Company Number: 13708258

Analysis Date: 2025-07-20 17:56 UTC

1. Risk Rating: HIGH
   The company exhibits significant liquidity concerns with current liabilities vastly exceeding current assets, resulting in a large negative net working capital. The presence of substantial long-term liabilities further pressures solvency, despite positive net assets. The financial structure suggests elevated risk in meeting short-term obligations.

2. Key Concerns:

• Liquidity Deficit: Current assets (£50k) are minimal compared to current liabilities (£631k), producing a net current liability position of approximately £581k, indicating potential cash flow stress.
• High Long-Term Debt: Introduction of £471k creditors due after one year in the latest period increases leverage and financial risk.
• Negative Working Capital Trend: Persistent negative net current assets over multiple years with limited improvement, coupled with a low cash balance, raises questions about operational cash flow management and sustainability.

3. Positive Indicators:

• Increasing Fixed Assets: Tangible fixed assets have grown from £338k to £1.15m over three years, potentially reflecting capital investment to support operations or growth.
• Positive Net Assets: Despite liquidity issues, net assets remain positive at £98k, indicating some retained capital and shareholder equity.
• No Filing or Compliance Issues: Accounts and confirmation statements are filed on time with no overdue filings, suggesting good regulatory compliance.

4. Due Diligence Notes:

• Investigate the nature and terms of the substantial current and long-term liabilities to assess repayment schedules and covenant risks.
• Review cash flow statements and management accounts to determine operational cash generation and working capital management.
• Clarify the composition and valuation basis of the fixed assets to understand their liquidity and potential for collateral or sale.
• Assess the impact of finance leases or hire purchase obligations, especially given a zero balance in 2024 compared to £30k in 2023.
• Confirm the background and creditworthiness of the principal shareholder and director, given their controlling interest.