AVOCADO TREE HOLDINGS LTD

Executive Summary

Avocado Tree Holdings Ltd exhibits a moderate risk profile characterized by solvency but challenged liquidity, primarily due to reliance on director funding and low cash reserves. The company maintains regulatory compliance and stable governance, with investments in subsidiaries supporting operational activities. Further scrutiny of director loans and subsidiary performance is recommended to fully assess financial sustainability.

AVOCADO TREE HOLDINGS LTD - Analysis Report

Company Number: 13799887

Analysis Date: 2025-07-29 17:27 UTC

1. Risk Rating: MEDIUM
   The company demonstrates positive net assets and current assets exceeding current liabilities, indicating baseline solvency. However, the significant reliance on debt owed to directors and other loans, combined with very low cash balances, raises moderate liquidity and operational risk concerns.

2. Key Concerns:

• Liquidity constraints: Cash on hand is very low (£3,431), while current liabilities are substantial (£109,060), largely driven by directors' current accounts (£96,280), which may indicate dependency on director funding rather than operational cash flow.
• Concentration of debt: A large portion of liabilities are loans and director accounts, which could affect financial stability if these are called in or withdrawn.
• Declining net assets: Net assets decreased from £61,580 in 2022 to £50,358 in 2023, suggesting erosion of equity possibly due to operational losses or write-downs.

3. Positive Indicators:

• No overdue filings: Both accounts and confirmation statements are filed on time, indicating compliance with regulatory requirements.
• Stable ownership and governance: Directors and PSCs are clearly identified, with no adverse information. Both directors appear to be actively involved since incorporation.
• Investment in subsidiary: The company holds a fixed asset investment in a wholly owned subsidiary, suggesting ongoing business operations and potential value generation.

4. Due Diligence Notes:

• Investigate the terms and conditions of director loans and current accounts to assess repayment risk and impact on cash flow.
• Review subsidiary performance (Poco Loco (Imports) Ltd) to understand contribution to group financial health.
• Obtain income statement or profit & loss data to evaluate operational profitability and causes of net asset reduction.
• Confirm working capital management practices given the high debtor balances versus low cash.
• Check for any contingent liabilities or off-balance sheet risks not disclosed in the filleted accounts.