Risk Analysis: A.W. WALKER (UK) LIMITED

1. Risk Rating: HIGH

The company is deeply insolvent with net liabilities of £123,785 as at October 2024, and has been balance-sheet insolvent for at least the past decade. While 2024 showed a marginal improvement over 2023, the fundamental position remains critical. Current liabilities exceed current assets by a factor of approximately 6.6:1, indicating severe doubt about the company's ability to continue as a going concern.

2. Key Concerns

i) Severe and Worsening Insolvency The trajectory of net assets is deeply troubling. After marginal positive net asset positions in 2018-2020 (£2,911, £1,309, and £1,537 respectively), the position deteriorated dramatically from 2021 onwards, reaching a nadir of -£161,120 in 2023. While 2024 shows some recovery to -£123,785, this still represents a deficit that is more than 5 times the company's total assets. The company is balance-sheet insolvent by a significant margin, and has been for an extended period.

ii) Extreme Working Capital Deficit As at October 2024, current assets stood at £22,142 against current liabilities of £146,764, yielding net current liabilities of £124,622. The company has virtually no capacity to meet its obligations as they fall due from its own resources. Fixed assets are negligible at £837. Cash data is not disclosed for 2024, but historical figures show minimal cash holdings (£0 in 2020, £531 in 2019). This raises serious questions about day-to-day solvency and whether the company can pay trade creditors, tax liabilities, or other obligations.

iii) Potential Wrongful Trading Risk The directors have continued to operate the company while insolvent for several years. Under Section 214 of the Insolvency Act 1986, directors who continue trading when they knew or ought to have known there was no reasonable prospect of avoiding insolvent liquidation may be personally liable. The dramatic deterioration in 2022 and 2023, followed by continued trading, warrants careful scrutiny. No going concern assessment or solvency statement is available in the micro-entity accounts.

3. Positive Indicators

• Filing Compliance: Accounts and confirmation statements are filed on time with no overdue items. The 2024 accounts were signed on 24th July 2025, ahead of the filing deadline. This suggests the directors are maintaining their statutory obligations.

• Marginal 2024 Improvement: Net liabilities reduced from -£161,120 to -£123,785 year-on-year, and current assets increased from £11,290 to £22,142. This may indicate some operational activity or recovery, though the improvement is modest relative to the overall deficit.

• Longevity: The company has been incorporated since 1991 (33+ years), suggesting some resilience or underlying business rationale. The two-director structure with Mr and Mrs Black has remained consistent, indicating stability in ownership and management.

• No Formal Insolvency Proceedings: The company is not in liquidation, administration, or receivership, and no charges are indicated in the available data.

4. Due Diligence Notes

a) Composition of Liabilities The micro-entity accounts provide no breakdown of the £146,764 in current liabilities. It is critical to determine what proportion represents: - Director loans or related-party creditors (which may be subordinated or not called in) - Trade creditors - HMRC liabilities (VAT, Corporation Tax, PAYE) - Other third-party debts

If the majority of liabilities are director loans, the insolvency risk is materially lower in practice, as directors are unlikely to force their own company into liquidation. If significant third-party creditors exist, the risk is substantially greater.

b) Trading Status and Revenue No profit and loss information is available due to micro-entity filing. The absence of a stated principal activity in the accounts ("No description of principal activity") is unusual and concerning. It is unclear whether the company is actively trading, undertaking intermittent contracts, or effectively dormant with accumulated liabilities. SIC codes 43390 and 43999 suggest construction finishing and specialised construction work—industries with cyclical demand and project-based revenue that can mask underlying weakness.

c) Going Concern Basis The accounts contain no explicit going concern statement. Given the magnitude of the net liability position, an investor should seek written confirmation from the directors regarding: - Whether they have assessed going concern status - The basis on which they believe the company can continue - Whether creditor repayment terms have been renegotiated or informal forbearance exists

d) Director Conduct and Related Party Matters Both directors hold equal PSC interests (25-50% shares and voting rights each), with Mr Black additionally holding the right to appoint and remove directors. No disqualification records are indicated. However, given the extended period of insolvency, a full search of county court judgments, statutory demands, and any prior insolvency involvement of the directors would be prudent.

e) Creditor Security and Charges A full search of registered charges at Companies House is recommended. The accounts provide no information on secured creditors or debentures, which could significantly alter the risk profile if major assets are encumbered.

f) Year-on-Year Volatility The swing from net assets of £1,537 (2020) to net liabilities of -£161,120 (2023) represents a deterioration of approximately £162,000 over three years. Understanding the drivers—whether trading losses, asset write-downs, or increased borrowing—is essential. The partial recovery in 2024 (£37,000 improvement) should also be investigated for sustainability.