Company Number: 12596051

Analysis Date: 2025-07-20 15:39 UTC

1. Risk Rating: MEDIUM
   Avonnex Limited exhibits moderate financial stability but recent significant reductions in current assets and liabilities warrant caution. The company is solvent based on net asset figures; however, the sharp decline in working capital and total assets compared to prior years suggests potential liquidity strain.

2. Key Concerns:

• Deterioration in Current Assets: Current assets fell dramatically from £1,002k in 2023 to £141k in 2024, reducing liquidity buffers.
• Reduction in Net Current Assets: The net current assets dropped from £574k in 2023 to just £20k in 2024, indicating tighter short-term financial flexibility.
• Significant Decrease in Total Assets Less Current Liabilities: Declined from £580k in 2023 to £25.9k in 2024, a marked contraction that could impact operational stability if it reflects underlying business challenges.

3. Positive Indicators:

• Positive Net Assets and Shareholders’ Funds: Despite the downturn, net assets remain positive at £25.9k, indicating solvency on a balance sheet basis.
• No Overdue Filings: Accounts and confirmation statements are up to date, suggesting compliance with regulatory requirements and sound governance practices.
• Stable Director and Ownership Structure: Single director with no adverse records and a clearly identified person with significant control; this reduces governance complexity.
• Micro Entity Status: The company is micro-sized, implying limited operational scale but also reduced reporting burdens and potentially lower fixed costs.

4. Due Diligence Notes:

• Investigate the cause of the sharp decline in current assets and net current assets between 2023 and 2024, including cash flow statements and debtor aging.
• Examine the nature and timing of current liabilities and accruals (notably the £562k accruals/deferred income in 2023) to understand their impact on liquidity and obligations.
• Assess revenue streams and profitability trends, as limited P&L data is available to confirm operational sustainability.
• Review any contingent liabilities or off-balance sheet risks that may affect financial health.
• Confirm the accuracy and completeness of the micro-entity accounts given the large year-on-year balance sheet changes.