Risk Assessment: ASHBROOKES GROUP LIMITED

1. Risk Rating: HIGH

The company is technically insolvent with negative net assets of £22,550, holds only £2,176 in cash against £332,422 in current liabilities, and its balance sheet is dominated by related party balances that obscure the true financial position. The rapid deterioration from marginal solvency to insolvency within a single year, combined with the absence of any visible trading revenue or employees, raises significant concerns about both solvency and operational viability.

2. Key Concerns

Concern 1: Insolvency and Severe Liquidity Crisis

Net assets have moved from a marginal £500 (2023) to negative £22,550 (2024). Cash has depleted by 97% from £76,472 to £2,176. With current liabilities of £332,422 due within one year and virtually no cash, the company is entirely dependent on creditor forbearance—specifically from related parties—to continue as a going concern. The current ratio is deeply problematic at approximately 0.09:1.

Concern 2: Overwhelming Related Party Dominance

The balance sheet is fundamentally a vehicle for inter-company fund flows: - Debtors: £290,576 of £307,828 (94%) are amounts owed by associates - Current Creditors: £311,163 of £332,422 (94%) are amounts owed to associates - Non-Current Creditors: The £200,006 long-term loan in 2023 has been reduced to £132, replaced almost entirely by short-term related party debt

This structure means the company's solvency is entirely contingent on the willingness and ability of associated entities to maintain their positions. There is no independent creditor protection or arm's-length discipline evident.

Concern 3: Absence of Operational Substance

Despite describing itself as a property developer with "high yield off-market investments" and "buy-to-let offerings," the company reports: - Zero employees in both 2023 and 2024 - No visible turnover (the P&L has been filleted under s444(1) and is not available) - No fixed assets whatsoever - Trade debtors of only £15,031—minimal evidence of genuine trading activity

The financial profile is more consistent with a holding or intermediary entity than an operating business.

3. Positive Indicators

• Filing compliance is current: Accounts and confirmation statements are up to date with no overdue filings, suggesting the director is maintaining statutory obligations
• Long-term debt restructured: The £200,006 long-term creditor has been substantially cleared, which may indicate improved debt management or refinancing, though it has been replaced by short-term related party obligations
• Corporation tax liability is minimal: Only £115 outstanding, suggesting the company is not generating significant taxable profits (which could be interpreted either positively or negatively, but does indicate no accumulating tax arrears)

4. Due Diligence Notes

1. Identify the associated entities: Critical to understand who the "associates" are, their financial health, and whether they can or will honour the £290,576 owed to this company. If these are also Mushtaq-controlled entities, the recoverability of this balance must be independently assessed.

2. Going concern assessment: The accounts contain no explicit going concern note or director's assessment of the company's ability to continue trading. Given net liabilities and cash position, clarification is needed on whether related party creditors have provided formal comfort letters or undertaken not to seek repayment within 12 months.

3. PSC register anomaly: Both Mr Mohammed Arif Mushtaq and Mrs Sofia Tabasum Mushtaq are recorded as owning "more than 75%" of shares and holding "more than 75%" of voting rights. This is mathematically inconsistent and may indicate an error in the PSC register or the existence of different share classes that should be investigated.

4. Registered address discrepancy: The company overview lists 165 Crescent Road, Middlesbrough, TS1 4QT, while the filed accounts reference Oakleigh, Tamworth Road, Keresley End, Coventry, CV7 8JJ. Verify which is current and whether this reflects a recent relocation or administrative error.

5. Nature of business verification: The website claims property development and investment activity, but the financial statements show no fixed assets, no employee costs, and minimal trade debtors. Investigate whether the company is genuinely trading or serving as a financing conduit within a wider group structure.

6. Source of initial capital and cash movements: The company had £76,472 cash at incorporation +1 year but only £2,176 the following year, with significant inter-company flows. Trace the origin and destination of these funds to assess whether there is any risk of preference or transactions at undervalue.