Company Number: 15424025

Analysis Date: 2025-07-29 18:57 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency and liquidity risks due to large borrowings relative to net assets and current liabilities substantially exceeding current assets.

2. Key Concerns:

• Negative Working Capital: Current liabilities (£2.24m) far exceed current assets (£76.8k), resulting in a net current liability of over £2.16m, indicating potential near-term liquidity issues.
• High Leverage: Total borrowings amount to £4.35m (including £4.05m long-term and £0.3m short-term bank loans) against net assets of only £23.4k, implying very high financial leverage and risk of insolvency under adverse conditions.
• Reliance on Investment Property Valuation: The company’s principal asset is investment property valued at £6.24m, based on director valuation without independent audit or market verification, which raises concerns about asset realizability and valuation accuracy.

3. Positive Indicators:

• Asset Backing: The company holds substantial investment property assets, which theoretically support the borrowings secured against them.
• No Overdue Filings: The company is current with account and confirmation statement filings, indicating compliance with regulatory requirements.
• Clear Ownership and Governance: The company’s directors and persons with significant control have been clearly disclosed, with no indications of disqualifications or governance issues.

4. Due Diligence Notes:

• Verify Investment Property Valuation: Obtain independent professional valuation to confirm the fair market value and liquidity of the investment property assets.
• Assess Borrowing Terms: Review loan agreements with HS Credit (Manchester) Ltd and group undertakings to understand covenants, repayment schedules, interest rates, and security arrangements.
• Examine Group Structure and Related Party Transactions: Since a large creditor is a group undertaking, investigate intercompany balances and potential support or risks related to group financial health.
• Cash Flow Projections: Evaluate the company’s rental income streams and operational cash flows to assess ability to service debt and meet short-term liabilities.
• Confirm No Undisclosed Liabilities: Given the high leverage, confirm that all liabilities have been disclosed and that there are no pending litigations or contingent liabilities.