaluate strategic responses to financial distress.