BORDERLAND FENCING MANUFACTURERS LIMITED

Executive Summary

Borderland Fencing Manufacturers Limited exhibits material financial distress as evidenced by negative net current assets and shareholders’ funds as of March 2024, raising solvency and liquidity concerns. While regulatory compliance is maintained and asset investment continues, the company’s reliance on related party debtors and ongoing capital erosion necessitate further scrutiny. Detailed cash flow analysis and evaluation of related party exposures are recommended to assess operational sustainability and financial risk.

BORDERLAND FENCING MANUFACTURERS LIMITED - Analysis Report

Company Number: 13917619

Analysis Date: 2025-07-29 20:35 UTC

1. Risk Rating: HIGH

Justification: The company shows significant negative net current assets and shareholders’ funds as at the latest financial year end (31 March 2024). The current liabilities exceed current assets by approximately £59k, and the company’s total net liabilities stand at around £51k. This indicates potential solvency issues and suggests the company may struggle to meet its short-term obligations without additional financing.

2. Key Concerns:

• Negative Net Current Assets and Shareholders’ Funds: The deterioration from positive equity of £1,740 in 2023 to negative £51,254 in 2024 is a material red flag for financial stability.
• High Trade Debtors Concentration and Related Party Exposure: Debtors constitute almost all current assets (£88k out of £89k), with a significant portion owed by Borderland Fencing Limited, a related party controlled by a director. This concentration risk and related party exposure could impair liquidity if those debts are not collectible in a timely manner.
• Ongoing Losses or Capital Erosion: The company’s accumulated losses (reflected in the negative profit and loss reserves) imply ongoing operational losses or capital erosion since incorporation in 2022, raising concerns about business sustainability.

3. Positive Indicators:

• Filing Compliance: The company is up to date with both accounts and confirmation statement filings, indicating regulatory compliance.
• Tangible Fixed Assets Growth: There has been investment in tangible fixed assets (plant and machinery increased from £5,750 in 2023 to £8,125 in 2024), indicating some reinvestment in operations.
• Stable Director and Ownership Structure: The two directors and significant shareholders have been consistent since incorporation, which can support management continuity.

4. Due Diligence Notes:

• Cash Flow Analysis: Review detailed cash flow statements or bank statements to assess whether the company can service its current liabilities and how it manages working capital, especially given the negative net current assets.
• Recoverability of Debtors: Investigate the collectability and aging of trade debtors, particularly the amounts owed by related parties, to determine liquidity risk.
• Profit and Loss Details: Obtain the profit and loss account to understand revenue trends, gross margins, and expense drivers contributing to losses or capital erosion.
• Related Party Transactions: Evaluate the nature and commercial terms of transactions with Borderland Fencing Limited and Abbey Garden Buildings Limited to confirm these are at arm’s length and sustainable.
• Director Loans and Financing Arrangements: Assess any director loans or external financing arrangements to understand how the company is funded and any contingent liabilities.