ESSDEEKAY LIMITED

Executive Summary

ESSDEEKAY LIMITED shows growth in net assets driven by intangible asset revaluations but suffers from chronic liquidity constraints with large net current liabilities and minimal cash reserves. The company’s ability to service short-term debt is reliant on director support, indicating a potential risk for credit exposure. Conditional credit approval is advised with tight liquidity monitoring and possible additional safeguards.

ESSDEEKAY LIMITED - Analysis Report

Company Number: 12388854

Analysis Date: 2025-07-20 13:39 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   ESSDEEKAY LIMITED demonstrates an improving net asset base and consistent shareholder equity growth since incorporation, indicating a level of financial stability. However, the company exhibits persistent negative working capital (net current liabilities) and very low cash balances, which pose liquidity risks and raise concerns about its ability to meet short-term obligations promptly. The director’s interest-free loan and rent charged at below market rates suggest reliance on related party support, which can be a credit risk if this support is withdrawn. Approval is recommended with conditions requiring regular monitoring of liquidity and working capital improvements and possibly additional security or guarantees.

2. Financial Strength:
   The balance sheet shows net assets increased from approximately £1,090 at incorporation in 2020 to £88,500 as of January 2024, reflecting growth in intangible fixed assets (notably revalued intangible assets rising to £106,734). Total fixed assets are strong relative to the company size, but current liabilities (£18,835) exceed current assets (£150), resulting in a net current liability position of -£18,685. This signals that short-term obligations significantly outstrip liquid resources, which could impair operational resilience. Shareholders’ funds have increased mainly through revaluations and retained earnings despite the negative working capital.

3. Cash Flow Assessment:
   Cash at bank is critically low at £21 as of the last reporting date, compared to current liabilities of nearly £19k. The company has minimal liquid assets to cover immediate liabilities, relying on director loans and possibly future cash inflows. Debtors are negligible (£129), indicating limited short-term receivables to provide working capital relief. The cash flow profile is weak, and there is a risk of cash shortfalls impacting day-to-day operations unless external funding or improved cash management occurs.

4. Monitoring Points:

• Liquidity position: Track monthly cash balances and current liabilities to ensure no worsening of working capital deficits.
• Director loans and related party transactions: Monitor for any changes in director support terms or repayment demands that could affect liquidity.
• Intangible asset valuations: Verify the sustainability of revaluations and their impact on net asset values.
• Profitability trends: Request interim management accounts to assess operational cash generation and profitability improvements.
• Filing compliance: Maintain timely submission of accounts and confirmation statements to avoid regulatory risks.